Vonovia : First Reaction Post Elections

First Reaction Post Elections

• Federal Elections
• Berlin State Elections
• Expropriation Referendum in Berlin

All data as of

6:30 CET on Sep. 27

September 27, 2021

German Federal Election

No Majority for R2G; SPD Slightly Ahead of CDU

• Based on the official preliminary election results1 the outcome is tight with a small lead for the SPD over the CDU.
• The election did not deliver an obvious winner, and SPD and CDU have both emphasized their intention to form a new government coalition led by them.
• As the Greens and the FDP both had strong results, a three-way coalition with the two, led by the
  SPD ("Traffic Light") or CDU ("Jamaica"), look to be the two most likely outcomes.
• Given the weak result of The Left, the combination of SPD, Greens and The Left has no majority. Based on the official preliminary results, it is not yet clear that The Left has even won enough votes to clear the 5% hurdle to get into the new parliament and may only have the three seats won via direct mandates.

Preliminary Results1		Seats in Federal Parliament2
30

25	24.1	25.8						"Jamaica"	196	118	92
					Not
20						considered/
					not eligible for	"Traffic Light"	206	118	92
			14.6			a coalition
15
			11.5
					10.5		"Germany"	196	206	92
10						8.7
5					4.9
							"R2G"	206	118	39
0	CDU/CSU	SPD	Greens	FDP	The Left	AfD	Other
				(Liberals)

1 www.buundeswahlleiter.de.	5% required to enter parliament	Est. 366 seats needed for a majority

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German Federal Election

What to Expect Now

• The election result essentially makes one of two government coalitions highly likely:
• • SPD, Greens, and FDP ("Traffic Light") or
  • CDU, Greens, and FDP ("Jamaica")
• A continuation of the grand coalition between CDU and SPD is would also have a majority, but both parties have clearly signaled that they do not want to continue this combination.
• A combination of SPD, Greens and The Left does not have a majority.
• Because of the tight results, exploratory discussions between the different parties and subsequent coalition talks will most likely take time, and it may be several weeks or even months before a new government coalition is successfully formed.
• Either coalition will require substantial consensus, and it is impossible to predict what concessions will be made by which party and on which issue.
• The very strict hardline positions laid out in the various manifestos will most likely be diluted in coalition negotiations as parties are forced to find consensus and common ground to form a sufficiently stable government coalition.
• In light of (i) the consensual view across party lines to combat climate change and reduce
  CO2 and (ii) the high ratio of retail landlords (65%) there is a factual need for housing policy to remain sufficiently balanced in order to increase much needed CO2 reduction efforts and also to leave enough "breathing room" for private owners.

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Berlin State Election

SPD Ahead of Greens; Future of R2G in Berlin Uncertain

• The SPD won the Berlin State Election, followed by the Greens.
• Franziska Giffey, head of the Berlin SPD, has declared expropriation a "red line" and said "We need an alliance for new construction of affordable housing with all stakeholders in the city and effective protection of tenants - not expropriations worth billions of euros" (cf. page 5).
• Giffey has an alternative to the "R2G" coalition with a "Germany" combination of SPD, CDU and FDP
  (Liberals)
• While a coalition between SPD, CDU, and Greens or between SPD, FDP, and Greens would have a majority, either combination seems unlikely.

Preliminary Results1					Seats in Berlin State Parliament2
30
25							Not
	21.4				considered/
					not eligible for	"Germany"	33	39	13
20	18.1		18.9			a coalition
15					14.0		12.4
10				7.2		8.0		"R2G"	39	34	26
5
0	CDU	SPD	Greens	FDP	The Left	AfD	Other
			Est. 81 seats needed for a majority
				(Liberals)

1www.tagesspiegel.de

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Non-binding Referendum on Expropriation Successful

Majority Votes in Favor

• The New Berlin government will now be required to deliberate on whether or not to pass legislation with the target of expropriating large landlords in Berlin.
• Similar to previous referendums (e.g. on keeping Tegel Airport open), the result is not binding and the government can decide not to pass an expropriation law.
• There is no political support for expropriation among the CDU, FDP, and SPD.
• The Left is in favor of expropriation and the Greens are divided, suggesting that only a smaller minority across the whole political spectrum in Berlin would be supportive.
• Any legislation on the subject would be guaranteed to be challenged in court in what would likely be long judicial process during which the implementation would be suspended.

Franziska Giffey (Berlin SPD Leader and

Candidate for Mayor of Berlin) on expropriation

"I don't think expropriation is the right way to solve the major social issue of affordable housing. On the contrary, not a single new apartment is created as a result. But we urgently need more housing. The 240,000 apartments that the initiative wants to transfer to state-owned companies are not vacant. The compensation costs would be over 30 billion euros, as much as an entire Berlin state budget. To expropriate across the board those who have more than 3,000 apartments would be neither targeted nor fair and would stand on legally very questionable ground, all the more so if compensation were paid below fair value. During the lawsuits that would be certain to ensue, there would be no investments and no new construction. We need an alliance for new construction of affordable housing with all stakeholders in the city and effective protection of tenants - not expropriations worth billions of euros."

(n-tv; Sep 18, 2021)1

"For me, the topic of expropriation is a red line. I don't want to live in a city that sends the message: we do expropriation here. I grew up in the East Germany, and I experienced what it means - expropriation, really, even in people's lives. And what it means for the condition of a city […] We need more affordable housing, no question. We need investment in infrastructure. But we also need effective tenant protection. In my view, expropriation is not part of the toolbox."

(rbb press portal; Aug 21, 2021)2

1https://www.n-tv.de/politik/Das-Signal-Hier-wird-enteignet-schadet-Berlin-article22811490.html. 2https://www.presseportal.de/pm/51580/4999360.

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