Vonovia's Berlin Portfolio in the Crosshairs as Expropriation Math and Legal Doubts Pile Up
Published on 10/19/2026 at 11:41 | Editorial boerse-global.de
Berlin's push to bring large private landlords under state ownership has run into a wall of opposition from both the company at the centre of the storm and the city's own outgoing economics chief. Vonovia CEO Luka Mucic has come out squarely against the plans, while Franziska Giffey, Berlin's still-serving senator for economic affairs, warned yesterday of the consequences in unusually blunt terms.
The trigger is an exploratory paper tabled at the weekend by the Left party, the Greens and the SPD in Berlin, which sets out a route to transferring privately held rental flats into state hands. Rising housing costs remain the dominant issue in the German capital, but the proposal has drawn fierce resistance from the leadership of the country's largest residential group.
A 10,000-Flat Threshold and 160,000 Units in Play
Under the blueprint, private landlords holding at least 10,000 apartments in Berlin would be affected. Each company would keep that base portfolio intact, with units above the threshold passing into common ownership. Vonovia is the biggest private landlord in the capital, with just under 140,000 flats there â meaning up to 120,000 units could in theory be caught by the measure. Across its entire portfolio the group owns more than 570,000 apartments.
Four other groups would be drawn in alongside Vonovia, including Heimstaden, Adler and Covivio, putting roughly 160,000 flats in the frame overall. Cooperatives, public-interest providers and buildings completed since the start of 2021 are carved out. A draft state law is not expected before mid-2028 at the earliest.
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The EUR 16 Billion Cap and a EUR 40 Billion Question
Money is the fault line running through the whole debate. The exploratory paper caps total compensation at EUR 16 billion, which works out at about EUR 100,000 per flat. Berlin's state audit office estimated in 2024 that a payout based on market value could reach as much as EUR 40 billion. The city already carries liabilities of close to EUR 70 billion.
Figures from the German Institute for Economic Research (DIW) put compensation for 160,000 flats at EUR 14.4 billion. Keeping rents at the targeted level would, on the DIW's numbers, require annual state subsidies of EUR 366 million on a compensation volume of EUR 15.12 billion. Giffey called the compensation sum unrealistic and predicted protracted legal battles, warning that affected groups could freeze pending investment and new-build projects â tightening an already stretched supply of housing.
Federal Resistance and Constitutional Hurdles
Opposition is forming at national level too. The federal government is currently coordinating between the interior, justice and construction ministries on a possible ban on the expropriation of rental flats, though no concrete bill has been put forward. Chancellor Friedrich Merz announced in the summer that he wanted to stop such initiatives through federal legislation. His justice minister has conceded that, given the constitution, such a move is unlikely to be feasible, and the federal government's legislative competence is itself contested.
Whether the Berlin plans would survive legal scrutiny is far from settled. An expert commission concluded in 2023 that expropriation under Article 15 of the Basic Law was possible in principle, but left central questions on proportionality and the level of compensation unanswered. With a draft law not due until mid-2028 and a constitutional review likely to follow, a transfer of the flats before 2029 looks improbable. A Baader Bank analyst also rates the chances of the plan being realised as low, citing the absence of a broad political majority and the federal government as a substantial obstacle. Years of litigation are seen across the sector as the likely outcome.
Shares Pinned Near Their 52-Week Low
The recurring debate is keeping investors on the back foot. Vonovia shares changed hands at EUR 16.54 today, down 1.2% on the day and only just above their 52-week low of EUR 16.18. The stock closed Friday's session at EUR 16.73, leaving it down 32% since the start of the year. Until the legal position on Berlin's housing policy is finally clarified, uncertainty around the capital's portfolio is likely to weigh on the shares as a valuation discount.
A fresh catalyst could arrive with the interim report for the third quarter, due on 4 November. Investors will be watching financing costs and the profitability of the portfolio in particular.
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