German Chancellor Friedrich Merz has voiced strong opposition to proposals being discussed by Berlin’s potential regional coalition to nationalise assets belonging to large landlords, amid Germany’s first investor summit held this week in the capital. The plan, aimed at addressing soaring rents and a persistent housing shortage, targets landlords owning more than 10,000 apartments, potentially affecting over 150,000 homes.
Merz cautioned against “experimenting” with property rights, emphasizing that the protection of property and trust in a functioning market economy are foundational principles that should not be compromised. Speaking after the Invest in Germany conference, the conservative leader underscored his intent to attract foreign investment, even as he faces mounting political pressure at home following recent regional elections.
The nationalisation proposal is being considered by a prospective coalition of the far-left Die Linke, the Social Democrats (SPD), and the Greens in Berlin. Their plan involves invoking a little-used article of the German constitution which allows the expropriation of land and assets for the public good, provided compensation is made. The coalition envisions compensation costs of up to €16 billion, equating to roughly €100,000 per apartment on average. Critics argue this figure is significantly below current market values, raising concerns about the fairness and economic impact of such a move.
Berlin’s housing challenges and the debate over property rights have a complex history. After German reunification, the city sold more than 200,000 publicly owned apartments to private investors to address financial shortfalls, a decision now being revisited with billions having since been spent on repurchasing these properties.
The discussion has also intensified tensions within the federal coalition government. Merz’s CDU is at odds with the SPD, particularly as the chancellor has urged the latter to form an alliance with his party in Berlin rather than pursue coalitions with left-wing and Green parties. Meanwhile, the SPD has accused some CDU members in eastern Germany of tacitly supporting the far-right Alternative for Germany (AfD) party in that region’s parliament. This comes as the AfD made significant gains in recent elections, notably securing 44 percent of the vote in Sachsen Anhalt, where the far-right party’s candidate could become postwar Germany’s first far-right premier in December.
The CDU faces broader challenges, including electoral setbacks, internal coalition disputes, and declining personal approval ratings for Merz. Nevertheless, the chancellor highlighted renewed investor interest in Germany’s economy, attributing it in part to last year’s major public investment initiative focusing on infrastructure and defense.
The unfolding developments in Berlin illustrate the complex balancing act between addressing socioeconomic issues such as housing shortages and maintaining market confidence and property rights within Germany’s political and economic framework.