As part of a new series looking at municipal movements and responses from around Europe we hear from Thomas McGath, a Berlin-based writer and housing activist.
Over the last few decades, housing in cities around the world has undergone unprecedented financialization and artificial speculation. Investors have never been richer. The worldwide value of the current real estate market is $217 trillion, 36 times worth the value of all the gold ever mined.
Profits from the commodification of the housing market have skyrocketed in step with the enclosure of spaces and the fixing of financial value to them. Living spaces are now complex financial products that can be packaged up into investment funds and swapped by companies across the world.
As Raquel Rolnik, former special rapporteur to the UN on adequate housing, attests, “In the new political economy, centered around housing as a means of access to wealth, the home becomes a fixed capital asset whose value resides in its expectation of generating more value in the future, depending on the oscillations of the (always assumed) rise of real-estate prices.”
Berlin has been the epicenter of the emerging struggle against capital, giving birth to a rebellious housing movement. A city-wide referendum is underway to expropriate “mega-landlords” with 3,000 apartments or more. If successful, the campaign could tip the scales away from speculation and essentially decommodify 250,000 apartments. In Berlin, tenants and housing activists are building upon shared struggle to break capital’s control over the home and democratize how and where we live.
Expropriate Deutsche Wohnen & Co!
Berlin’s rents have doubled since 2009. A recent study sponsored by the German government shows the harrowing results of this increase: for the average single renter, only 5 percent of apartments are affordable. Within the inner city, that number plummets to less than 1 percent. Skyrocketing prices are displacing thousands across the city and destroying working-class neighborhoods as their residents make way for more affluent residents.
During the same period, the number of apartments held by massive investor groups in the city has more than doubled to 250,000, almost on a par with the city’s public housing stock. These trends go together — investor groups acquire a greater share of the market, pushing up the value of land as speculators buy just to resell rather than build.
Activists working on the campaign (including me) to expropriate these landlords are not just pushing for public housing; we are creating a renters’ commons of a sort, democratically managed by the people who live in the apartments. It represents a clear break from housing dominated by finance, speculation, and alienation.
This is no pipe dream, either. Just a few months ago, we collected almost four times the required number of signatures to move the referendum to the next round. Berliners are rallying behind a call that would have seemed unthinkable just a decade ago.
We are banking on a broad base of support to force the issue — despite pushback from establishment politicians. If we are successful in two rounds of collecting signatures, the referendum will go up for a vote regardless of political objections. Next year Berliners could be asked to decide whether the city should directly expropriate all apartments from companies that have 3,000 apartments or more.
Berlin’s referendum law has become one of activist’s most powerful tools, with six referenda already having gone up for a vote. In 2014, activists prevented the construction of luxury apartments around Berlin’s former Tempelhof airfield, one of Berlin’s most popular parks.
Direct democracy is a major tool for renters to fight back against monied interests, forcing the issue without having to break through tried-and-true triangulation strategies of politicians. After years of protesting, renters are finally getting somewhere. And they are discovering what kind of power they have.
Cities around Germany and the world are echoing these demands. Renters are finally dreaming big about winning a whole city for themselves.
Bankruptcy and Tales of Privatization
If you take a stroll through Potsdamer Platz, you’ll see a microcosm of what Berlin’s politicians had in mind for the city in the 1990s: everything gleaming, new, and full of money; glass-sheathed high-rises occupied by big German companies; an open-air forum stuffed with a big movie theater; touristy restaurants and tall hotels.
Potsdamer Platz was supposed to be a reflection of Berlin’s future as a bustling metropolis, a place of wonder and exploration. It’s anything but. Much derided for its distinctly “dead” mood, it has instead become a metaphor for the short-sighted priorities of establishment politics in the city and their delusions of grandeur. Berlin became establishment politicians’ vanity project as they tried to transform the city into a global service provider metropole which could attract the headquarters of international corporations and producers. Eberhard Diepgen, the mayor of a reunited Berlin from 1990 until 2001, characteristically baptized the city as “Corporate Berlin.”
