25% of German authorities willing to sell housing stock

MUNICH - A quarter of German local authorities want to sell off their housing stock, with and medium-sized towns and cities particularly keen to get sell off part of their housing stocks, a new survey by consultancy firm PriceWaterhouseCoopers (PWC) shows. Towns in the west of the country are more ready than towns in eastern Germany. East German authorities prefer to demolish unwanted stocks, which have high vacancy rates, rather than sell them, PWC said.

However, Helmut Trappmann, head of PWC's property division, does not believe that the massive sell-offs feared by Germany's Social Democrats (SPD) will happen. Only 6% of the surveyed authorities had sold off more than half of their properties so far, while 80% of towns had sold less than 10% of their stock until now. Most authorities had sold their properties to external investors or tenants, the survey showed. The city councils want to use the revenue mainly to pay off debts and to push ahead with renewal.

The city of Dresden sold their entire housing stock to US investment fund Fortress earlier this year, in a deal which attracted huge publicity and sparked debate in Germany. Similarly, the cash-strapped city of Berlin wants to sell off housing in order to reduce its enormous EUR 60 bn in debts.

Under pressure from the left-wing of the Social Democrat, the German coalition government has agreed, for now, that residential properties will be excluded from the legislation to create real estate investment trusts (REITs). The legislation is expected to be enacted retroactively from 1 January next year.