“Poor but sexy” is how Klaus Wowereit, a proudly gay former mayor of Berlin, once described his city. The attribute stuck, even as Berlin kept becoming a more global and cosmopolitan city. The kind of laissez-faire lifestyle you can have with a small budget in Berlin hasn’t been possible in New York for two decades.
It is literally a poor city: Berlin is the only European capital where the average income drags down the national average. The GDP per inhabitant in France would decline by 14.8 percent if Paris were excised from the country, the Cologne Institute for Economic Research found last year. If Berlin were omitted, the average GDP per person in Germany would rise by 0.2 percent.
But as it’s experiencing an economic revival, Berlin is self-conscious about its new role on the world stage. Berlin is a capital city that is only begrudgingly a seat of government again. Divided by the Iron Curtain for 45 years, it became the reunified country’s capital on paper in the 1990s, but in practice only in the aughts, as ministries and bureaucracies and their attendant international courtiers moved piecemeal from Bonn to Berlin.
Today it is a city of almost 4 million, but the stores are still all closed on Sundays. It’s a place with a long history of reconstruction and people-powered politics that is now the target for billions of dollars in venture capital. It’s beautiful because it’s ugly, a metropolitan manifestation of jolie laide. The scars of history — Empire, Nazis, Cold War — are visible everywhere.
Berlin also finds itself in a unique position to avoid the path taken by other metropolises, such as San Francisco and London, where economic booms have turned the cities into playgrounds only the ultra-wealthy can afford to live in, with their cleaners, nannies and Uber drivers relegated to run-down suburbs. Renowned American urbanist Richard Florida calls this the New Urban Crisis: The urbanization of the last 15 years has increased inequality and deepened segregation, not only in the US but in all global cities.
In Berlin, those changes still feel sudden and unexpected to many residents. Since the destruction of World War II, the city has always seen itself as an underdog. And even earlier, it had a fluid identity. Art critic Karl Scheffler wrote in 1910 that Berlin is condemned “forever to become, never to be.”
Historian Andrej Holm told me the real question isn’t why gentrification is happening in Berlin, but rather why it’s happening so late. In Berlin, 85 percent of all residents live in rental housing; in the past decade, the average rent on new contracts has increased by 75 percent. A large coalition of pro-tenant organizations is marching against “rent insanity” and eviction this Saturday, with more than 10,000 RSVPs on Facebook so far.
Berlin in effect tapped the brakes on the road to the “winner-take-all urbanism” now visible in London and San Francisco, Florida says, because it was divided for so many years, during which time postwar German industry migrated to Munich, Frankfurt, Hamburg and Düsseldorf. There’s an advantage to being a little late to the party: Berlin has the opportunity to learn from cautionary tales of urbanization and approach its renaissance more thoughtfully.
Berlin’s grit and possibility are what makes it so attractive to startup founders and global citizens. Nearly $3 billion in venture capital flowed into its startups in 2017, more than two-thirds of Germany’s total. But the capital flowing into the capital is undeniably changing it, sanding the edges and scrubbing off the graffiti. An apartment building without spray-painted tags on its walls is a sign a neighborhood is getting a little too nice. “We don’t have anything, no industry,” says Katja Lucker, head of Musicboard Berlin. “But we have this sense of freedom, this spirit, and that’s what we have to preserve.”
Berlin’s senator for development, Regula Lüscher, said at a real-estate conference earlier this year that the city has an appetite for development and growth. But activists say otherwise. It’s entirely common to see banners proclaiming “Capitalism Kills” or “Ownership Is Theft” adorning balconies in certain parts of Berlin. The annual May Day festival celebrating workers’ rights has a clearly revolutionary bent in Kreuzberg, with leftist and anarchist groups attracting the watchful eye of law enforcement. Heightened awareness of growing economic inequality has led to backlash against redevelopment, international investment and gentrification.
Germany has more renters’ protections than other countries, and the city of Berlin has not hesitated to put halts on development in neighborhoods getting too hot. Rents continue to rise despite rules that tap the brakes, but a national law protects the social makeup of neighborhoods. Last year, the district of Friedrichshain-Kreuzberg on 11 occasions used Vorkaufsrecht, the right of first refusal to buy real estate in protected residential areas, snapping up buildings with 814 apartments and 131 businesses.
Spending on residential construction in Berlin almost tripled between 2008 and 2016, to €2.4 billion, but it still isn’t meeting demand. Everyone agrees more apartments need to be built, but long-time residents and city preservationists are clashing with developers. After Senator Katrin Lompscher announced a new development in the northeast suburb of Blankenburg would create 10,600 new housing units rather than 6,000 as planned, residents slammed on the brakes.
“We must find a way to combine the perspective of the people and the needs of the inhabitants but also the economic opinions of the developers,” says Gero Bergmann, an executive at Berlin Hyp, one of the largest real-estate banks in Germany. “If we lose time, we lose space.”
In the most powerful world cities, inequality and unaffordability have gone hand in hand with growth. But perhaps can Berlin create a more inclusive form of urbanism. It can avoid the fate of San Francisco and London, but it has to act now, Florida says. “Berlin’s success is by no means assured.”
Read the whole series
- Part I: The Berlin paradox: Striving for equitable urbanization without gentrification
- Part II: The clash of capitalism and collectivism in Friedrichshain-Kreuzberg
- Part III: Berlin’s real estate Robin Hood
- Part IV: Lessons from urbanization in Berlin’s past
Grace Dobush is an editor with Handelsblatt Global in Berlin. To contact the author: firstname.lastname@example.org