But these plans were removed from reality: Berlin’s structural weaknesses were no basis for a global production and service hub. Instead of investing in the population’s endogenous strengths, the government tried everything to attract these companies and even made a bid for the 2000 Olympics. Politicians were so desperate to draw companies to the city that they sold the development land for Potsdamer Platz for such a low price that the EU competition commission intervened and demanded further compensation.
This neoliberal supply-side strategy ushered in a real estate boom that ultimately doomed the new city to bankruptcy and downward mobility. Much of it was pure speculation, based on the “belief that office building sites are a sign of economic progress and a promising future of the respective city,” as economist Stephan Krätke writes. Within eight years, the city built 7 million square meters of new office space, giving Berlin the largest surplus of office space in the country. The companies didn’t come and the plan collapsed.
The ensuing debt crisis was triggered by subsidies for real estate, massive speculation in real estate bonds by the city’s own public financial corporation (the Bankgesellschaft Berlin), and the dirt-cheap loans granted to developers — factors that shrank tax revenue. Unsurprisingly, the crisis brought with it massive cuts to public services and social expenditure. Tellingly, and in keeping with Berlin’s insidious culture of nepotism, a significant proportion of Berlin’s current debt servicing goes to paying back these real estate bonds, many of which are still owned by local elites.
The debt crisis was a watershed for communal housing policies in the city. During the scandal, the city sold off the entire stock of one of its own housing companies, 66,700 apartments, to Cerberus and Goldman Sachs. This investor amalgamation would eventually become the stock-market listed company Deutsche Wohnen, the namesake for our expropriation campaign. The majority of Deutsche Wohnen’s 110,000 apartments were once public housing owned by the city.
Berlin’s 500,000 public housing units shrank to just 260,000 in 2009. Taken together with the abolition of rent control in West Berlin in 1988, the halting of building social housing, and the feverish speculative real estate boom, Berlin’s rental politics have become tragic. From 1993 until 2014, the socially regulated apartment stock in Berlin shrank from 44 to 20 percent.
Now, some 85 percent of Berliners rent. The city has, until recently, benefited from an essentially decommodified housing sector. This profit-need-for-housing paradox has triggered manifold protests and initiatives across Berlin.
“We had been talking about expropriation for a few years now,” says Sandy Kalternborn a member of Kotti and Co., the neighborhood initiative for the renters of social housing units in Kottbusser Tor and around the city. Some of the members here are also involved in the expropriate Deutsche Wohnen campaign.
Kotti and Co. have been fighting for over eight years to stay in the neighborhood despite the buildings crumbling from lack of maintenance. The majority of the apartments in the area belong to Deutsche Wohnen. The apartments often make headlines for bad mold and the heat mercilessly going out during the winter. “We were involved in some round table discussions with the city government early on, but they didn’t go anywhere. Eventually, we asked ourselves how we could expand the topic and create more pressure. We saw expropriation as the next logical step to provoke and bring more radical solutions into the discussion,” recounts Sandy.
Much of the apartments that the renters of Kotti and Co. live in were built after the war during the city’s robust social housing boom. But because Germany gives subsidized loans for private developers to build social housing in exchange for regulated rents, companies like Deutsche Wohnen have made a habit of purchasing them. Once purchased, they can pay back the subsidized loans and raise the rent. They have been doing so for years now, through debt restructuring and cheap loans.
The renters of Kotti and Co. are thus facing off against global capital channeled through Deutsche Wohnen, trying to displace them from social housing that they have lived in for years. In response, they occupied the courtyard of one of the estates to build a protest hut in 2011, named Gecekondu after the temporary shelters on the outskirts of Istanbul — a nod to the neighborhood’s Turkish population. The hut is a standing protest to their own expropriation by Deutsche Wohnen — they are reclaiming space that should be public and using it to offer legal advice to other renters and organize their initiative.
Kotti and Co. Are not alone in organizing renters. Part of our referendum campaign directly organizes renters in their buildings and estates by helping them start their own renter initiatives. We and other initiatives effectively form a network that is not only democratizing living spaces but laying the groundwork for a sort of housing commons.
