German Chancellor Friedrich Merz has warned against Berlin’s proposals to nationalise the assets of large landlords, as hundreds of businesses attended the country’s first investor summit in the capital. Policymakers should refrain from “experimenting” with property rights, he said, referring to plans under discussion in regional coalition talks between the far-left Die Linke, Social Democrats and the Greens in Berlin. “Protecting property and trust in a functioning market” is “the basis of our market economy and you don’t experiment with it”, he said on Tuesday after the Invest in Germany conference. The warning highlights Merz’s delicate balancing act.
The conservative chancellor seeks to attract foreign capital while coming under mounting pressure from his own party at home, following gains from the far right and the far left in regional elections in Berlin, Sachsen-Anhalt and Mecklenburg-Vorpommern last month. Proposals under discussion in Berlin include nationalising the bulk of the assets of landlords with more than 10,000 apartments, as part of a broader push to rein in rising rents and a chronic housing shortage. The measure would likely affect more than 150,000 homes.
The parties envisage paying not more than €16bn, which would amount to an average compensation of just over €100,000 per apartment. That would be far below market value, according to FT calculations. In a paper setting out the priorities for the coalition talks, the three parties said they would invoke an article in the German constitution that was never used before, allowing land and other assets to be expropriated for the public good in exchange for compensation.
The dispute reflects Berlin’s troubled history with housing privatisation. In the decades following German reunification, the cash-strapped city sold more than 200,000 publicly owned apartments to private investors. It has since spent billions buying back tens of thousands of them.
Die Linke surged to first place in Berlin’s elections in September with a record 25.7 per cent of the vote after campaigning on property expropriation, rent caps and housing affordability. Support for Merz’s Christian Democrats, who have led the city-state’s government since 2023, fell 9 points to 18.8 per cent, while the far-right Alternative for Germany climbed to 16.3 per cent. Last week, shares in Vonovia, Berlin’s largest landlord with a portfolio of more than 138,000 flats, fell to the lowest level since 2023.
The talks have exacerbated tensions between Merz’s CDU and its federal coalition partner, the SPD, with the chancellor urging the latter to pursue an alliance with his party in Berlin instead of the far-left Die Linke. Meanwhile, the SPD has accused some regional CDU officials of backing the AfD’s candidate for parliament speaker in the eastern state of Sachsen-Anhalt, where the far-right party won 44 per cent of the vote last month. The state of 2.1mn could elect postwar Germany’s first far-right premier in December.
The CDU’s electoral setbacks, coalition infighting and growing criticism of Merz, whose personal ratings have plunged to record lows, have deepened a sense of political instability. Yet Tuesday, Merz and SPD finance minister Lars Klingbeil displayed unity in front of about 200 investors as they touted Germany as an attractive and reliable investment destination. The chancellor hailed renewed investor appetite for Europe’s largest economy following his coalition’s decision last year to launch a vast public investment package focused on infrastructure and defence.
New commitments include Amazon’s plans to invest €16bn and a pledge by Canadian asset manager Brookfield to allocate “tens of billions” over the next five years. Chipmaker Nvidia also said it planned to invest in Germany.
Source: Financial Times Companies · Summarized by HeadlinesBriefing