08 June, 2022

„Nichts haben sie getan“

“They have done nothing”, is the complaint of a representative of the Luxembourg real-estate industry made recently in a conversation with the country’s largest newspaper.(1) It seems as if this massive revelation has so far gone without public commentary but was probably debated behind the scenes. Therefore, it deserves some reflection. Was it made just for the purpose of rolling out the red carpet for the property lobby? Or is there more to it? Maybe it is both, since on the one hand, the interview is logically one-sided (nothing wrong with that). On the other hand, the coverage provides insight as to some important patterns of argumentation and discourse. Hence, it is a useful read if one wants to track the lines of the current debate.(2 for a recent take on this) This does not necessarily mean that one must agree to every point identified in the press interview. 

    The complaint is simply that a) public institutions such as state and communes have failed in providing sufficient housing so far, and b) that private market actors would have contributed to resolving the problem if someone, particularly the state with its regulatory practice or the communes that hold back developable land, would let them. This is a common but incomplete pattern of discourse, to say the least. The points one could most easily agree to are firstly that the country is facing a severe housing crisis that renders not all but many parties desperate, especially those who are in need of housing, in particular affordable housing. Secondly, in the light of the country’s economic and demographic growth paths, which were quite strong in recent times, it is rather unlikely that current housing policies and activities can be effective or sufficient at all in covering existing demands, not to talk of future growth. There is no solution in sight, and this cannot be highlighted too often.
    However, there is obvious dissent when it comes to a) contextualising the problem, b) ascertaining who benefits from the dilemma, and who must pay the bill, and c) identifying the possible consequences which flow from that. As to a), it is always striking to see how little attention is being paid in housing debates to the evolution of country and capital city as a top-notch European financial marketplace and a hot spot of economic growth.(3) This creates a rocketing demand for office and housing space, particularly in small city and country, increasingly at high-end levels. Even a concerted action of public and private actors would be hard-pressed to meet this demand. Balancing the use of limited resources (land, planning, construction) available for different purposes, and setting clear priorities, would be the only way of getting out of the dilemma. As to b), housing seems to be the most concerning issue creating rising degrees of inequality in the country that is otherwise so wealthy, most notably in economic terms. It is a matter of truth, even though rarely admitted, that the globalisation dividend that is funnelled through Grand Duchy’s land and property sectors over the past decades has made many private and corporate players impossibly rich. Landowners, real-estate developers and agents are on the sunny side of this development, while house-seekers and others are left behind on the darker side of the problem. Most recently, the housing drama has swept over to the state, with parliamentarians and political parties prompted to do more in order to manage this crisis.

    However, under current circumstances this is hardly possible, given the extraordinary support and protection business affairs in general—and property issues in particular—enjoy in the Grand Duchy’s big politics. Those who call for action and bemoan inertia in politics ought to know better; likewise, the complaint that “they have done nothing” is certainly not a sufficient explanation. First, while it can be easily revealed that public concerns and state and communal action on the issue have dramatically increased compared to previous years, it is simply difficult to break the long historical path of private landownership and missing public politics of property. Renting has represented a mere niche for a long time. Path dependence is an issue worth considering as well. Second, housing clearly represents a wicked problem, one that could only get closer to ‘solutions’ if strategies reflect upon the country’s political economy and include strategies and measures as variegated as, for example, developing a public politics of land; introducing effective taxation on property related income; questioning the focus on office space but increase housing supply; help a better use of the existing housing stock to emerge. This is a highly unpopular inconvenient truth among the business community.
    Media stories like this one indicate that while certain voices increase their volume and are becoming more explicit in tone, they are probably not willing to serve as a scapegoat. Do we need a more balanced distribution of ‘guilt’, or responsibility, among the key players in this topical area? Do we need a more radicalised discourse? Not sure about the latter. A more open and honest discourse would indeed be useful. There is a striking deficit when it comes to open debate on a range of matters in this country, which seems to be altering only slowly. (Mobility in general and biking in particular might be a case in point). Land in Luxembourg is an extraordinarily complex and increasingly contentious issue, to which the prevailing discourse still responds with rather simple answers. To this end, published opinion ties in with the historically grown tradition of land ownership. In the current situation of maximum rents and prices, however, property ownership has become a fiction for large sections of society. It is a rhetorical construct, hardly playing a material role in the reality of many people's lives. It is an imaginary, immaterial discourse that is possibly representative of the longing for the good old days. It is also constrained by communicative barriers which have been erected to protect particular interests. The mobilization of land-based profits and the limits of the political model based on private property have effectively remained without echo so far. 
    If one takes the land problem and the related housing shortage in the country seriously, this discourse would have to be opened, moving away from the outdated image of home ownership, single-family homes and the demand to simply "build more". Then the radical transformation of the country in the recent past would be the topic, especially the dominance of office space, the financialization of land development and ownership (also by external investment capital), and the associated disconnection of use value and exchange value from property. A proper response to this would necessarily include two elements: first, honesty about the fact that the housing problem is not solvable by neither big player (state, local, private) under the given conditions of the real estate market; second, it would involve the strategic, long-term build-up of resources in public, not private, land. These would be the questions that an ideally free discourse would have to raise (evoking the concept of "herrschaftsfreier Diskurs" once claimed by Jürgen Habermas). Of course, discourse is not everything. But without open communication about the problem, its causes and alternative strategies, nothing will change – regardless of what “they” have done or not.

Markus Hesse

(1) Luxemburger Wort, 24.5.2022, pp. 1-3.
(2) Hesse, M. (2022): Sprachregelungen. Grund und Boden als diskursives Phänomen. forum 424, pp. 28-31. 
(3) Deloitte (2020): Real Estate Predictions 2020. Prepare to adapt to the market. Luxembourg.

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