Deutsche Wohnen and other corporate landlords are speeding up the mass democratization of renters with package deals, buying up whole blocks of apartments at lower prices. Earlier this year, they attempted to purchase 675 apartments along the Karl Marx boulevard in Friedrichshain, a gentrification hotspot. Built-in the 1950s, the apartments are characteristic for their Stalinist architecture and the Hausmann-esque boulevard they fence. You’d be forgiven for thinking you were in Moscow. Activists from our campaign and coalition offered support immediately, sharing their common experiences and helping to generate media attention.
As a campaign of renters and activists, we can say from our own experiences that Berlin’s exploding housing prices are not a natural development of urbanization or people moving to cities. Rather, the situation is a systemic imperative that financializes the city, mortgaging our homes off and pushing us ever more precariously to its edge.
These experiences have laid the groundwork for our expropriation campaign and helped us create one big network of renters, a type of renters’ commons that works beyond one issue or campaign. We are actively creating the conditions for the socialization. Our campaign is thus the product and continuation of Berlin’s unique spatial dynamic. As Henri Lefebvre explains, “New social relations demand a new space, and vice-versa.”
Bar Syndicat Takes on Global Real Estate Capital
On a misty, overcast day, I shuffle my way through Neukölln, Berlin’s most recent epicenter of gentrification, where I meet Christian, one of the owners of the bar Syndikat.
He’s a tall and deep-voiced German with tousled dirty-blonde hair. He greets me and invites me in, offering something to drink. “You can let your dog run around, no worries,” he says.
Syndikat looks like your usual lefty dive bar. The wall is plastered with anti-fascist and radical queer stickers, and posters and signs for community protests, events, and workshops.
Since September 2018, Syndikat has been fighting for its life. A shell company owned by Pears Global, a massive UK-based player in global real estate, bought up the entire building, including its apartments, and terminated the bar’s rental contract. For the owners of the bar, it’s essentially a death sentence for their way of life. Christian himself lives in the building and also fears that the residents will be forced out at some point.
The bar, owned as a collective, has been an integral part of the neighborhood for 34 years. “I moved here from Cologne some 12 years ago and this was the first bar I ever visited,” recounts Christian. He remembers being nonchalant about Pears Global’s purchase. “We thought, ok, it’s just shifting the building from one tax paradise to the next. At first, we didn’t think anything of it since we had our rental contract and nothing changed with the building. No rent raises, nothing more or less done for the building either. We had no idea that the buyer, Fuhrmann Properties, was simply a shell company for the global real estate player Pears Global.”
Syndikat’s contract was due to expire at the end of 2018, but Fuhrmann Properties instead sent them an early cancellation notice — with the addendum that they would rather negotiate a new contract.
Fuhrmann ignored Syndikat’s requests to talk and negotiate, and sent them an eviction notice on 11 September 2018, setting a deadline for the last day of the year.
“We kept trying to contact them, to no avail. Then we decided to see exactly who these people were,” Christian continues. Christian and the other owners asked a friend who lives in Luxembourg to visit the company’s office. The friend reported back that it was in a six-floor building for letterbox companies perched above a tanning salon and shoe store.
Down the rabbit hole of legal documents, the bar owners followed the trail of ownership to Denmark, which requires companies to disclose the real owner, rather than listing CEOs like in Luxembourg. That’s how Christian discovered one of the Pears brothers is an owner. They followed the trail back to Pears Global itself, owned and operated by a trio of brothers.
“The net just kept getting larger and larger. Eventually, we discovered Pears Global had an office in Berlin. We called them repeatedly, trying to negotiate the lease, but always the same answer: we’re not responsible for any rental matters.” Absurdly enough, Pears Global’s Berlin office simply referred back to the companies in Luxembourg. “We were continually told that the picture we had of the letterbox was proof that this company existed.”
Syndikat’s situation illustrates the nefariously abstracted financial nature of real estate. Companies like Pears Global are landlords only in name. They don’t maintain properties or serve their tenants. They work to turn property into financial products with an interest yield that is generally higher than most bonds.
