A few weeks ago, an important German real estate company had to file for bankruptcy. Now the company is back with bad news.
Wiesbaden – The insolvent real estate company Deutsche Invest Immobilien (dii) has to file further bankruptcies within the company. As the company writes in a statement available to
Ippen.Media
, it will soon file for bankruptcy for 14. GmbH & Co. Closed Investment-KG. Last week, dii also filed for insolvency with the district court in Frankfurt for dii 14. Neubau E GmbH. Insolvency applications will follow “soon” for four other companies, the company continued.
The real estate group primarily manages residential construction projects. According to its own information, the company manages a portfolio of properties worth four billion euros in 50 different locations. The company employs 280 people, most of whom work at the company headquarters in Wiesbaden.
The construction industry has been hit hard by the crises of recent years
The new building fund 14 and in particular the “Viktoria Quarter” project in Wiesbaden were particularly affected by the very difficult market conditions for project developments in recent years, writes the company. “The start of the Victoria Quarter project development in 2020 fell in the middle of the Corona period and accordingly we had to contend with significant problems throughout the entire construction phase,” the chairman of the board, Frank Wojtalewicz, is quoted as saying. “On the one hand, an enormous increase in the cost of building materials due to material bottlenecks, delivery difficulties and a lack of craftsmen and, on the other hand, a sharp decline in the purchase of condominiums due to the high interest rate level.”
The real estate group is one of several mega-bankruptcies in the construction and real estate industry, which has slipped into a deep crisis, especially in the past two years. The bankruptcy of the Austrian real estate group Signa caused a stir in November 2023, but smaller project developers also had to give up due to high interest rates, cautious investor activity and increased construction prices.
The provisional insolvency administrator, Romy Metzger, does not expect any insolvencies for most of the dii funds. “With a few exceptions, I have an overall positive image of the majority of other funds,” says the lawyer from the law firm SGP Schneider Geiwitz. “For the funds that currently have a tense liquidity situation, the company is currently conducting intensive discussions with investors and banks in order to stabilize the situation in these funds in the long term. I am optimistic that these can be continued as planned with additional investor funds.”
Construction crisis has housing construction under control: Traffic light must take action
The tense developments in the construction industry are now having consequences for the entire economy. The construction industry is a crucial economic engine for Germany. 14 percent of the working population in Germany is directly employed in the construction industry. “Housing construction is more important in Germany than the automobile industry,” explained Martin Gorning from the German Institute for Economic Research (DIW) last week at the Housing Construction Day 2024. The increasing insolvencies in the construction industry, the staff cuts, which are increasing in all areas What can be observed is the resulting falling tax revenue for the state - all of this contributes significantly to the fact that Germany is in a growth slump.
The federal government is currently working on measures to stimulate the construction industry, but these are currently stuck in the coordination process. Of particular importance for the industry is the introduction of the so-called building class E (E for “experimental” or “simple”), which is intended to significantly simplify construction and therefore make it cheaper. This requires a change in the Civil Code - but that is now coming, as
IPPEN.MEDIA
has learned from government circles. Exactly when is not clear, but a draft could be available this month.
Category list image: © Daniel Bockwoldt/dpa