Swedish residential landlord Heimstaden Bostad has frozen new capital allocations to Germany, with co-chief executive Christian Fladeland declaring the country “uninvestable” if Berlin’s prospective left-wing coalition advances plans to seize large private housing portfolios.
The group holds roughly 20,000 flats in the capital valued at about €5 billion, around 15 per cent of its portfolio, and estimates that nearly half could fall under the proposed scheme, potentially exposing it to a €1 billion hit if compensation is set well below market value.
The plan, agreed in exploratory talks between Die Linke, the Social Democratic Party (SPD) and the Greens after Die Linke’s victory in the Berlin election on September 20, would force private owners with more than 10,000 flats in the city to transfer surplus units into public ownership.
Die Linke took 25.7 per cent of the vote, ahead of the Christian Democratic Union (CDU) on 18.8 per cent. The three parties set out their housing agreement on October 18.
Total compensation would be capped at €16 billion, an average of about €100,000 per flat, far below book values for major landlords. Die Linke lead candidate Elif Eralp has said the measure would cover about 160,000 flats held by Vonovia, Adler, Heimstaden, Covivio and the DVI group.
Legislation is targeted for mid-2028, with the law due to take effect in mid-2029 at the earliest. The 2021 referendum that set the process in motion had sought a threshold of 3,000 flats.
Fladeland warned in an interview with Bloomberg that the uncertainty is already steering capital elsewhere and said he could “not find a worse way of actually discouraging any capital to come into the city” to address its housing shortage.
He said he thought there was a “very, very low likelihood” that the expropriations will ultimately actually be implemented, as it would fail in court, though noted that the talks alone were doing a lot of damage.
Fladeland said he hoped the federal government would step in to block further plans on expropriation.
Regarding Berlin’s housing crisis, the Heimstaden co-chief executive said that the German capital has been too slow to provide space for new housing and should attract more private capital to increase supply instead.
Europe’s largest landlord, Vonovia, has similarly paused new residential projects in Berlin, citing lack of investment certainty, while shares across the sector have come under pressure. Heimstaden’s hybrid bond has slipped from about 98 cents in August to 82.5 cents.
Vonovia chief executive Luka Mucic said the proposed plans were unconstitutional.
Chancellor Friedrich Merz’s federal government has moved to counter the regional push, with interior minister Alexander Dobrindt preparing an investment protection act (Investitionsschutzgesetz) to raise hurdles on such nationalisations, requiring states to exhaust other options, pay market value in cash and face constitutional scrutiny.
Merz has stressed that property rights and market confidence must not be experimented with, telling an investment summit in Berlin on October 20 that both were the foundation of the country’s market economy.
Critics, including the banking sector, argue the mere debate already damages Germany’s reputation as an investment location and will worsen the very housing shortage the expropriation is meant to solve. The Association of German Pfandbrief Banks has warned that writing off mortgage charges would push up the cost of property credit.
