The German government’s €500 billion Special Fund for Infrastructure and Climate Neutrality, designed to boost social real estate and meet 2045 net-zero targets, is a welcome project.
Decades of underinvestment in social infrastructure have left schools, childcare centres and public administration buildings in a state of chronic disrepair across Germany. But this shortfall cannot be closed by public budgets alone. Additional private capital will be needed, ideally through public-private partnerships (PPPs). PPPs are likely to emerge as a way of dealing with the growing disparity between government funding and societal needs.
One way in which the government could mobilise private capital is as follows: Firstly, the government’s objectives are prioritised. Secondly, private capital’s objectives are considered, such as achieving a risk-adjusted return, maintaining stable framework conditions and ensuring reliable asset management expertise.
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