(Bloomberg) --
Germany’s biggest residential landlords declined on concern that the City of Berlin will freeze rents in the capital for five years in response to a surge in housing costs.
Deutsche Wohnen SE fell 8.7% in Frankfurt, while Vonovia SE dropped 5.5%. As a result, the Stoxx Europe Real-Estate Index was the region’s worst-performing sector on Thursday, declining about 2.4%.
Berlin’s Social Democratic-led government plans to float a proposal for a five-year freeze on rents this month, with a draft law on the measure expected in October, the state ministry for urban development said. The measure was agreed on in principle earlier this year by the SPD and its state coalition partners, the Greens and the Left party.
Berlin’s residents have been buffeted by a sudden surge in costs in recent years, fueling public demonstrations and calls for a referendum to push the city to expropriate apartments from landlords owning more than 3,000 units. Deutsche Wohnen -- one of the main winners of Berlin’s housing boom and owner of about 112,000 properties in the city -- has rejected demands to turn over its property.
“A potential long-term rent freeze is arguably a more significant concern,” Morgan Stanley analysts including Bart Gysens said in a note. “Not only does the likelihood of this seem higher, it could also reduce capital s as much or even more than other measures.”
The proposed rent cap raises serious constitutional issues, according to the Berlin-Brandenburg Association of Housing Companies. “It begs further key questions: should there be a cap on building costs, to ensure that maintenance investment is still possible with frozen rents?” the association said in a statement.
Nina Henckel, a spokeswoman for Vonovia, said we need to take concerns about rising rents seriously and act. “At the same time we urgently need to construct more affordable homes,” she said.
Deutsche Wohnen said nobody was immediately available to comment.
©2019 Bloomberg L.P.
RECOMMENDED FOR YOU
POPULAR