Missed deadlines: Berlin high-rise projects face sanctions

Construction delays in two high-rise buildings on Alexanderplatz in Mitte and on Steglitzer Schlossstrasse can result in severe fines for private builders – in one case up to the Land of Berlin’s cancellation of the purchase contract. The construction projects revolve on the one hand around the residential tower that the Russian investor Monarch has planned next to the shopping center Alexa, and on the other hand the Steglitzer Kreisel, which is to be converted into a residential tower by another developer.

The state-owned Berliner Immobilienmanagement GmbH (BIM) announced on Tuesday that “deadlines had been overlooked” in the case of Monarch’s high-rise project on Alexanderplatz. However, BIM’s CEO Birgit Möhring did not provide any details with reference to the confidentiality of the contracts. Only so much: In 2019, we sat down with Monarch, discussed the construction project and “set realistic deadlines from our point of view”. It was determined “by when something was going to happen,” Möhring says. However, some of the deadlines have since been “torn”. “We are observing it and, of course, we are examining all the legal consequences that come with it.” If things continue like this, “it will result in us also considering withdrawing from the contract.” But that is not the case now.

According to BIM, the sanctions imposed by the West on Russian companies in response to the war in Ukraine will not affect the high-rise project. According to BIM, the shareholders of Monarch are “currently not on any sanctions list”. It was also checked.

Pioneering in November 2019

The symbolic groundbreaking for Monark Tower, Alexander Tower, was celebrated in November 2019. The skyscraper is the first 150 meter high tower built according to the master plan by Hans Kollhoff from 1993. The design for the project comes from the architects Ortner + Ortner.

The plan allows for the construction of 377 apartments in the size of 24 to 423 square meters. The apartments are spread over 29 floors. Office and conference rooms, a gym, a club lounge, a pool, a wellness spa and a restaurant are planned for the remaining floors. According to the information at the time, Monarch invested 250 million euros. The tower should be ready in 2023 according to the symbolic groundbreaking ceremony in 2019. Although construction is currently underway, the ground floor level has still not been reached, as a visit to the site on Tuesday showed.

Not much is happening on the Steglitzer Kreisel construction site either. The former high-rise office building, formerly owned by the Land of Berlin, is to be converted into a residential tower. The first residents were actually to move in by the end of 2021. But the tower still looks like a construction site.

“Last time I was informed: The move-in completion date will be postponed to June 30, 2024,” states one buyer. According to BIM, it is not possible to reverse the purchase contract here – due to the many new owners. According to Möhring, agreed deadlines were also not met at the roundabout. It triggered a contractual penalty, as BIM claimed. Möhring did not provide any information on the amount. She just said, “It’s a sensitive punishment.”

As a state-owned real estate service provider, BIM is responsible for more than 5,000 buildings and properties in Berlin. These include schools, police and fire departments and office buildings for the Senate administration. BIM invested 232 million euros in construction measures last year – 20 percent more than the year before. The focus is on projects that will save CO₂. This includes not only the energetic renovation of old buildings, but also the increased use of renewable energy. As a result, eleven additional photovoltaic systems were installed last year. BIM now has 151 such systems that convert sunlight into electricity.

First green balance eco-account

While Berlin used to sell state-owned land to the highest bidder, land is now being bought. Last year, BIM and its subsidiary Berliner Bodenfonds GmbH (BBF), which was founded for this purpose, acquired 125,268 square meters for a total of 26.3 million euros. “The strategic procurement also includes compensation areas, which we especially need for new construction projects such as our modular buildings for the Berlin fire brigade,” says BIM’s CEO Sven Lemiss.

To create areas for green compensation, BIM last year set up Berlin’s first eco-account on the site of the former district garden center on Diedersdorfer Weg in Tempelhof-Schöneberg. The purpose of the eco-accounts is to create renatured areas to compensate for state-owned construction measures in Berlin, where bushes, forests and meadows must give way and the soil is sealed. “At the same time, a credit should be built up for future projects,” says Sven Lemiss.

Rising construction costs and problems in the supply chain also have an impact on BIM projects. Lemiss said that BIM is therefore investigating whether price scaling clauses should be included in contracts – in order to give contract partners security in the calculation.

One of the major projects where costs are rising is the renovation of the office building of the Senate Department of Urban Development on Württembergische Strasse. According to BIM, the conversion cost, which was estimated at 124 million, can no longer be maintained. BIM intends to inform the Folketing before long about how big the price increase will be. The renovation of the Palais am Festungsgraben, which is due to start next year, is now estimated by BIM at around 60 million euros. In 2015, it was estimated at 20 to 25 million euros.

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