Germany's top landlord predicts more casualties as property crash bites
German property crisis worst in a generation
Vonovia CEO sees surge in real estate bankruptcies
CEO Buch: 'It is going to be bitter'
Despite ECB rate cut, executives cautious on recovery
Updates with LBBW report in paragraph 17, adds second graphic at end
By John O'Donnell and Tom Sims
FRANKFURT, July 10 (Reuters) -Germany's real estate industry, already in its third year of turmoil, faces more pain ahead as further companies go bust, the CEO of Germany's largest landlord warned.
The bleak assessment from Rolf Buch, the CEO of Vonovia VNAn.DE and one of the nation's property titans, defies hopes for an imminent turnaround as the sector goes through its worst crisis in a generation.
"We're going to see an extreme number of bankruptcies over the next few months, maybe over the next few years. We're already seeing them today," Buch told journalists on Tuesday.
"It is going to be bitter."
For years, low interest rates and a strong economy sustained a boom across the German property sector, which broadly contributes 730 billion euros ($789.64 billion) a year to the nation's economy, or roughly a fifth of Germany's output.
That boom ended when rampant inflation forced the European Central Bank to swiftly raise borrowing costs. Real-estate financing dried up, deals fizzled, projects stalled, major developers went bust, and some banks teetered.
The industry has called on Berlin to intervene.
Buch built Vonovia through a series of multi-billion-euro takeovers, building up a debt mountain as the property crisis struck, forcing it to sell swathes of homes.
In its wake, Vonovia, which has roughly 550,000 apartments, slashed the value of its properties by almost 11 billion euros in 2023, taking the group to a 6.7-billion-euro loss, its worst ever.
It has cut the value of its property by more than one fifth, stripping out rent increases, since 2022, when interest rates started to climb, knocking prices.
Buch said Vonovia was now finished with big writedowns, although said there could be further small adjustments.
ECB RATE CUT
A recent rate cut by the ECB has sparked hopes of a revival of the sector, but some executives are still cautious.
"Whether or not the ECB changes interest rates marginally will not reverse the trend for property," said Matthias Danne, board member at Deka, one of Germany's largest asset managers with 55 billion euros in property investments.
Elevated rates will keep financing expensive, and a rebound in building sales has been "slower coming than expected", Danne told Reuters.
Germany is the largest real estate investment market on the European continent. The turnover of buildings through sales that often characterises a healthy market slowed to a halt and is only gradually picking up.
Jones Lang LaSalle, the global real estate consultant, this week disclosed that transaction volumes across Europe's largest economy rose 10% during the first half of 2024 from last year's low level.
Offices have been particularly hard hit, and the German bank LBBW said in a report on Wednesday that low turnover in transactions points to a risk that "distressed sales are on the back burner and could flood the market later".
The spectacular collapse of Signa, the real estate empire of Rene Benko, has been one of the most dramatic episodes underscoring the industry's troubles.
But weakness in commercial real estate in the United States, with offices still empty after the pandemic, and the struggles of major property developers in China have focused global attention on the sector.
The drumbeat of bad news is continuing in Europe. Last month, a Frankfurt skyscraper that is home to Germany's central bank and asset manager Deka filed for insolvency.
The Apollo-owned property company Demire has revealed it is in talks with investors about restructuring 500 million euros in bonds. It has also said it has been struggling to agree with a bank on a loan. Demire and the bank, DZ HYP, declined tocomment.
Rents have been climbing steeply as immigrants flock to Germany, foreigners seek work there and house building ground to a virtual halt, squeezing the supply of homes.
Vonovia targets mid- and low-income earners with affordable rents, and Buch said there was fierce competition for flats.
"The market for apartments is going to get worse," he said.
($1 = 0.9245 euros)
Vonovia underperforms https://reut.rs/3Liz0Jc
German building slumps https://reut.rs/4ctLucF
Additional reporting by Matthias Inverardi; editing by Rachel More and Mark Heinrich
Activos relacionados
Últimas noticias
Descargo de responsabilidades: Cada una de las entidades de XM Group proporciona un servicio de solo ejecución y acceso a nuestra plataforma de trading online, permitiendo a una persona ver o usar el contenido disponible en o a través del sitio web, sin intención de cambiarlo ni ampliarlo. Dicho acceso y uso están sujetos en todo momento a: (i) Términos y Condiciones; (ii) Advertencias de riesgo; y (iii) Descargo completo de responsabilidades. Por lo tanto, dicho contenido se proporciona exclusivamente como información general. En particular, por favor tenga en cuenta que, los contenidos de nuestra plataforma de trading online no son ni solicitud ni una oferta para entrar a realizar transacciones en los mercados financieros. Operar en cualquier mercado financiero implica un nivel de riesgo significativo para su capital.
Todo el material publicado en nuestra plataforma de trading online tiene únicamente fines educativos/informativos y no contiene –y no debe considerarse que contenga– asesoramiento ni recomendaciones financieras, tributarias o de inversión, ni un registro de nuestros precios de trading, ni una oferta ni solicitud de transacción con instrumentos financieros ni promociones financieras no solicitadas.
Cualquier contenido de terceros, así como el contenido preparado por XM, como por ejemplo opiniones, noticias, investigaciones, análisis, precios, otras informaciones o enlaces a sitios de terceros que figuran en este sitio web se proporcionan “tal cual”, como comentarios generales del mercado y no constituyen un asesoramiento en materia de inversión. En la medida en que cualquier contenido se interprete como investigación de inversión, usted debe tener en cuenta y aceptar que dicho contenido no fue concebido ni elaborado de acuerdo con los requisitos legales diseñados para promover la independencia en materia de investigación de inversiones y, por tanto, se considera como una comunicación comercial en virtud de las leyes y regulaciones pertinentes. Por favor, asegúrese de haber leído y comprendido nuestro Aviso sobre investigación de inversión no independiente y advertencia de riesgo en relación con la información anterior, al que se puede acceder aquí.
