When - after a peaceful revolution in the former GDR [1] - the German wall came down in November 1989 - two German states existed next to each other: the Federal Republic of Germany (FRG) led by a so-called social market economy as well as the German Democratic Republic (GDR) [2] with a socialist planned economy. Almost a year later, on October 3rd 1990, the five federal states [3] joined the Federal Republic according to the unification treaty (Einigungsvertrag) [4]. In contrast to other East European countries that were also undergoing dramatic changes, the former GDR joined an already existing political system. All of a sudden, its citizens were confronted with severe political, economic, as well as social changes [5]. A high population exodus as well as a strong decrease in the birth rate [6] demonstrate an overall uncertainty amongst the people [7] during the first years after unification. This uncertainty was further increased by drastic cut backs in employment [8]and the reduction of the social infrastructure.
The so-called "Wende" (change) also marked a radical upheaval in the development of cities in East Germany. Instead of a planned economy, the market dominated evolution. Which meant that, not a central authority made decisions on new developments but private construction companies set the pace. Instead of general rights of disposal, planning had to follow private property regulations [9]. Therefore, the road from a "socialist to a capitalist city" (Häußermann 1996) was marked by difficulties which resulted from, amongst other things, completely different pre-conditions:
These undertakings became even more difficult due to some specific conditions of the early transformation period. First of all, the West German planning law was also implemented in the Eastern part of the country without considering the special planning measures that would take into account the different situation in the new states. The so-called Maßnahmengesetz [15] reacted only partly to the historic situation. Secondly, there was a shortage of local qualified staff [16] that could implement the laws right away. As a consequence, several positions were filled with experts from West Germany which again gave many East Germans the feeling of inferiority of being "colonised" [17] by the West. This feeling [18] was even more intensified by the procedure regarding non-solved property ownership questions, especially the principle of "Rückgabe vor Entschädigung" [19] (restitution before compensation). When the wall came down, approximately 40 % of the land as well as 41 % of the apartments of the former GDR belonged to the people, the so-called "Volkseigentum". The privatisation of property - which was handled by the so-called Treuhandanstalt [20] (trusteeship institution) - became one of the main preconditions for a functioning market economy. Furthermore, the legislation was bound ethically to compensate for former unlawful expropriations.
The demand for the return of property not only dated back to the policy of the former GDR between 1949 and 1989, but resulted also from expropriations of Jewish land property [21] by the Hitler regime that still had not yet been compensated. The property law, "Vermögensgesetz" [22], from 1990 enabled the former owners of land or other property to apply for the return of their property. This so-called "restitution principle" [23] was one of the most delicate decisions for urban development in East Germany. The newly established departments for unsolved property questions [24] were confronted with a flood of applications: approximately 2.2 million petitions for land restitution were handed in. Even though the legislator tried to establish a functioning juridical frame [25], it took years before most of the questions [26] were solved. Since these properties and buildings could not be sold or changed before clarification, many East German communities had to put up with considerable investment delays. This situation had a strong impact on the spatial structure of the towns due to a simultaneous lack of public funds as well as an increasing dependency on private investors.
The example of the city of Dresden helps to demonstrate the characteristics of the development of towns in the eastern states. Oversized market squares for political demonstrations and major roads that tore through the historic centre symbolise urban planning in the former GDR. After 1990, it was necessary to develop a general concept that met the demands of a modern city centre as well as keeping the cultural heritage of the Elbflorenz baroque [27]. When experts were still fighting over the right concept, the city already underwent strong investment pressure. Property prices in central locations soared up to DM 20,000 per sqm.
