Tenants in social housing experience significant property value increase due to urban growth initiatives
A Sober Look at Urban Development Funding in North Germany
45/2025
In a candid conversation, VNW Director Andreas Breiter shares insights about the power of urban development funding. Recent findings show that a single Euro invested in urban development creates a multifold return of seven Euros in private investments.
Kiel. The social housing sector of Schleswig-Holstein is on the brink of leaving urban development funding.
"Andreas Breitner, Director of VNW, emphasizes, 'Urban development funding fortifies cities and municipalities as economic and habitable hubs long-term. It permanently eliminates urban planning deficiencies.' The aforementioned discoveries suggest that urban development funding pumps up private investments."
Companies focusing on the common good value the impact on affordable housing constructions in cities with tight housing markets. "One million Euros in federal funds stimulate approximately 20 housing renovations annually. The effects remain similar when constructing apartments," explains the VNW Director.
For 2025, the federal government shells out nearly 23.6 million Euros for Schleswig-Holstein within its urban development funding program. This represents a 1.2 million Euro increase compared to the previous year. The program necessitates shared financing, with the federal government, states, and municipalities each contributing.
"The Skedaddle of the State"
"The state has already taken a hasty exit this year by grabbing its share from the communal financial compensation - essentially money that municipalities are entitled to anyway," states VNW Director Andreas Breitner. Starting the next year, the state government plans to slash urban development funding quotas for roads and paths by half and cease covering cost increases.
"We grasp that the state government needs to balance its budget," says Andreas Breitner. "The puzzling question is why this drastic action is happening in regards to urban development funding, given that studies suggest a substantial return on every Euro invested here. This is economically questionable and politically short-sighted."
Communities Struggling in the Energy Transition
The social housing sector is concerned about the weakening financial basis of municipalities during a challenging period. "On the one hand, the black-green state government deserves praise for its ambitious climate policy vision. On the other hand, it seems to be running away when it comes to the matter of funding the billions needed for climate neutrality by 2040."
Such a policy fosters public disillusionment, says VNW Director Andreas Breitner. "People can do the math. They understand that the energy transition isn't free. They expect politics to address these issues pragmatically, with an awareness of the social consequences, rather than being led by ideology-driven aspirations."
19-06-2025
Representing 466 housing cooperatives and housing companies in Hamburg, Mecklenburg-Vorpommern, and Schleswig-Holstein, VNW manages 775,000 apartments, home to around two million people. The average monthly per-square-meter rent is 6.59 Euros. Known as 'The Association of Landlords with Values,' VNW strives to improve the quality and availability of housing.**
Contact: Oliver Schirg, Communications Department, Phone: +49 40 52011 226, Mobile: +49 151 6450 2897, Email:** [email protected]**
Insights:
- Urban development funding can act as a catalyst for private investments by sharing risks and leveraging additional capital through mechanisms such as public-private partnerships.
- Secure property rights and clear regulations are crucial for attracting and sustaining private investments in urban infrastructure and housing.
- The Association of North German Housing Companies e.V. benefits from urban development funding, reducing risks and encouraging private investment in residential projects.
- Strong legal and regulatory frameworks and federal incentives geared towards promoting affordable housing investment further facilitate private equity investment within the association's member companies.
These elements underline the positive impact of urban development funding on private investments, leading to improved housing and infrastructure development in contexts such as North Germany's housing market.
"Urban development funding serves as a catalyst for private investments, creating a significant sevenfold return on every Euro invested. This is evident in the case of the North German housing market, where a 1 million Euro investment in federal funds leads to approximately 20 housing renovations annually."
"Investments in urban development, particularly in the realm of affordable housing, enhance the financial foundation of municipalities. However, political decisions, such as the potential state government reduction in urban development funding for infrastructure like roads and paths, risk undermining this positive impact."
