By Tom Sims and John O'Donnell
FRANKFURT (Reuters) - German Chancellor Olaf Scholz is facing fresh demands to stem a property crisis in Europe's largest economy after a recent summit aimed at rescuing the sector disbanded in acrimony.
The nation's ailing building industry will present the chancellor with a new set of proposed measures this month to cushion the worst property crisis in a generation, two people involved in the preparations said.
In a letter, the contents of which have been described to Reuters, one of the country's top building groups will ask for support to prevent mass layoffs and stimulate building activity.
Wolfgang Schubert-Raab, president of the ZDB industry association that represents 35,000 building firms, told Reuters he planned to send the proposals to the chancellor and his ministers for finance, economy and housing.
The industry's demands reflect alarm that Germany is being sucked further into a global property rout that has been most acutely felt in China.
There is also concern that the government is dragging its feet after a contentious industry meeting with the chancellor on Sept. 25.
"We can't afford to lose more time," Schubert-Raab said.
The real estate sector was a bedrock of Germany's economy for years, accounting for roughly a fifth of output and one in 10 jobs. Fuelled by low interest rates, billions were funnelled into property, which was viewed as stable and safe.
Now a sharp rise in rates has put an end to the run, tipping developers into insolvency as deals freeze and prices fall. The number of people employed in the building sector has begun to drop for the first time in a decade.
The slump is part of a broader malaise with the International Monetary Fund this week projecting that Germany's economy will be the only major country's to contract this year, and by more than previously forecast.
Four people who were at Scholz's meeting of property industry chiefs and regional leaders in the chancellery told Reuters they felt they were given little chance to have a say in support measures they believed moved in the right direction but overall fell short.
"Building is all but impossible, financially," Nicole Razavi, a regional politician representing state ministers, told Scholz at the closed door meeting, according to an account of the gathering.
Razavi criticised the government for "ambushing" those present at the summit by announcing measures - such as the scrapping of stricter building standards - before they had been discussed.
A spokesperson for the chancellery said there was "a great deal of agreement" with the federal government's proposals.
Now, industry leaders like Schubert-Raab are considering their next steps.
Among measures the ZDB will propose is an expanded state-subsidised "Kurzarbeit" furlough scheme that would protect hundreds of thousands of workers whose jobs could be at risk.
The business association is also calling for more generous terms for state-backed home loans for families, and demanding that the chancellor hold another meeting of government officials and industry in December.
"We have to talk because it's urgent," Schubert-Raab said.
Weakness in commercial real estate in the United States as offices remain empty after the pandemic and the struggle of major property developers in China have focused global attention on the sector.
Germany, where the population has grown rapidly as millions migrate to the country, is missing its goal of building 400,000 apartments a year as construction permits nosedive, leading the industry to warn of impending social strife.
Francesco Fedele, chief executive of BF.direkt, a property financing consultant, expects insolvencies in the sector in Germany to double before the market bottoms out in the middle of next year and called measures so far as "just for show".
"This is not the big bang that the industry, and many, many citizens are waiting for," he said.