Germany faces a shortage of approximately 1,35 Millionen Wohnungen, a severe deficit that drags on the broader economy and forces skilled workers to turn down employment offers due to a lack of housing.
Building Permits Rise Amid Persistently High Costs
The construction sector is showing early signs of stabilization. According to official figures reported by ZDF, the first half of 2026 saw approvals for roughly 126,300 new apartments—a 15.1 percent jump compared to the same period in 2025. ZDF market expert Frank Bethmann noted that permits have climbed at their fastest pace in a decade.
Yet, permits alone do not guarantee a crane in the sky. Land acquisition, construction services, raw materials, financing rates, and rigid technical requirements dictate whether a project pencils out for developers. Federal Construction Minister Verena Hubertz points to overloaded standards and complex regulations as primary cost drivers, arguing that current building norms inflate prices unnecessarily.
Standardizing Construction via Gebäudetype E
To combat soaring expenses, the German government is championing the planned “Gebäudetyp-E-Gesetz,” a legal framework designed to promote simpler construction. The “E” stands for simple, allowing builders to construct more affordable housing without compromising essential safety protocols.
Under this approach, structural safety and fire protection remain mandatory, but standardized technical systems replace bespoke engineering. German homebuilding has long functioned like a series of custom tailors—every single project requires fresh planning, distinct approvals, and individual cost calculations. By encouraging standardized floor plans and pre-tested building modules that can be replicated hundreds of times over, particularly in the social housing sector, lawmakers aim to slash overhead expenses.
Converting Commercial Spaces and Supermarkets
With greenfield development moving slowly, urban planners are targeting existing real estate footprints. Vacant offices in Germany’s top seven metropolitan areas totaled roughly eight million square meters at the end of 2025, according to the economic journal Wirtschaftsdienst. The ifo Institute estimates that converting these empty corporate spaces could yield up to 60,000 new apartments by 2030, offering much-needed inventory for students and unhoused individuals.
Sarah Dungs, managing director of the real estate redevelopment firm Greyfield Group, points out that existing regulations often hinder these transformations. “Norms are important, but many are made for new construction,” Dungs said in an interview with the Deutschen Architekt:innenblatt, emphasizing that older office assets require flexible regulatory treatment rather than a blanket rulebook.
To accelerate this shift, the federal government launched a KfW funding program titled “Gewerbe zu Wohnen” in July 2026. Developers can apply for grants of up to 30,000 euros per newly created residential unit when converting vacant commercial properties, backed by a 300 million euro federal budget for 2026.
Retail real estate offers another untapped reservoir. Traditional German supermarkets often feature low-density, single-story footprints paired with expansive asphalt parking lots. Retailers like Aldi Nord and Süd are already advancing mixed-use projects in cities such as Leipzig, Berlin, Bergisch Gladbach, and Mannheim. By placing apartments directly above supermarkets and pushing parking underground, developers can maximize existing urban infrastructure without consuming new land on city outskirts.
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