Urban Development
Urban development in Kreuzberg
Dragoner site becomes redevelopment area: what it means for Berlin's property market
After years of dispute, the Berlin Senate has designated the Dragoner site in Kreuzberg as a redevelopment area. The sale to a private investor is being reversed. What is behind this decision?
Peter Guthmann
On 5 July 2016, the Berlin Senate designated the Rathausblock in Kreuzberg, including the prominent Dragoner site, as a redevelopment area. This provisionally ends a years-long conflict over the strategically located land between Yorckstrasse and Mehringdamm. The decision signals how the Senate intends to steer urban development in central locations going forward.
What the redevelopment designation means
The decision activates redevelopment law under Germany's Federal Building Code. The State of Berlin can exercise a pre-emption right for the entire site and reverse the sale by the Federal Institute for Real Estate Tasks (BImA) to a private investor. Property sales within the designated area now require approval at market value only. Value increases resulting from redevelopment are to benefit the public, and speculative price movements are blocked. This will influence the market trend in this part of Kreuzberg.
Plans for housing, commerce and culture
The site is to become a mixed-use neighbourhood combining residential, commercial, cultural and social infrastructure. At least 50% of the new apartments are to be built with social housing subsidies, targeting low and middle income households. The size of the site also offers potential for inner-city green spaces in one of the most densely populated areas of the capital, close to Mitte.
The long road to a municipal solution
The dispute over the Dragoner site goes back to 2010. After the leaseholder went insolvent, BImA planned to sell the land to the highest bidder. In 2012, a Hamburg-based investor won the bid at around 20 million euros. The borough refused to change the zoning plan and demanded an integrated urban development concept. The investor withdrew in 2014. In a new procedure, the contract went to a buyer at 36 million euros, a sum that state housing companies could not match. In 2015, the Bundesrat blocked the sale, paving the way for the current solution.
What this means for investors
The decision shows the Senate is prepared to use urban planning instruments such as pre-emption rights and redevelopment law to keep key sites in public hands. For private developers and investors, this means that comparable sites are increasingly likely to face municipal intervention and cooperative development models. The path toward construction by state-owned housing companies has been set.