Last Wednesday ended with a disappointment for Volker Leers.

Like so many people wanting to build, the managing director of a real estate company from Saarbrücken had been waiting for the day when funding for new buildings according to the efficiency standard 40 could be applied for again.

But like many others, Leers was no longer able to get through his application to the state development bank KfW.

"It felt like an ABBA concert, where the tickets are gone in the first few minutes," says Leers, audibly frustrated.

His consequence: "We are now not building 120 apartments that would otherwise have been built."

Julia Loehr

Business correspondent in Berlin.

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Leer's company, the SBT Immobilien Group, buys land, builds rental apartments on it and then sells it to investors such as pension funds and insurance companies.

It is currently building around 800 new apartments, the 120 in Homburg in Saarland would have been added.

"It is absolutely not possible to build these apartments to this standard without subsidies," says Leers.

He wanted to invest around 40 million euros, without the 3.7 million euros subsidy from KfW the calculation would no longer work.

In view of the income level in the region, offering the apartments more expensively is not an option.

The cold rents for new buildings are already around 11 to 13 euros per square meter.

“Perhaps more is possible in Berlin at Potsdamer Platz.

But not here,” says Leers.

The situation is completely different from 2021

The entrepreneur is also President of the Association of the Saarland Housing Industry.

He is currently hearing many such stories from his colleagues.

Construction projects are currently being put on hold everywhere.

Since Federal Minister of Economics Robert Habeck (Greens) largely stopped state subsidies for energy-efficient new buildings due to the high demand, real estate developers have been cold turkey.

Habeck wants to prescribe much of what has been funded so far as a legal standard, directing the funding primarily to renovations.

This is likely to cause further debate within the cabinet.

Because the federal government not only wants Germany to become climate-neutral by 2045.

But also that 400,000 apartments are built every year.

Especially in the conurbations, the supply of housing has been smaller than the demand for years, and prices have risen correspondingly.

In 2020, 306,000 apartments were completed in Germany.

The Federal Statistical Office has not yet published the figures for 2021.

For Klara Geywitz (SPD), the resentment of the housing companies about the Efficiency House 40 subsidy, which was stopped after just a few hours, comes at the worst possible time.

This Wednesday she wants to start her alliance for affordable housing, swear around 40 institutions on the Berlin Euref campus to the big new building offensive.

So that not only talk is done, but also construction, the ministry wants to continuously track the progress in housing construction and hold it up to the alliance members.

Olaf Scholz (SPD) used this type of “monitoring” to increase the number of new buildings when he was mayor in Hamburg.

A new alliance is already a challenge in normal times.

Environmental groups want as little surface area as possible to be sealed.

Housing companies want as little regulation as possible, cooperatives want the most attractive conditions possible for non-profit building projects and so on.

There are currently other complicating factors.

In addition to the back and forth in terms of KfW funding, the sharp rise in prices for building materials is causing problems for the companies.

Because of the Ukraine war, but also the lockdowns in China, many supply chains are interrupted.

Crazy times and crazy prices

The General Association of the German Housing Industry no longer considers the 400,000 new apartments per year from the coalition agreement to be realistic.

"It is absolutely illusory to believe that this target can even come close to being reached this year and next," said association president Axel Gedaschko of the FAZ. What is preventing the construction of affordable housing: "Supply chain problems since the Corona crisis, a total uncertainty in terms of new construction subsidies from 2023, a massive shortage of materials, skyrocketing construction and energy costs, rising interest rates and a collapsing supply of raw materials.” The situation is completely different from the end of 2021. In the case of socially oriented housing companies, the plans would literally “implode”.

According to the construction industry, the supply bottlenecks particularly affect steel and petroleum-based products such as bitumen, plastics and insulating materials.

"It is precisely here that we are seeing significant price increases," reports Felix Pakleppa, General Manager of the Central Association of the German Construction Industry.

The supply of timber is also faltering, which is unfortunate because more should actually be built from wood for climate protection reasons.

According to Pakleppa, the construction companies could not bear the additional costs on their own.

But customers' budgets don't always allow for price increases.

"We have a difficult year ahead of us."

Volker Leers recently negotiated a contract for the shell work for a construction project in Saarbrücken.

Shortly before completion, the contractor increased the price again because of the rise in steel prices: from 3.8 to 4 million euros.

These are crazy times, says Leers.

He does not yet know what will happen to the property in Homburg an der Saar.

If it only met the minimum legal standards in terms of energy efficiency, it could reduce construction costs and thus subsequent rents.

But with a view to climate protection, he feels uncomfortable with it.

"These buildings will exist for the next 50 years."