Berlin expropriation plans trigger investor withdrawal and legal challenges

The left-wing coalition in Berlin is pursuing plans to expropriate up to 160,000 housing units, with a compensation cap of 16 billion euros, equating to 100,000 euros per unit. This amount is significantly below market value for two- to three-room apartments. Swedish real estate group Heimstarten-Bostart, which owns approximately 20,000 units in Berlin worth 5 billion euros, has announced it will no longer invest in Germany, citing the threat to property rights. The coalition has set a threshold of 10,000 units for expropriation, a move criticized as arbitrary. Legal experts argue the plan is constitutionally flawed under Article 15 of the German Basic Law, which requires compensation based on market value.

Concerns are raised that this sets a precedent for other German cities and undermines investor confidence in the country's legal framework, potentially affecting other sectors like data centers. The federal government is considering an anti-expropriation law, but experts doubt its constitutionality without a Basic Law amendment. Critics argue that the expropriation plans will damage Germany's investment climate and create false incentives, while also criticizing the SPD for breaking campaign promises against expropriation. The situation highlights growing tensions between municipal housing policies and national legal standards.