How to deal with decreasing subsidies since the German reunification

Leipzig: two decades of urban regeneration


Cities in the former East Germany are in a position different from that of both western German cities and cities of the former socialist bloc. Compared to Western cities, they have gone through a drastic demographic decline that made their urban fabric shrink or disappear. At the same time, they benefitted from European funds much earlier than cities in other central and eastern European countries.

Urban regeneration in Leipzig has been influenced by both characteristics. It started in the early 1990s. Leipzig then became a reference for all European cities after European ministers of urban development and territorial cohesion met there informally in 2007 and issued the Leipzig Charter on Urban Integrated Sustainable Development.

In the following pages, the presentation will first deal with the municipal strategy of urban regeneration. Then it will focus on actors and financing of the strategy, with concrete examples of actions. The last point will derive some lessons from the Leipzig experience.

General data:


Land: Saxony

Location at the crossroads of three main highways: Berlin-Munich, Magdeburg-Dresden, Leipzig-Göttingen

Urban fabric

The socialist heritage: Wilhelminian-style buildings and art nouveau buildings in bad shape, derelict industrial sites

Improvement of the housing stock: refurbishment of more than 75% of the old building stock


1933: 713,000 inhabitants in the city of Leipzig

1989: 530,000

1998: 437,000

2012: 535,000

Urban regeneration in Leipzig, a story spanning two decades

The steep demographic decline that Leipzig underwent after WWII deepened after reunification, but stopped at the end of the 1990s. In 1999 population slowly started to grow, and growth has been continuous since then, although the figures remain lower than at the end of the socialist regime.

Facing this situation, local authorities launched a strategy which has continued through distinct phases.

The initial strategy

Back in the 1990s, the most urgent issue was to stop economic decline and demographic loss. Thus, refurbishment of the housing stock was implemented in order to improve living conditions in the existing houses. This did not prevent further de-population which was caused not only by departures towards the Western part of the country and the suburbs but also by a decline in birth rates. So the strategy evolved towards improving the urban environment to make it more liveable and, at the same time, towards attracting companies, in particular international ones. The main challenge then was to cope with the coexistence of high tech areas with new buildings and prestigious companies on one side and, on the other side, declining areas that even poor families deserted if they could, leaving behind the poorest of the poor.

The early 2000s strategy

Compared to other former GDR cities, Leipzig seemed to be quite farsighted and realistic in declaring that urban shrinking would be considered as being the main condition of future urban development. The slogan was: “Keeping as much of the urban tissue as possible and restructuring as much as possible”. According to this principle, the whole urban tissue was divided into distinct categories corresponding to the kind of work required (from nothing to do to light rehabilitation and further on to complete restructuration and even some demolitions). Three main areas received special target plans to define precisely the development targets: Leipziger Osten (east), Leipziger Western (west) and the large housing estates.

One main tool of that strategy was the bundling of resources: various subsidy programs were combined in order to treat the focus areas in a comprehensive and sustainable approach, and also to have actions in several places. For example, a system of guardian houses (Wächterhäuser) was launched, allowing artists and small companies to use certain buildings temporarily if the building owners did not have enough money to maintain them. The “guardians” had only to maintain and use the place for work (not as a residence) to prevent the building from falling apart. Another tool, called Selbstnutzer, was promoted and funded by the municipality: it consisted in an association of professionals that brought together potential new owners and helped them refurbish an old house or build a new one (700 households involved at the end of the 2000s).

The greatest help came from URBAN II, a European programme for urban restructuring in deprived areas (2000-2006) that brought not only significant subsidies but also guidelines to combine actions on housing, public and green spaces, former industrial buildings and brownfields, and employment, all that with real citizen participation. It created a framework within which local actors could use their imaginations and experiment with actions like the ‘House guardians’ launched by the Haushalten association, or implementation of the concept of ‘perforated city’ – maintaining empty plots as part of the environment. This European programme helped restructure infrastructures, decontaminate a canal and clean its waterfront, and create new designs in plots left empty after demolition of abandoned factories or houses. The west became attractive for artists, start-ups, services industries and creative industry.

The second half of the 2000s strategy

While URBAN II was implemented in the western part of the city - where regeneration was on its way in 2006 but not achieved - the eastern part was still in rather bad shape. The municipality then aimed at a larger approach, but with less money. Its ambition was to launch actions not only aimed at housing and urban development but also targeting schools, culture, education and other areas. City planners oriented their strategy towards what they considered a second stage of integrated development.

This strategy was designed to start in the north-western part of the city centre, mainly Lindenau and Plagwitz, then go to the inner south, then to the west, and finally to the east. Aside from this geographical progression, it should be noted that the sharing of responsibilities has been evolving throughout this process.