The high price level expressed the necessity, especially for facilities of the tertiary sector, to make up the shortages. Up until then, the provision of retail space per capita was only 0.27 sqm, office space accounted for 2.8 sqm. Comparable numbers for West German towns ranged between 1.1 and 7.0 sqm (Meyer/Pütz 1997: 493). Even though Dresden could balance out this deficit [28] within a few years (in the office market it even surpassed West German cities), most of the investments occurred in suburban locations. The special priority law to speed the process of approval (Investitionsvorranggesetz [29]) did not help to change the disproportional development. Huge shopping centres [30] and commercial parks [31] erected in the surrounding areas of the cities are now a common picture in East Germany. Only when the unsolved property and urban development questions were solved, investments in the downtown area became attractive for private investors. Up until now, though, it is still uncertain how successfully the inner cities will compete with out-of-town developments.
Whereas a new urban context was implemented in inner cities, the main endeavour of the historic residential neighbourhoods has been a careful renewal of the buildings. With its so-called "Äußere Neustadt" [32], Dresden possesses an area of 74 ha of old buildings from the turn of the 19th , the time of rapid industrial expansion. It is the largest quarter of this kind in Germany. Already in 1992, the section was declared an area of renewal [33] in order to control - after the experiences made in West German cities - the transfer of property and to design a socially acceptable process of renewal. The developers however were soon confronted with problems that could only partly be handled by the West German apparatus. Due to severe neglect during the last decades, the buildings were in such a bad condition that fundamental safeguarding measures were necessary. At the same time, 90 % of the houses were burdened with demands for restitution. As a result, many buildings continued to decay because nobody felt responsible for them.
In those cases, were renovation had started, financial sources were short. Especially East German owners did not have enough money to finance comprehensive renovations. Since public subsidies were not sufficient to support every undertaking, cities depended on West German investors who dealt more professionally with real estate. The transfer of wealth from East to West was even supported by the tax policy of the federal government. Until 1996, investors could claim a tax refund of up to 50 % of the invested capital in the new states. Despite a strong protest against the upgrading of the old neighbourhoods, this development could only be partially stopped. In most of the old central neighbourhoods many buildings remained vacant. After their renovation into luxury apartments they were misused as office space and the local population was pushed out, a process generally called gentrification [34].
A third problematic aspect of urban development in East Germany was the transformation of the housing sector. After unification, apartments that used to be the property of the nationally owned companies were given to the communities. At first this looked like a generous gift, but it turned into a huge burden for them. Rents in former GDR were never high enough to cover the costs just to maintain them. Only with the help of public loans the buildings could be maintained and new houses could be built. After 1990, the Deutsche Kreditbank - which was the successor of the GDR State Bank - increased the interest on these debts. Only two years later the debt of the East German development companies had grown up to 51 billion DM (Borst 1996: 112). At the same time, millions were needed for the renewal of the huge housing estates built during socialist times. Due to the social and economic situation of the population, however, the rents in East Germany [35], could not be raised to Western standard [36].
With a special law, the Altschuldenhilfegesetz [37] (help with old debts), the federal government tried to alleviate the situation. Under the condition that they privatize at least 15 % of their apartments mainly to tenants by 2003, 50 % of the debts were waived for the housing companies. With only limited success [38], though. Only a few tenants were willing to buy their apartments. During socialist times, they had saved little money and the willingness to invest into property was low. Those who were willing to buy, preferred one-family houses in the suburbs. A strong suburbanization [39] that started right after 1990 underlined this process that went along with an increasing spatial mobility [40]. The conditions for privatization therefore, could only be reached by selling to private housing companies. As demonstrated by social segregation and an increasing crime rate, especially the huge East German housing estates [41] are developing into problematic areas [42].
It is a difficult task to draw an overall conclusion of the ten years of urban development in East Germany. On the one hand, many old buildings have been beautifully renewed [43] and billions have been invested into the housing market. Also, run down inner cities have emerged into considerable centres. On the other hand though, the central hierarchy pattern has been changed, social segregation increased, historical heritage of the socialist past destroyed, and land property concentrated into the hands a few professional real estate brokers. The further development of East German towns will depend on a successful strengthening of the civil and communal self confidence that is the milestone of every sustainable city development.
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