Kiel Institute: Berlin expropriation plan would exacerbate housing shortage
A proposed plan by Berlin’s Left Party to socialize large corporate housing portfolios would exacerbate the German capital’s housing shortage rather than resolve it, according to a study published by the Kiel Institute for the World Economy. Instead of buying up existing units, investing billions in new construction could generate up to 71,000 new apartments by 2045 and significantly dampen soaring rental prices.
Billions Earmarked for Compensation Versus Construction
The Kiel Institute calculated the total market value of the targeted residential portfolios at 40.2 billion euros. Proponents of the expropriation estimate that the required legal compensation would amount to half of that traffic value, or roughly 20.1 billion euros.
Study author Stefan Kooths noted that substituting market prices with state-controlled privileges creates structural bottlenecks rather than broad relief.
Using Moving Chains for Metropolitan Relief
According to the research model, if that compensation sum were alternatively channeled directly into new residential developments, asking rents could drop by up to 8.7 percent below current baseline projections by the year 2045.
Moving into newly built housing units routinely frees up existing stock elsewhere. Through these moving chains, fresh inventory relieves broad pricing pressures across the metropolitan region.
Targeting Supply Deficits Over Corporate Ownership
Co-author Jonas Zdrzalek emphasized that the fundamental determinant of market health is not corporate ownership structures, but rather the net addition of fresh inventory. Constructing new apartments directly absorbs excess demand. When municipal programs specifically target the lower-income housing segment for development, price suppression effects multiply across the most vulnerable tenant demographics.
The study was commissioned by the business initiative “Berlin denkt weiter,” which brings together the Berlin Chamber of Commerce and Industry, the Berlin Chamber of Skilled Crafts, the Berlin-Brandenburg Business Associations, and the Association of Berlin Merchants and Industrialists. The coalition warned against executing what it termed a dangerous expropriation experiment.
Political Friction and Parallel Academic Findings
The Berlin Left Party reaffirmed its commitment to pursuing the expropriation of major residential firms following its success in the Chamber of Deputies elections. These policy proposals continue to draw sharp criticism across political lines, threatening to create significant friction during upcoming exploratory coalition talks with the Social Democratic Party and the Greens.
That parallel research similarly concluded that socializing large housing portfolios fails to solve structural supply shortages, though it suggested such measures might serve as a supplementary tool alongside new builds to address affordability constraints.