Large parts of Prora, a Nazi-era vacation resort on the Baltic Sea that spent eight decades in mothballs after World War II, are now emerging from the mold and decay, as builders scamper through the giant development.
That doesn’t bother real estate entrepreneur Ulrich Busch as he guides potential buyers across a dusty forecourt, through a half-finished lobby and up a nearly 80-year-old stairwell to what in 2015 is called a model apartment.
Awaiting them is a bedroom with a walk-in closet, parquet floors, a chic designer bathroom and best of all, a balcony with an uninterrupted view of the Baltic, west of Rostock, Germany.
“There’s been tremendous interest,” Mr. Busch tells a visitor.
“There’s been tremendous interest. Actually, we aren't selling the apartments, we're handing them out.”
That’s no exaggeration. Although peak vacation season is long over, Prora is still drawing in the crowds. Senior citizens in hiking boots, families on bicycles, young couples and men in sunglasses driving open convertibles, all stop to marvel at the cranes at work once again in Prora.
The building was originally planned by the Nazis as a “Kraft durch Freude” or “Strength through Joy” vacation resort for Aryan families. The first cornerstone was laid on May 2, 1936, but construction was stopped abruptly at the outbreak of World War II. After the war, the East Germans stationed troops there and the building remained mysterious and off limits to the public.
After the Berlin Wall fell, the complex was left empty, doomed to rot.
They don’t all come just to gawp at the restitution of a Nazi colossus. More than a few of the many visitors to Prora these days are seriously interested in buying.
“Actually,” Mr. Busch added, “We aren’t selling the apartments, we’re handing them out.”
Designed by architect Clemens Klotz and based on the principles of legendary French-Swiss architect Le Corbusier, the gigantic complex was intended to house 20,000 vacationers.
In the early 1990s, reunification brought new interest in the complex’s potential, and in 1997 a study proposed it be used for tourism. The government began selling properties to investors in 2004.
Mr. Busch, who lives in the Netherlands, played a crucial role in the real estate boom along the idyllic bay of Prorer Wiek.
Nine years ago he had the foresight to buy two of Prora’s five surviving concrete blocks, just a few kilometers along from the Baltic spa town of Binz, from the German government.
At the time, only starry-eyed dreamers thought the hulking Nazi relic, weighed down by its dark past, could be revived. But Mr. Busch recognized the site’s potential and agreed on a development plan with Binz authorities. He then split up the blocks and sold them to other investors.
Together they are breathing new life into the vacation resort dream first conceived by the Nazis.
The five apartment blocks will house several hundred condominiums and 3,000 vacation beds, including a youth hostel that opened in 2011.
Instead of the modest two-bedroom apartments envisioned by the Nazi state leisure organization, modern developers are selling luxury, furnished condominiums for use as vacation homes or year-round residences.
The prices are formidable. The going rate is between €3,000 ($3,359) and €6,500 per-square-meter, depending on location and configuration. Several exclusive apartments in Block Two could fetch prices from €10,000 to €14,000 per-square-meter, said Mr. Busch, who now advises investors as an independent project developer.
Kathrin Lange, head of the Rügen office of real-estate firm Engel & Volkers, is sceptical of these prices.
Unlike Binz, Prora is not yet an established vacation spot. Yet the location is undeniably attractive. Only a narrow strip of pines separates the complex from the Baltic sea, which is clearly visible through the trees.
“At this location, in the first row of a large piece of property, the price is completely reasonable,” said Gerd Grochowiak, the chief executive officer of Berlin-based Irisgerd, which is building 161 condominiums and 114 hotel apartments in Block One.
Moreover, buyers profit from tax cuts for purchasers of historic sites, added Mr. Grochowiak. According to various project developers, buyers can declare 70 to 85 percent of the purchase price as a business expense for tax purposes.
Even without these tax benefits, Prora developers predict returns of 3 percent for those making buy-to-let purchases, assuming an apartment can fetch rents of €10 per square meter.
Binz Mayor Karsten Schneider said that’s realistic because the market for apartments in the Baltic spa is “extremely tight.” High rents force many employees of local restaurants and hotels in Binz to commute from elsewhere on the island.
For those buying to rent the apartments as vacation properties, sellers predict a payout of 3 to 4 percent based on rentals of 180 days per year, but that’s optimistic.
Vacation beds on Rügen are occupied an average of 104 days per year, according to figures from the Mecklenburg-Western Pomerania statistics office. That figure is higher for the area around Binz, said realtor Ms. Lange, but cautioned that renting 150 days a year would be a more realistic estimate.
Not all of the Prora resort can be rented to tourists.
The Binz municipality has designated which parts of the complex can be rented out and which reserved for full-time residents.
Developers are working on various models in the parts reserved for tourists, including a hotel where individual rooms can be sold to private investors.
Although it is not yet clear who will operate the hotel, marketers said 80 percent of the apartments already have been sold.
“No one knows what prices will look like in 10 years.”
One snag for those planning to rent out an apartment is Prora’s meager infrastructure.
Vacationers must be content with a bakery, café and Italian restaurant. Binz Mayor Schneider is convinced it won’t remain like that for long.
“In Prora, a site is being created that is as large as Binz itself,” he said. “That means a corresponding infrastructure must also be built up.”
Mr. Schneider said he is pleased things are finally progressing, after 20 years of “problems with the property.” Yet Prora hasn’t escaped its past quite yet. Only time would tell whether the grand revival of the Nazi coastal vacation town will be a success, said Mr. Schneider.
That’s also true for investors. “No one knows what prices will look like in 10 years,” said realtor Ms. Lange, with regard to future reselling of the apartments. Buyers who are not averse to risk are those showing the most enthusiasm for Prora.
Video: The abandoned site of Seebad Prora.
“Many have another 10 to 15 years to work and plan before they move into their retirement apartment in Prora,” said Jochen Bekemeier, construction manager for Binzprora, a section of the complex being developed by two Berlin companies.
Marketers said even apartments with no sea view, with grand names such as Sun Apartment or Garden Suite, are selling like hotcakes.
Is it the “one-of-a-kind location” Mr. Busch describes that makes Prora so attractive? Or is it the tax benefits or simply Germany’s real estate boom?
“It’s amazing how much money is sloshing around in Germany,” said one seller as he showed prospective buyers a model apartment.
The swish marketing drive has been successful in pushing up prices, which have soared by 15 to 20 percent over the past year. The most attractive properties in Prora today can easily fetch up to half a million euros.
That’s more than Mr. Busch paid for the two entire blocks of crumbling Nazi concrete in 2006.
Christian Hunziker is a freelance journalist. Mr. Hunziker covers real estate for several German publications including Handelsblatt and is currently based in Berlin. To contact the author: firstname.lastname@example.org