The overall cost increases in the construction sector and the discontinuation of KfW 40 subsidies require adjustments to BUWOG’s planned new construction project on Rosa-Luxemburg-Allee in Elstal. As a result, the start of construction scheduled for 2024 has been postponed.
Since 2020, BUWOG has been planning to build around 200 one- to five-room rental apartments and 3,700 m² of commercial space, including a local supermarket, on the approximately 15,400 m² site on Rosa-Luxemburg-Allee in Elstal. Planning has meanwhile progressed. Due to the cost developments of the last 18 months, the municipality and the property developer have reached an agreement on how to proceed together.
BUWOG remains committed to the attractive location of Elstal and continues to be a dependable partner to the municipality in the realisation of new residential space and the accompanying residential amenities. BUWOG is aware of the importance of the new construction project in the centre of Elstal with new apartments and an EDEKA planned as a full-range retailer at this important location. However, due to the current conditions on the real estate market, it is not possible to develop the project in the short term with construction starting in 2024. In addition to the sharp rise in construction costs since the land was purchased in 2018, the discontinuation of KfW 40 subsidies is a particularly important reason that has had a direct impact on the project’s current profitability.
BUWOG’s commitment to the location is linked to the plan to further advance and adapt the planning for the project in Elstal within 2024. Together with the municipality, BUWOG will seek additional possibilities for optimisation within the planning process. The aim is to initiate the first tenders for the construction work, preferably with regional construction companies from the Berlin and Brandenburg area, by the end of 2024.
BUWOG Managing Director Eva Weiß: “Even if this means that the schedule will be delayed a bit in the short term, our decision in favour of the attractive Elstal location remains unchanged. We now need to make effective use of 2024 to improve the profitability of the project. At the same time, we do not want to make any compromises in terms of architectural, structural or functional quality. We are aware that we have the opportunity to design an important property and therefore a new part of Elstal that will have long-term significance for the location’s future. We are therefore certain that the upcoming revision of the plans will be worthwhile, even if it requires a little more patience.”
Mayor Holger Schreiber: “On the one hand, we regret that construction will not begin in 2024. At the same time, we see BUWOG as a transparent and very reliable partner for the municipality. Especially in the current situation, the property developer’s commitment to the site is especially important to us so that we can continue to support the plans in a spirit of partnership – and do so in the understandable, changed context of the cost structure in the building industry, upon which we municipalities have scarce influence and with respect to which we urgently hope the general conditions in the construction sector will improve or at least stabilise again nationwide. For this reason, the local authority is pleased to coordinate planning optimisations that maintain the quality of the project while simultaneously resulting in an optimisation of costs and therefore also an appropriate rent structure. The aim for all of us is to put this important piece of the puzzle in place as quickly as possible for our Elstal and thus provide a significant impetus to the centre and especially the supply situation there.”
About BUWOG
BUWOG looks back on over 70 years of experience in the residential property business and currently has a development pipeline of around 55,000 residential units. BUWOG is a subsidiary of Vonovia SE, Europe’s leading residential property company, which is located in Bochum (Germany), and has an energy management system in accordance with ISO 50001.
