In view of the rising land prices and the increasingly scarce amount of residential space, heritage building rights are again coming to the forefront in bidding processes for urban development in Berlin. Until now, the state of Berlin had generally sold its land to the highest bidder. The principle of heritable building rights ist to separate ownership of the plot of land from the buildings standing on it. In leasing the land, the purchaser or a constructor of a building need not finance the plot of land itself, but rather pays ground rent for the whole contractual period, which is limited to a maximum of 99 years.
The BÜRO DR. VOGEL GMBH was commissioned to identify, analyze and evaluate the advantages and disadvantages of the increased provision of heritage building rights in the allocation of land within the context of bidding and sales processes. In this, the sale of one or several plots of land was to be compared, as an alternative, to the awarding of heritage building rights for these plots.
The BÜRO DR. VOGEL GMBH defined four main tasks for their analysis: market impacts, efficiency and profitability, as well as questions concerning risks and feasibility. These subject areas were also examined in terms of their connections and interdependencies.
It was first examined how the increased provision of heritable building rights affects the marketability of the properties. Next, the economic impacts on both the buyer and seller were demonstrated in sample projects. The client was able to fully comprehend this feasibility study by means of a mathematical model that corresponded to a full set of financial accounts.
The subsequent risk discussion was carried out on specific cases and by evaluating the experience of comparable cities. Our consulting work focused on operational feasibility. On the basis of various courses of action, it was demonstrated which risks the State of Berlin actually took when opting for real estate with heritage building rights concerning urban and economic development objectives and the pursuit of other issues in the public interest.
Result / Added Value
The BÜRO DR. VOGEL GMBH issued the Senate Administration for Finance of the State of Berlin with strategy advice on real estate policy instruments and an analysis of the development potential for the State of Berlin. Due to our consultation on the overall cost-effectiveness of heritage building rights, various recommendations were drawn up which focused on the main political objectives of the State of Berlin.