More and more actors in the regeneration strategy

The municipality

Shortly after reunification, the municipality of Leipzig had an active policy of recruitment of professionals in order to tackle urban, economic and social challenges. Thus the municipal method has been twofold: on the one hand, total responsibility in launching its strategy in the short-, medium- and long-term; and on the other hand, a capacity to build up partnerships with various public and private actors to implement the strategy.

Within the municipal government, the office for urban planning is the institutional body that basically deals with the strategies and their further development, whereas the office for urban development and house building support is the office in charge of putting the strategies into action. It is the latter that coordinates all urban subsidy programs –unlike the situation in many other municipalities where the programs are managed by different offices.

Local offices in neighbourhoods provide support for the policies of the central services by writing flyers and reports, putting up posters, organising meetings and launching exhibitions.

Actors from the housing policies

Under the moderation of the municipality, different actors of the housing market such as housing companies, tenants’ associations, associations of owners, etc., meet regularly to discuss relevant issues.

Private investors have had a growing role over the entire period, buying and building office spaces and housing. An example is given by a street (Joseph Street) where houses were in a very bad state of repair and most of them were empty. This street underwent complete transformation after the municipality converted a disused space into a public garden. The garden made the area more attractive and, as a result of this strategy, families took advantage of the area’s low real estate prices to buy houses and restore them. Through combined public and private investment, the place has come back to life. A kindergarten has been opened at the initiative of a group of inhabitants. Projects are launched in close cooperation between the municipality, owners and tenants. This process illustrates what the municipality has been seeking in its strategy: public investments multiplied by the injection of private investments.

Inhabitants and private professionals

Urban planners were the first actors to advocate for the urban regeneration of the former industrial neighbourhood of Plagwitz, west of the city centre, in the early 1990s. They got the municipality to create an ‘association for the urban development and regeneration of Plagwitz’ (ESGP in German).

Since then, inhabitants and various stakeholders in the target areas of the urban regeneration have been meeting regularly in forums. Moreover, in the most recent period, as public money and action have become scarce, a stronger mobilisation of civil society has been visible in the implementation of local amenities.

Decreasing financing of the regeneration strategy

European structural funds have had an important role in the financing of the Leipzig urban regeneration, although the whole process has also been strongly subsidized by federal and Länder funds. However, all these financing sources have been drastically cut in recent years. For example, the federal “Soziale Stadt” programme lost 25% of its budget from 2009 to 2010. While URBAN II (2000-2006) brought about €20 million (URBAN and city contributions included) for an action plan focused on an area located in the Lindenau and Plagwitz neighbourhoods, the ERDF operational programme that followed URBAN brought only €5 million for the same territory.

These restrictions paved the way to PPP (public private partnership) and smaller initiatives on the part of inhabitants in neighbourhoods undergoing regeneration.

Some lessons learned

After two decades of the Leipzig strategy, a real change is perceptible in the west, with more office buildings, more inhabitants and private initiatives. The Baumwolle Spinnerei may be the most impressive of these initiatives. A former spinning mill turned into a cultural complex, it is designed to provide one hundred studios at low rents to artists, and it is run on a non-profit basis. Other structures have been progressively added such as twelve exhibition rooms, private galleries215 (some of which moved in from the town centre) an art-house cinema, public library, and free gardens for the people working in the Spinnerei and for former factory workers still there. In order to have enough money to maintain the non-profit system, part of the complex is rented out commercially to businesses, with a special permit from the municipality.

The municipality’s vision led it to give a controlled place to private investment and to combine attractiveness for international companies in specific places with incentives for small- and medium-sized enterprises. Efforts to attract investments in housing refurbishment were not immediately successful but progressively delivered results.

The urban integrated approach needs to be regularly assessed, and this leads to debate among professionals and even sometimes between professionals and political actors. The latter tend to think that policies implemented for more than ten years have not provided enough significant results, and point to the still high unemployment rate and poor performance of the educational system, with many young people leaving school without a degree. Technicians are more optimistic, considering Leipzig as a success story since people who moved to the outskirts are coming back into town, boosting the real estate sector, limiting urban sprawl, and contributing to a demographic increase that they foresee continuing until 2020.

In spite of the carefully drawn strategy, real change is slow. Only the north-western and western parts of the city have been affected and the dilemma is expressed in budget negotiations over the reduction of amounts available for urban planning.


Fayman, S., Keresztély, K., & Krisjane, Z., (2009) « Les politiques de renouvellement urbain des villes d’Europe Centrale illustrées par la réhabilitation de quartiers existants – le cas de la ville de Leipzig en Allemagne », Final Report, manuscript, ACT Consultants, Anah-CDC, Paris.

Fayman, S. (2011) “The consolidation of a post socialist urban regeneration with decreasing subsidies - The case of Leipzig, Germany.” in : Fayman, S. – Keresztély K. et al. (2011) Good policies and practices to tackle urban challenges. Study commissioned by the European Commission (Directorate General for Regional Policy) in the frame of the common reflection on the « Cities of Tomorrow ».