This week, I had the opportunity to talk to Frank Junker from the municipal housing and real estate group ABG Frankfurt Holding at a Union event in Frankfurt's Nordend district. As chairman of the management board, he has been steering the company's fortune for over 30 years. During this time, ABG successfully expanded to become one of the largest housing companies in Germany, with around 55,000 apartments. The company operates profitably. It transfers millions to the City of Frankfurt every year. The portfolio was also renovated with foresight at an early stage.
New Construction
ABG has stopped new construction for economic reasons. Due to the increased cost, new construction in Frankfurt is no longer justifiable. The cost rent for a new-build apartment would be more than €20/m². As a municipal company with a social mission, this would no longer be affordable for ABG tenants. The average rent in ABG apartments is around €8.80/m².
Positions
- Reduction in construction costs, for example, by reducing VAT from 19% to 7% for construction work
- Higher subsidy programs
- Reliable political framework conditions
- New construction, modernization, and maintenance require profitable municipal housing companies (ABG annual surplus of over € 83 million in 2023)
- Non-profit housing organizations are a wrong approach, as the past has already shown
Overall, it was an interesting evening focusing on how new construction activities for affordable housing can be increased again. There is already a calculated shortfall of around 8,500 apartments in Frankfurt. The annual requirement for new-build apartments in Frankfurt is around 6,500 apartments. Last year, only just over 2,000 units were added to the market.
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