(de-news.net) – The German government is seeking to revive residential construction through a 13-point reform package focused on reducing building costs, accelerating approvals, and consolidating housing subsidies. While housing completions remain at their lowest level in more than a decade, permit activity has begun to recover. At the same time, policymakers are promoting office-to-residential conversions as a supplementary source of housing supply.
The 13-point action plan introduced by the Federal Construction Minister, Verena Hubertz (SPD), is intended to reduce building costs, which the Federal Government regards as one of the principal factors behind the country’s persistently weak level of housing construction. According to the strategy document, the issue extends beyond simply making real estate development more attractive to investors and builders. Instead, lowering costs is increasingly viewed as essential to preserving the economic viability of projects and ensuring that planned developments can proceed to completion in the first place. The plan therefore frames cost reduction as a prerequisite for sustaining housing construction activity rather than merely as a means of improving market conditions.
Among the key measures proposed is the full digitization of building permit applications beginning in 2028. Under the plan, digital submission would become the standard procedure, while paper-based applications would be accepted only in narrowly defined cases involving exceptional hardship. The proposal also calls for the development of incentive mechanisms within existing new-construction support programs to reward shorter building timelines and lower costs achieved through serial and modular construction methods. In addition, the current system of federal housing subsidies is to be consolidated into a single, centrally administered framework designed to simplify access to support. According to the ministry, the overall package seeks to accelerate planning and approval procedures, reduce both construction-related and transaction costs, and at the same time maintain established standards for quality, safety, and regulatory compliance.
A housing slump and recovery on the horizon
The initiative is being launched against the backdrop of a significant downturn in residential construction activity. Official statistics indicate that only 206,600 dwellings were completed in Germany in 2025, representing an 18 percent decline compared with the previous year and marking the lowest annual completion figure recorded since 2012. The contraction followed an already substantial decrease of 14.4 percent in 2024, making it the second consecutive year of pronounced decline. Of the total number of completed dwellings, 172,600 were located in newly constructed residential buildings. Significant reductions were recorded across all major housing categories, including single-family homes, two-family houses, and multi-family residential developments, underscoring the breadth of the slowdown throughout the sector.
More recent indicators, however, suggest that development activity may be beginning to stabilize. In April 2026, permits were issued for 20,200 dwellings, representing an increase of 9.2 percent compared with the same month a year earlier. During the first four months of the year, approvals reached 83,700 units, a year-over-year increase of 13.2 percent. Growth was registered across most housing categories, including single-family homes, two-family properties, and apartment buildings, indicating a broader improvement in permitting activity. The only notable exception was residential institutions, where approvals declined slightly. At the same time, the number of housing units authorized through the conversion of existing buildings also increased, suggesting growing interest in alternative methods of expanding housing supply.
From empty offices to new homes
One potential mechanism for addressing Germany’s housing shortage is the conversion of vacant commercial properties into residential accommodation. The country currently has more than 11 million square meters of unused office space, a figure that has risen in the years following the COVID-19 pandemic and the widespread adoption of remote and hybrid working arrangements. These changing workplace patterns have left portions of the office market underutilized while housing demand remains elevated. Estimates regarding the scale of the opportunity vary considerably. Research conducted by Bulwiengesa suggests that the repurposing of obsolete office buildings could yield approximately 150,000 additional housing units, whereas a separate study by the Ifo Institute projects a more limited potential of roughly 60,000 dwellings.
The practical feasibility of such conversions has already been demonstrated through several high-profile redevelopment projects. In cities including Düsseldorf and Frankfurt, former office complexes have been transformed into mixed residential neighborhoods incorporating hundreds of apartments alongside supporting community infrastructure. These examples illustrate how existing commercial properties can be adapted for housing purposes when market conditions and planning requirements align. To encourage similar projects, the Federal Government has introduced a dedicated subsidy program under which developers may receive grants of up to 30,000 euros for each converted dwelling, provided specified eligibility criteria are met.
Despite the apparent potential of office-to-residential conversions, the process remains both technically demanding and financially challenging. Compliance with building regulations frequently requires extensive structural modifications covering areas such as fire protection, sound insulation, daylight access, ventilation systems, energy efficiency standards, and parking provisions. Older office buildings can also present additional complications, including the discovery of asbestos, mold, or other unforeseen structural and environmental deficiencies. As a result, many redevelopment projects require substantial renovation work and, in some cases, involve stripping buildings back to their structural framework before reconstruction can begin.
Costs and affordability at the center of conversion trend
Economic viability nevertheless remains the decisive factor in determining whether such projects move forward. Property owners, developers, and market analysts frequently argue that the complexity of conversion projects, combined with extensive regulatory requirements, can push costs close to those associated with entirely new construction. Some developers estimate that expenses reach near new-build levels, a factor that could ultimately result in monthly rents exceeding 20 euros per square meter. Others, however, maintain that conversions can be completed at significantly lower costs than comparable new developments, highlighting the differing assessments that exist within the industry regarding the economics of adaptive reuse projects.
The Federal Government’s ‘Commercial-to-Residential’ support program does not include requirements governing the type of housing that must be created, nor does it establish affordability criteria for completed units. Critics therefore contend that the subsidy structure, which provides support on a per-unit basis, may encourage the development of smaller apartments and micro-units rather than larger homes suitable for families. The construction ministry has acknowledged that the program was not specifically designed as an affordable-housing instrument. Instead, it argues that the primary objective is to stimulate the reuse of existing buildings, expand overall housing supply, and generate additional residential capacity that can help ease pressure across the broader housing market.
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