As of: March 13, 2024, 7:00 a.m
By: Jonas Napiletzki
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Cautiously optimistic: Managing directors Johannes Groß (l.) and Carsten Freitag see more stability coming again after years of uncertainty.
© Thomas Plettenberg
“Building is virtually impossible today,” is how real estate expert Andreas Mattner put it.
But the Gross company from Holzkirchen believes that this is not entirely true.
Holzkirchen
- The construction site for six apartment buildings in Hausham stood still for four weeks - due to the bankruptcy of a general contractor.
Just one example of many that fits the picture recently painted by industry representative Andreas Mattner.
“Anyone who builds today will go bankrupt,” the President of the Central Real Estate Committee was quoted as saying at an appointment with the Building Minister in Berlin – and caused a stir.
But it's apparently not that bad in the district, as the Holzkirchner construction company Gross classifies as an example.
Demand has dropped significantly, confirms managing director Carsten Freitag.
Overall, the mood is moving towards “cautious optimism”.
Gross GmbH, founded in 1970, moved its headquarters from Sauerlach to Holzkirchen a year ago.
From there, 130 employees implement orders as a construction company.
At the same time, the company acts as a property developer: “We also buy and develop ourselves,” explains Freitag.
Until a few years ago, you could still choose who you wanted as a customer, adds managing director Johannes Groß.
Meanwhile, the capacity utilization is no longer such that you can sit back and relax, says Freitag.
“We have to acquire our orders.”
challenges
Many potential builders submitted offers, explains Freitag.
“But the decision as to whether and when construction can take place tends to be put on hold.” Unlike in the past, several rounds of negotiations are common in order to bring the price down.
Overall, demand was probably 20 to 30 percent higher in the period before the interest rate increase.
Meanwhile, as a property developer, marketing apartments has become more difficult.
“Larger stories in particular are dangerous,” says Groß.
The company stays out of neighborhoods in Munich with 100 to 200 residential units.
“It is almost impossible to find enough buyers to start the project,” explains Freitag.
A size of eight to twelve residential units is more suitable - projects that can start with three to four buyers found.
Buyers' reluctance is not only due to the interest, but also to the costs.
Freitag speaks of an “upward spiral” of inflation, building interest and material prices, which means that some end customers can no longer afford the costs.
“When it came to financing, all parameters were turned negative,” summarizes Freitag.
This is particularly noticeable for the company when it comes to supplier prices.
Factors such as tolls and the CO2 tax must be taken into account, as do higher energy standards that require more insulation.
Property developers can also be affected by these circumstances, as Freitag shows.
In the background is the principle of purchasing land, developing it and selling apartments.
“Many property developers are now realizing that they used to buy properties that were too expensive,” says Freitag.
The high prices would now have to be taken into account in sales.
Together with the high construction costs, this becomes a problem.
“It’s not about margins, it’s about the risk of being stuck with properties.”
outlook
However, the managing directors do not want to sign general statements like those made by industry representative Mattner.
Material prices have always risen by seven to ten percent annually, says Freitag.
And the market has normalized a little: “Inflation is falling, interest rates have leveled off.” Whether the private house builder can afford the prices is another matter.
But at least the costs have become more tangible, adds Groß.
The fluctuations could hardly be compared to those that occurred at the start of the war in Ukraine or during the pandemic.
Demand is still there, probably due to rising rents - and with it the company's capacity utilization.
“One or two people venture out of cover again,” says Freitag.
However, only politics can provide the real impetus for a change - for example through changed taxes.
“There is light at the end of the tunnel,” says Freitag, “but the tunnel is very long.”
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Handling
Until then, we have to wait out the bottom, says Freitag.
For property developers who – like Gross GmbH – don’t have banks to back them, this is the best option.
“We can’t give anything away,” says Groß, because there’s too little scope for that.
Time accounts, the balance of which employees can use up, help to bridge the gap.
“And we are more cautious when it comes to new hires,” says Freitag.
Despite the shortage of skilled workers, there is a risk of overcapacity.
However, the company does not notice a tendency to build less qualitatively.
Serial construction, as recently demanded politically, hardly plays a role in the region.
For economic reasons, properties here usually have to be developed to the maximum extent - sooner or later anyway.
nap
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