Interview with Federal Minister of Transport Peter Ramsauer in the run-up to EXPO REAL 2012

1. The weaker economic outlook and increasing regulation of the financial markets are causing uncertainty in the real estate industry. Companies are very concerned about the possibility of financing bottlenecks. What is your assessment of these fears and what can the ministries jointly do for the real estate sector?

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The ongoing strong construction demand continues to be a growth driver in Germany. The real estate sector is robust and in good shape. Demand for real estate has grown considerably. Especially for owner occupiers, residential property has become more affordable in recent years owing to stable property prices and historically low interest rates. Young families in particular are now realizing their dream of their own four walls and are increasingly investing in “concrete gold”.

For me as the Federal Building Minister it is important that the real estate financing culture in Germany, standing as it does for solidity and a long-term focus and which protected us from a collapse of the real estate markets such as in the USA or Spain, be maintained.

2. The real estate industry is forever complaining that politicians use coercion when implementing measures to achieve energy policy goals, with little understanding of economic concerns. What is your perspective and what is being done to share the burdens imposed by the transformation of our energy system as sensibly as possible?

The Federal Government has set itself ambitious climate protection goals. But I have repeatedly emphasized that there will be no forced clean ups or even an “energy police”. The objective of the upcoming amendment of the energy saving decree is a moderate tightening of its requirements, where possible and necessary. The efficiency principle must be preserved.

To progress the renovation of the building stock, as part of the CO2 building renovation program, we are promoting without preference for certain technologies all investments for increasing energy efficiency that are significantly better than the energy saving decree requires. In the process, we are offering lower interest rates and higher subsidies to reward those – on a sliding scale depending on the level of efficiency being targeted – who are voluntarily setting themselves more challenging construction and renovation objectives. That means, the greater the efficiency, the higher the subsidy. That means we are creating incentives.

3. Reinforcing urban inner city development and reducing the amount of space used are two central topics exercising not just the public authorities but also the real estate industry. What do you intend to do to promote these important goals?

Strengthening the inner cities is a central objective of my urban development policy. The city center is at one and the same time a town’s heart and calling card. Strong inner cities are the key factor in urban development. Strengthening the centers requires a package of measures and collaboration between all parties: the federal level, the states, local authorities, associations and the real estate industry. That is why I put forward a “City Center White Paper” in 2011. It contains numerous specific measures for sustainable inner city development.

Urban development funding is an important contribution to strengthening the centers. For next year as well, a further 455 million euro of urban development funds have been earmarked in the budget. More than half the initiatives being funded are located in the inner cities and heart of the community.

The federal government is also supporting municipalities with the new “Urban Energy Redevelopment” program, which we are funding next year to the tune of 100 million euro.

In July, the federal cabinet passed the draft bill I had submitted to promote inner urban and communal development and the continued development of urban planning legislation. We are thereby supporting the objective of the national sustainability strategy to reduce the demand for new land to 30 hectares per day by 2020. Because we have to be even more careful in husbanding the limited resource that is “land”.

4. The consequences of demographic change are the subject of much discussion in the real estate sector, as all real estate segments have to adapt to the requirements of an increasingly older and more diverse society. Politicians as well have taken a close interest in this topic. How is the cooperation between the real estate industry and politicians working out in this arena? What can politicians do to create a sensible framework in light of the changing population structure?

In the demographic strategy passed by the federal cabinet in April 2012, we developed key points for a long term “Concept for independent living in old age”. The strategy also encompasses independent living for as long as possible in familiar surroundings and mobility in old age. Under the banner of “Caring communities” there is a cross-departmental dialog going on about forward-looking forms of co-responsibility and participation as well as exemplary communal and regional structures for an independent old age. The central real estate industry organizations and principal communal organizations are also involved in this dialog. The results will be presented by the federal chancellor in 2013 at a second demographic summit. The first demographic summit has just taken place at the beginning of October.

As part of its first economic stimulus package, the federal government offered investment incentives for adapting the housing stock and residential environment to the needs of the elderly in the KfW program “Converting to meet the needs of the elderly”, which expired at its due date at the end of 2011. Federal funding of 100 million euro from 2009 to 2011 respectively, kick started total investment of around 1.1 billion euro with around 82,500 dwellings being adapted to meet the needs of the elderly. Since January 2012, the KfW has been continuing the “Converting to meet the needs of the elderly” program in the form of a loan on very advantageous terms. 
       
5. In the past, German residential properties have also been attractive purchases for major investors. Many local authorities have divested themselves of their municipal residential property companies. What is your assessment of this development for the residential market?

Ownership structures of the housing stock have been experiencing constant change for a few years now. Between 1999 and 2011 alone, more than two million rented apartments changed ownership in major transactions. This also includes the sale of public authority housing stock. In recent years, we have taken a very close interest in residential property sales to financial investors.

But I take reports of individual occurrences of sub-standard maintenance and repair very seriously. That is why we will continue to keep a very close eye on this development.

6. From your perspective, how might communication between politicians and the real estate industry be further improved and the understanding of the sector’s concerns on the part of the key politicians be enhanced?

We are in a constant dialog with representatives of business, science and politics. Because sensible, practicable solutions can only be developed and implemented in concert with all the players. That is why we have enshrined the dialog between the federal government and the construction, real estate and housing industry in the coalition agreement. We are continuing our “real estate industry dialog” to ensure that future collaboration remains good.

In so doing, we want to raise awareness of and continue to promote the outstanding role of this business sector. And we want to include the industry associations in the political process at an early stage in the interests of Germany as a real estate location. Because: Germany has managed to strengthen and build on its good international competitive position. The housing and real estate industry has made a critical contribution to this achievement and proved yet again to be a reliable political partner in especially challenging times.

7. In recent years, EXPO REAL has developed into one of Europe’s most important commercial real estate trade fairs. How would you like your participation in this trade fair to be interpreted?

The real estate sector is of major importance to Germany as a location and to its competitiveness. It is a mainstay of our economic strength and provides investment and jobs. And at not quite 90 per cent, real estate accounts for the bulk of German assets.

That is of course why I as the Federal Building Minister want to attend Europe’s largest real estate trade fair at which the entire spectrum of the real estate industry is represented. I can exchange views here with industry representatives on current developments and present my ministry’s achievements and projects to industry professionals face to face.

Additional information can be found at www.exporeal.net

EXPO REAL

EXPO REAL, the 15th International Trade Fair for Commercial Property and Investment, is being held at Messe München exhibition center from October 8 to 10, 2012. It is a key networking event for interdisciplinary and international projects, investment and finance. EXPO REAL caters to the full spectrum of the property sector, offering an international networking platform for the key markets of Europe, through to Russia, the Middle East and the US. The fair’s extensive program of conference events, featuring some 400 speakers, gives participants valuable insight into the latest trends and innovations in the property, investment and finance market.

Ms Katrin Polenz
Manager Communications
EXPO REAL 
Tel: +49 89 949-21483
Fax: +49 89 949-9721483
katrin.polenz@messe-muenchen.de