The company Project Immobilien, which managed the construction, went bankrupt this summer, hit by the real estate crisis that has shaken Germany for several months, leaving hundreds of buyers in uncertainty.

"The cranes, the equipment for the workers, everything has been removed," the 33-year-old father told AFP, standing in front of a windowless concrete façade.

Soaring interest rates that increase the cost of credit, demand in free fall, explosion in the price of materials... Company bankruptcies doubled year-on-year in Germany's construction sector, bringing many construction sites to a halt.

Chancellor Olaf Scholz invites industry professionals to a summit in Berlin on Monday. Objective: to revive construction, while the country is sorely lacking housing.

-250.000 euros-

"Investors no longer know how to make certain projects profitable," Tim-Oliver Müller, president of the German construction federation HDB, told AFP.

A building under renovation in Berlin, September 21, 2023 © John MACDOUGALL / AFP

For years, the sector has benefited from the low interest rates enabled by the generous monetary policy of the European Central Bank. Demand was high, construction sites in major German cities multiplied. But the ECB had to drastically raise rates to fight inflation, plunging demand for credit, the prices of goods for sale and the profitability of projects.

The market is slowing down all over Europe. However, Germany is particularly affected, with a fall in property prices over one year of 6.8% in the first quarter of 2023, against a slight increase of 0.4% for the euro zone as a whole.

At the same time, developers are suffering from the rising cost of building materials, following the coronavirus pandemic and amplified by the war in Ukraine.

The German developer Vonovia, a heavyweight in the sector, recently decided to freeze the construction of 60,000 homes. One in five real estate companies said they cancelled construction projects in August, while 11.9 percent of them are facing financing difficulties, according to a recent survey by the IFO institute.

In Berlin, the buyers of the Project Immobilien building in the central district of Prenzlauer Berg had all already paid for half of their property.

Valeriy Shevchenko in front of the site of the residential project "Malmoerstrasse 28" interrupted because of the bankruptcy of the developer, September 18, 2023 © John MACDOUGALL / AFP

"I'm not rich. My money is the fruit of my work, and I pay the interest on a loan that I do not even enjoy," said Shevchenko, who said he had paid 250,000 euros.

No insurance has been taken out, neither by the company nor by the future owners. Only hope: find a buyer to finish the site, or finish it themselves.

"I could never have thought that something like this could happen in Germany," said Marina Prakharchuk, 39, who has already paid 175,000 euros for a 45 m2 in this building. "I put all my savings into it," adds the logistics company worker from Belarus.

Social bomb

This crisis is a blow to Olaf Scholz's government, which promised, when it came to power at the end of 2021, to build 400,000 housing units per year. We are far from it: the sector expects to painfully reach the figure of 250,000 this year, and even to fall below 200,000 in 2024.

However, the needs are enormous, exacerbated by the reception in recent years of many refugees and foreign workers, in a country lacking manpower.

An unfinished building site in Berlin, September 18, 2023 © John MACDOUGALL / AFP

A situation that could turn into a social bomb, at a time when the lack of supply is causing a sharp rise in rents. In Germany, half of the population does not own their home. Enough to further weigh down the purchasing power of households, already shaken by inflation, which still exceeds 6% in the country.

Housing Minister Klara Geywitz has announced that she wants to extend certain measures to help families access to homeownership, and invest "an additional billion euros" in residences for students and apprentices.

© 2023 AFP