In Berlin, ghettos are remolded into profitable housing

BERLIN -- A developer buys and transforms a dilapidated Berlin home for immigrants, demonstrating that it is possible to make low-cost housing profitable.
Written by Shannon Smith, Correspondent (Berlin) on

BERLIN -- German housing developer Benjamin Marx was no stranger to sub-standard living conditions. But what he found in the series of apartment buildings he and his company acquired on Harzer Street in Berlin's Neukölln district startled him.

"Everyone was afraid of this house," Marx told SmartPlanet. He had previously commented to Germany's Abendschau TV program:

"The situation was bad. There was trash all over the courtyard when I first arrived, with two little girls playing in the middle of it and rats scrounging for food next to them."

The house was part of a cluster on Harzer Street filled with Roma families and other immigrants, many of whom had come from the village of Fontanelle near Bucharest, Romania. Economic hardship there had reduced life to a single dysfunctional school and few job opportunities, catalyzing dozens of Roma families to make the dangerous, multi-day journey to Berlin, where life was rumored to be better.

By early 2011 though, the Harzer Street block had come to be known as "Little Romania" with media reports uncovering living conditions worse than in Fontanelle. Local organizations demanded solutions, traditionally viewed as the government's responsibility, from Berlin's municipal officials. But it wasn't until Marx and his employer -- the Aachener Development and Real Estate Company, a self-sustaining affiliate of the Catholic church -- purchased the infamous eight-building cluster in late 2011 that anything changed.

Marx and Aachener would use their years of development expertise to "flip" the block into livability. But rather than evict its 600-plus residents and renovate the real estate for maximum profit, they would craft a minimum viable renovation plan that would bring the block's residents together as a community -- and see Aachener achieve a return on its investment.

Following the removal of some 750 cubic meters of trash, Marx got started on a plan to systematically renovate all eight buildings -- including new windows, heating and paint on the walls -- all on a shoestring that allowed rent rates to hover at about the local index. Most important to the success of the project, Marx said, was that they engaged residents in a range of modernization activities -- from painting to babysitting and gardening -- to form a community that would be proud to care for its buildings long after renovations were complete.

"When you know the person cleaning the stairs, you're less likely to put out your cigarette on it -- and you're more likely to tend to the garden in the courtyard when a piece of it belongs to you."

Marx said children, too, were engaged in renewal of the courtyard by taking responsibility for sunflowers or helping with other plots of garden. Today, activities such as sewing and upcycling classes also help young residents engage with their upgraded surroundings, as well as with one another and the rest of the city.

"They have become more flexible and self-confident, as well as gaining the courage to go into the city alone to learn more about Berlin," psychologist Ana-Maria Munteanu told Abendschau. "They weren't like this before -- they were too preoccupied with immediate problems."

September saw the Harzer Street project honored with the Julius Berger Architecture Award -- whose German-Jewish namesake forged several important bridges and tunnels in Germany before being forced from his company by the Nazis. The award's jury cited the clever social application of business principles to Marx's project as the leading reason for their decision.

"We have to make money -- this has to be economically feasible," Marx said of his employer Aachener, which is still in the financial black though rent rates that continue to reflect the local index. "But that's not our main focus, which is to provide residential space for those who might not find it otherwise."

The Aachener Development and Real Estate Company, whose land settlement branch was founded in 1932, owns about 25,000 apartments in total across Germany, all of which it maintains on a social, yet self-sustaining basis.

Marx said he hopes that other businesses will see the viability and payoff of projects like this one and follow suit: "I hope that in ten years, ventures like this are so normal, that no one will be talking about it as something special anymore."

PHOTOS: Carsten Koall / Getty Images

This post was originally published on Smartplanet.com

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