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Hamburg fights housing crunch with cooperation

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Roughing it in Hamburg's harbor district. Source: Bloom Images/PR

Applying equal opportunity to urban housing is tricky business, but forward-thinking Hamburg is obviously up to the task. When Franz-Josef Höing, the city’s chief urban planner, unveiled a blueprint for an ambitious new residential district in Oberbillwerder, developers committed to putting up equal numbers of owner-occupied, rental and subsidized homes – dubbed a “one-thirds” policy.

“Hamburg is the most progressive city in Germany when it comes to housing policy,” says Norbert Schumacher of real-estate developer Bonava. In 2016, the city’s Social Democrat government under Mayor Olaf Scholz, now Germany’s finance minister, forged an “Alliance for Housing” with developers that set a target of 10,000 new apartments and homes every year. In return, the city ensures building permits are issued quickly as long as the rule of thirds is met. “Many [German] cities are copying the Hamburg model today,” Mr. Schumacher says.

Oberbillwerder is the latest sign of Hamburg’s experimental zeal to ease its housing crunch. In 2022, construction of 7,000 new apartments will begin in a meadowy tract of just 1 square kilometer (0.4 sq mile), kept small to please environmental activists. Slated to accommodate 16,000 residents and up to 7,000 jobs, Oberbillwerder will be the city’s most elaborate new development, yet its most compact: A neighboring district, Neuallermöhe, is identical in size but has only 3,800 apartments. Less space also means fewer streets: Car-free bicycle and pedestrian paths will link to the city center, in a nod to future mobility plans. Only half of the residents will be offered a space in 11 parking garages to be built on the perimeter.

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Oberbillwerder's car-free ideal. Source: Adept

Unsurprisingly, the residential building trade is bustling in Germany’s second-largest city (population 1.8 million). In the center, several projects underway include HafenCity, home to the soaring Elbphilharmonie concert hall and the old harbor warehouses currently being converted to luxury apartments and office space. HafenCity’s current population of 3,600 is projected to balloon to 14,000 by 2030.

For years, Hamburg was worryingly at the forefront of German housing inflation, both for real estate and rents, and the impact altered the face of the city. Large new building projects for single-family homes continue to emerge, mainly in the outskirts. But more in vogue are mixed-purpose neighborhoods of owner-occupied, rented and subsidized housing. In late June, city legislators decided to increase the subsidized segment by 1,000 apartments a year. But that will take scant pressure off the free market, where apartments are being built smaller than a few years ago as a way for occupants to cope with stiff rents, and to ensure landlords fill their properties.

Average monthly rents in Hamburg are running at nearly €12 ($13.80) per square meter (m2), meaning that a smallish 60 m2 apartment costs a heady €720 excluding utilities. Though expensive, Hamburg’s residential rents are well below those in Stuttgart (€13.77), Frankfurt (€14.03) and Munich (€17.66), which has the highest level in Germany, according to statistics portal Statista.

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Unfurnished, but in the pink of condition. Source: DPA

The fresh political winds are blowing life into once-neglected neighborhoods. Buyers are venturing into up-and-coming northern districts such as Barmbek, a former milling and handicrafts center, the former canning center of Dulsberg and erstwhile industrial sites on the Bille river, according to Stefan Spilker, managing director of Hamburg developer Becken.

Purchase prices here fall short of those in the west of the city, in places such as well-to-do Eppendorf and hip Ottensen and elsewhere along the Elbe and Alster rivers. Close to the center, Mr. Spilker says the former office district of Hammerbrook, with a platoon of new restaurants, hotels and a planned startup campus (“Hammerbrooklyn”) stands to become a residential hotspot in the years ahead.

At the top end of the market, opportunities exist in old neighborhoods like the rich suburbs along the Elbe. Here, villas are being snapped up at prices of up to €3.5 million, says Albrecht Sonnenschein of the property developer Instone. Prospective buyers with less capital are better off looking south of the river, he recommends.

According to a survey conducted by Vdp Research for Handelsblatt, prices for homes in “trendy” neighborhoods rose 9.2 percent year-on-year to €4,000 per m2 in 2017. Condominiums cost on average €4,300 m2 in all these districts, an increase of 11.6 percent. Rents, meanwhile, rose only 5 percent in the same period. Mr. Höing, the municipal planner, is unperturbed by landlords’ complaints that the policy push on new rentals is inflating supply and endangering their return on investment.

Despite the city’s knack for urban innovation, not all of Hamburg’s big housing projects are going smoothly. Earlier this month, a local court issued a temporary stop on a €120 million ($141 million) space-age train station in the Altona district, following complications in relocating railway facilities during the construction period. Due for completion in 2023, the new station was designed to anchor a future residential quarter for 3,600 apartments, but the timetable will most certainly be delayed. While prospective residents fume, existing landlords in Hamburg have reason to rejoice.

Christoph Kapalschinski is a Handelsblatt correspondent in Hamburg. Jeremy Gray, an editor for Handelsblatt Global in Berlin, contributed to this story. To contact the author: kapalschinski@handelsblatt.com

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