The in­flux into ur­ban areas shows no sign of abat­ing. Ac­cord­ing to United Nations es­ti­mates, eight Germans in ten could be liv­ing in cities as early as 2030. The ques­tion is what all these people will be liv­ing in: a study pro­duced by the Hans Böckler Foundation found that the country’s 77 major cities al­ready have a com­bined deficit of an es­ti­mated 1.9 million homes. The seem­ingly inex­orable rise in the cost of rent­ing and buy­ing is putting a rea­son­able place to live beyond the means of an ever-larger pro­por­tion of the pop­u­­la­tion. This unmet demand at the same time repre­sents a huge reser­voir of un­tapped po­ten­tial for the res­i­den­tial real estate sector, although the extent to which this po­ten­tial can be realised is often limited by factors such as the length of time re­quired to obtain ap­proval for new builds.

New Ideas

Helaba is ac­tively in­volved in a wide range of efforts and ini­tia­tives not just to utilise the com­mercial op­por­tu­ni­ties har­boured by ur­ban­i­sa­tion for itself but also to help ensure that people’s needs are met and that as many op­tions as possible for urban living are de­vel­oped. It has created efficient special loan funds for this purpose that make capital avail­able for res­i­den­tial con­struc­tion while si­mul­ta­ne­ously en­abling in­vestors to share in the returns thus gen­erated and is also directly involved in the con­struc­tion of new homes and the de­vel­op­ment of new urban ideas through its Frankfurt-based sub­sidiary GWH. Stefan Bürger joined the senior man­age­ment team at GWH in January 2014 and has been CEO since January 2020. While he personally takes a par­ticu­lar in­ter­est in the ur­ban­i­sa­tion mega­trend for a number of reasons, he feels that the public at large often have only a very limited grasp of what this de­velop­ment means.

Stefan Bürger: „Demand clearly out­strips supply in urban areas of course – and by urban areas I mean not just the big cities, but also all those other places that have the urban in­fra­struc­tures re­quired to live a city life. We need to re­alise that some small towns meet this cri­te­rion as well as the es­tab­lished met­ro­pol­i­tan re­gions.“

Not a linear movement

Stefan Bürger’s re­spon­si­bil­i­ties at GWH include the areas of cor­po­rate strat­egy and real estate de­velop­ment, trading and man­age­ment, so the matter of GWH’s response to urbanisation occupies a large proportion of his working life. What is clear right from the outset is that there are no easy answers, first and foremost because, Bürger explains, the reality of what we refer to as ur­­ban­i­sation is far more complex than a straight­for­ward linear move­ment of people from the country to the city:

Stefan Bürger: „This not a case of there being one con­sis­tent pat­tern of mi­gra­tion from rural areas to the city. The groups of people making this move vary enor­mously in their back­ground, their mo­ti­va­tion and their ob­jec­tives in life.”

Germany’s “Big 8” cities (Berlin, Hamburg, Munich, Cologne, Frankfurt, Dusseldorf, Stuttgart and Leipzig), in which these different groups often merge to the extent that it becomes dif­fi­cult to pick them out, have recently been joined by nu­mer­ous boom­ing smaller cities on the periphery of the main centres. These smaller cities have become the target of clearly dis­tin­guish­able groups of internal migrants. 

Stefan Bürger: “The resort of Garmisch-Partenkirchen, for ex­am­ple, has become a pop­u­lar place to move to for people in the 70 and older age bracket, while Kassel has become es­pe­cially pop­u­lar with young people just starting out on their career. And we still have the tra­di­tional student towns and urban con­cen­tra­tions of public of­fi­cials to consider too.”

Options on a strategic basis

The dif­fer­en­tiated migration Bürger describes can even be observed at the level of in­di­vidual city dis­tricts, re­in­forc­ing the scale of the chal­lenge posed by ur­ban­i­sation for companies like GWH:

Stefan Bürger: "It is not a mat­ter of simply build­ing more homes in the cities. We need to be creat­ing op­tions on a strate­gic basis for specific pe­riph­eral cities or even spe­cific dis­tricts of our cities. Students, for example, don’t have much need of luxury fa­cil­i­ties, but these can be im­por­tant for older sections of the pop­u­la­tion, which also re­quire par­tic­u­lar ser­vices such as social care.”

GWH is already building homes designed specifi­cally with older people in mind in areas that have become popular with this demo­graphic. Developed in close con­sul­tation with part­ners from the social care sector, such as the Johanniter, the new build­ings have large door­ways to ac­com­mo­date nursing care beds and come with emer­gency call systems and stair lifts already installed. The Johanniter also provide the social care service for these proper­ties, creat­ing a single-source solution that older residents can find very valuable. The high level of demand demon­strates the at­trac­tive­ness of the proposition.

Stefan Bürger: "This example, which is one of many, il­lus­trates how more than anything, the mul­ti­faceted ur­ban­i­sation trend presents a real com­mercial op­por­tu­nity. We are ramping up our con­struction ac­tivi­ties and are able to support higher rents in some cases too, but this can only work if we have some­thing suit­able and in­no­vative for each of the dif­ferent target groups. If we just blindly build and build, we will soon run out of cus­tomers for whatever generic home it is that we are build­ing. Our objec­tive must always be to develop suc­cess­ful economic models that offer people precisely the home they need at a price they can afford."

Resource-saving concepts

Ur­ban­i­sation is being driven by perfectly pragmatic de­ci­sions on the part of the people involved: they want work, good schools, services and health­care and leisure fa­cil­i­ties and if that means moving to a new area, they move. Although they clearly want access to these urban struc­tures, it is not at all clear that they nec­es­sarily want the city itself. Surveys in­ves­ti­gat­ing urban popu­lation growth indi­cate that families in particular would actually prefer to live in a more rural setting or on the edge of the city. The lack of af­ford­able living space, es­pe­cially in the big cities, also stems in part from a short­­age of avail­able build­ing plots and the fact that the local plan­ning au­thor­i­ties are under­staffed, and it often takes too long to obtain build­ing permits. GWH is re­spond­ing to these limiting factors with a number of dif­ferent ap­proaches in­clud­ing concepts for in­creas­ing the density of existing prop­er­ties, which has the added benefit of helping to con­serve re­sources.

Stefan Bürger: „It is gen­er­ally the case these days that cities have most success dealing with the sit­u­ation when the public sector works to­gether with the banks and res­i­dential real estate com­pa­nies and when the whole process is managed with com­mit­ment and a social con­science so that homes are not just created but also main­tained and so that no part of the pop­u­lation is ex­cluded. Partner­ships of this type are exactly what we are all about at GWH.”