City of Munich merges municipal housing associations Gewofag and GWG

Gewofag and GWG are to become one company by 2024. The aim: to build more apartments with affordable rents more quickly. Can this step solve Munich’s housing problem? Read all about the merger of the two Munich housing associations here.

It is a project that has been the subject of heated discussions in Munich City Council since 2005 and is now a done deal: Gewofag and GWG, the two municipal housing associations, are merging. The result will be a real estate giant that holds around 67,000 apartments and commercial units in which around 150,000 tenants live, i.e. around ten percent of Munich’s total population. The merger was approved by the governing Greens/Rosa Liste and SPD/Volt parties under the leadership of Verena Dietl (SPD), the city’s third mayor.

The two municipal companies currently employ over 1,000 people in total. The operators hope to achieve synergy effects through a merger. They want to abolish the duplicate structures that currently exist. However, the Green-Red coalition has ruled out compulsory redundancies as a result of the merger. The companies also need the employees. GWG and Gewofag have been lagging behind their housing construction targets for years. The 2,000 additional apartments are expected to almost double the previous annual construction output.

There was no shortage of criticism of the merger in the run-up. The opposition warned of high costs and a lack of scrutiny as to whether the project made sense. It was also questionable whether real estate transfer tax – in the hundreds of millions – would be due as a result of the merger. There were also fears that housing construction would suffer if employees were tied up for a longer period of time as a result of the merger.

On the other hand, the advocates argue that the merger will enable forces to be pooled profitably and synergies to be exploited in areas such as administration, IT and project development. In addition, it makes sense to manage municipal housing construction from a single source, as GWG and Gewofag have been competing, albeit involuntarily, in some business areas.

One thing is clear: Munich is currently the city with by far the highest rents in Germany. Even a merger of GWG and Gewofag is therefore only a tiny step towards eliminating Munich’s housing shortage. It will be some time before the companies are finally merged and can effectively drive forward housing construction in Munich. After all, GWG and Gewofag are structured differently and their construction projects are based on different financing models.

The new urban development plan for Munich was presented in summer 2021. You can read more about the plans and goals here.