Europe’s largest landlord exposed to €8bn hit from Berlin apartment plans
Vonovia vulnerable to compulsory purchase of 120,000 flats under proposals from winners of state election
Europe’s largest residential landlord Vonovia stands to lose more than €8bn from nationalisation plans in Berlin, as the prospective governing parties in the city-state discuss the socialisation of more than 140,000 apartments.
The leftwing Die Linke, winner of the September state election, has agreed to coalition talks with the Social Democrats and the Greens over plans to transfer large apartment portfolios into public ownership in an effort to bring down rents in the capital.
The proposal, which foresees compensation far below market values, could impose losses of more than €11bn on four major property companies relative to the levels at which the properties are held in their books, according to FT calculations.
Berlin is struggling to address a chronic lack of housing, with the city of 4mn people short of an estimated 100,000 apartments, according to the Berlin Senate.
Under the plans, which rely on an untested clause of the German constitution, real estate companies that own more than 10,000 Berlin apartments would be forced to transfer flats above that threshold into public ownership. More than 144,000 homes are likely to be affected, company disclosures show.
The parties envisage paying no more than €16bn, which would amount to an average compensation of just over €100,000 per apartment. Legislation would be brought forward to 2028.
According to FT calculations based on disclosures from the four companies most likely to be affected — Vonovia, Heimstaden, Adler and Covivio — this would be more than 40 per cent below the average book value of their properties.
Shares in Vonovia, the biggest landlord in the German capital with a portfolio of roughly 130,000 flats, fell to the lowest level since 2023 last week. Its flats have an average market value of €170,000 each, according to company disclosures, which means the 120,000 apartments at risk of nationalisation would be worth €20.4bn.
The company would only receive €12bn in compensation, leaving a loss of €8.4bn — about 60 per cent of its current market capitalisation.
Vonovia’s chief executive Luka Mucic said the plans were “unconstitutional” and would not survive a legal challenge.
Germany needed “reliability, legal certainty and a stable investment environment” to address its housing shortage of 1.4mn apartments, he said. Despite the uncertainty, Vonovia said it planned to invest €539mn this year into its existing portfolio in Berlin and was currently building 1,000 flats.
Privately owned Heimstaden could face losses of €1.5bn on 10,000 apartments worth €2.5bn, according to FT calculations.
Heimstaden co-chief executive Christian Fladeland said he doubted the plans would ever become reality, but warned that the proposed compensation would hit investment.
“Obviously, Germany is uninvestable [for international investors] if this materialises,” he said. As for the company’s own plans, “if you are getting robbed of so much value, then you will definitely not prioritise new investment in such a market.”