However, what throws a wrench in these cool calculations is the social character of the property. In Syndikat’s case, Pears Global encountered a cooperatively owned business that blurs the lines between private, communal, and neighborhood property. Christian sees such spaces like Syndikat as central to Berlin’s neighborhoods.
“Here is where a lot of organizers who stopped the luxury development of Tempelhofer field first met and organized. We see ourselves as an integral and open place for the neighborhood and the city,” says Christian.
It’s no wonder that companies want establishments like Syndikat evicted. Unlike an enterprise such as Starbucks, which will return an expected yield, Syndikat isn’t raking in money and can’t pay exorbitant rent. Syndikat’s own model isn’t extraction from its customers — it’s based on a strong anchoring in the community around it, rather than overcharging for Moscow Mules. As Rolnik explains in Urban Warfare: Housing Under the Empire of Finance, it is “not by chance that dispossession is also a machine for the material and symbolic annihilation of lifestyles.”
Christian feels the same way and fears having to make space for a more corporate establishment. “There’s something wrong when an investor can come in and put a Starbucks where 99 percent of the neighborhood would rather have us stay,” he laments.
Despite the looming catastrophe, Syndikat is exemplary for its ability to foster several spaces at once. It functions as an open space for the renter’s movement, hosting regularly bi-weekly consultations, and the community. It is a product of and has generated the inherent bottom-up power that is beginning to win against real-estate capital.
That said, they aren’t satisfied with remaining a local phenomenon. Looking determined, Christian explains, “We decided that if Pears Global wouldn’t speak with us that we’d go to London where their corporate headquarters are. We got in contact with local renter activists, painted some signs, and organized a demo at their office. To this day, though, we never got an answer from Pears Global. Our eviction trial is in October this year.”
In the back of the bar hangs a garishly yellow poster with purple text: “Fight speculation: Expropriate Pears Global.” It’s the motto of our campaign adapted to fit their own corporate landlord who would also be expropriated if the campaign is successful.
Syndikat realizes that to fight speculative capital, its avenues of accumulation need to be cut off. That starts high up the ladder and may take you to places untraveled, but this resistance remains nonetheless rooted in your surrounding neighborhoods.
We’re Building Power from the Bottom Up: the Coming Referendum
It’s a Tuesday night and we’re packed into a community center in Kreuzberg. The building is rather large, adorned with wooden slats on the outside so that it blends into the surrounding treed courtyard.
Representatives from the city’s housing movement coalition, including some from our expropriation campaign, are sitting together to discuss a coming protest to support our expropriation referendum and a rent cap. Our expropriation campaign called for the protest, yet as with any direct action for housing in Berlin, it’s never just one initiative that organizes it.
As part of a coalition of renter initiatives, neighborhood groups and tenant associations, our campaign is one brawny arm of the renters’ movement. That’s where the radical expropriation campaign got its start. We are simply one campaign alongside others; even though we may have garnered so much attention this year, it wouldn’t be possible without this base.
By demanding expropriation, we are telling the city to take apartments away from often stock market-listed corporations — with an arsenal of legal resources — for under market value. It’s destined to be a long process that requires the city to write a law if our referendum passes.
Thanks to article 15 of the German constitution, however, we also have good legal footing. Dubbed the socialism clause, it allows for the socialization of land and means of production. By demanding the city to socialize a significant proportion of housing in the city, we are fulfilling the criteria that the drafters had in mind: that collective economic arrangements should be a viable option to stop the excesses of capitalism.
Since the beginning of our campaign, we have been attacked from all angles by the real estate lobby in Berlin and across Germany. Germany’s main federal lobby group for housing companies recently announced a €1.6 million ad campaign against our campaign and other rent cap initiatives. It’s not surprising that we have made enemies with establishment politicians. They have a monied interest in keeping real estate business lucrative.
At the moment, we are waiting on a judicial review of the constitutionality of our referendum. It is taking months despite several legal opinions confirming its legality. But we continue to draw support for demonstrations and protests from this base and we are pushing hard to speed things up.
