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Germany’s biggest landlord expects rent cap to cut 2020 Berlin revenue by a tenth
[BERLIN] Vonovia SE expects a rent cap proposed by the Berlin city government would cut revenue next year by as much as 25 million euros (S$38.8 million), or about 10 per cent of its rental income in the German capital.
Germany's biggest landlord, which confirmed its guidance for this year, said it plans to redirect cash earmarked for modernization of its Berlin properties to other regions and that it remains convinced that the planned rental legislation, further details of which were reported in German media at the weekend, is unconstitutional.
A property boom has driven rents in Berlin up by more than 50 per cent since 2011 and turned landlords such as Vonovia and rival Deutsche Wohnen SE into top stock-market performers. Previously the city, where a large majority of residents rent accommodation, was known for its low living costs.
Deutsche Wohnen shares fell 4.9 per cent in pre-market trading on Tradegate compared with Friday's Xetra closing price, while Vonovia was down 1.9 per cent.
"A rent freeze law would be going in the wrong direction and in no way solve the problem for tenants in Berlin or for the tens of thousands of people who move or want to move to Berlin every year," Vonovia said in a statement Monday.
Under the plan, expected to take effect in January, tenants living in houses built before 2014 should pay no more than 7.97 euros a square meter, Berliner Morgenpost newspaper reported Sunday. The measure will likely "exacerbate the problem of insufficient supply of new housing" and "prevent much needed investments in energy efficiency," Vonovia said.
Vonovia said Monday it expects the "imbalance" between supply and demand to become "even more pronounced" if the rent freeze plan is enacted.
"We are convinced that the longer-term underlying fundamentals of the Berlin housing market will become even more attractive compared to the currently already attractive environment," the company said. "Hence, we do not intend to change our strategy and will be monitoring the market very closely for opportunities to buy smaller distressed Berlin portfolios."