Within the movement, the consensus remains that this referendum is essential for Berlin’s survival as a place of alternative organization and economy.
When the next round of signature collection begins, necessary to put the referendum up for a vote, we will also look beyond this base. We will lay the groundwork for a more robust demos within the city, keeping it out of the hands of speculative capital for generations.
Berlin as a microcosm for the international real estate market
Berlin shares something with cities around the world: the penetration and dominance of foreign capital. This foreign capital comes in the form of financial management companies masquerading as landlords.
Rolnik names the whole setup “real-estate-financial complex.” It is composed of “income streams” converted into a range of assets that make it easy to swap, buy, and extort extra rent. Investors buy up whole blocks for cheap, due to an indebted municipality or private landlord, and the space is financialized as rents are raised or as buildings are demolished to make way for luxury apartments. Municipalities benefit from this as well because they can easily convert public spaces into quick profits.
Berlin has mortgaged off its spaces to international investors. A quick stroll down the East Side Gallery, once a desolate area along a remnant of the Berlin wall, shows the geospatial development of capital over the past few years. Rows and rows of ubiquitous, soulless, modern luxury apartments — “rich people ghettos,” as one politician calls them — are erected on land once owned by the city. Up until 2013, Berlin law forced the government to sell these incredibly valuable pieces of land to the highest bidder until activists forced them to change course, instead pursuing a policy of leasing land for building, rather than selling.
But developers didn’t miss out before that. From 2001 until 2011, the city sold over 14 million square meters of land to private developers — about 1.5 percent of the city — for around €2 billion.
The real estate financial complex often reveals massive democratic deficits in city politics. Last year, Berlin approved construction for luxury apartments and a hotel on the grounds behind the East Side Gallery. The spot is next to the infamous Living Levels project, a highrise that drew international outcry and high-profile intervention from David Hasselhoff in 2013 after developers removed a portion of the Berlin Wall to accommodate construction. This time around, almost 50,000 people signed an online signature to stop the construction. City politicians ignored the petition and refused to review the construction permit again, allowing the investors to instead build.
Beyond the reckless sale of land, Berlin’s own privatization of public housing has been disastrous for renters in the city. The city government has allowed the number of units in control of mega-landlords (those who own more than 3,000 apartments) to double since 2014, skyrocketing from some 90,000 units to almost 250,000.
Asset management companies bought up massive amounts of foreclosed houses or buildings after the 2008 financial meltdown. As Rolnik explains, “By mobilizing an enormous amount of capital via private equity funds, hedge funds, Real Estate Investment Trusts (REITs) and other financial instruments, capital obtained through shareholders or directly from loans, they were able to buy up deeply undervalued ‘housing stocks’ available in cities.”
In Spain and the US, this dynamic led to the quick and tremendous accumulation of foreclosed homes and buildings. In Berlin, however, it was a kind of municipal foreclosure on public spaces and housing. This is what David Harvey calls accumulation through repossession or destruction.
Technology also plays an important role, as it speeds up the discovery and sourcing of new frontiers of capital and its subsequent flow there. Digital financial products are able to securitize every piece of the housing market — from single apartments to buildings or blocks. A single apartment or building can change owners dozens of times in a day theoretically, making it easier than ever to buy up massive amounts of land and apartments at once.
Berlin is a new frontier for real-estate capital and expansion; here, even the best organized and progressive politics can be quickly put in danger of complete annihilation. That is why it is more essential than ever for activists to build networks beyond their cities and to go to the places of power like Syndikat did with Pears Global.
Having triggered such international attention and winning real concessions, Berlin shows that it pays to go radical and that renters must collectively aim past a turgent body politic that is weighed down by its own economic interests. By leveling up, going neighborhood to neighborhood, there’s real power to be won. And a new city to be formed.
In the end, though, Berlin’s huge corporate landlords themselves provide one hell of an easy target. As Eric Hoffer puts it, “Mass movements can rise and spread without belief in a god, but never without a belief in a devil.”
This article was first published in Roar magazine and is re-published under Creative Commons licence.