As of: March 15, 2024, 11:33 a.m
By: Bona Hyun
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Vonovia continues to feel the consequences of the real estate crisis.
Germany's largest residential real estate group slipped deep into the loss zone.
Berlin - The consequences of the real estate crisis do not stop at Germany's largest housing group: the DAX group Vonovia is in the red for 2023.
According to the company, the loss was almost 6.8 billion euros.
In the previous year, Vonovia recorded a deficit of around 669 million euros.
The value of the rental portfolio was around 83.9 billion euros at the end of December 2023.
A year earlier, Vonovia had valued the properties at 94.7 billion euros.
Because of the real estate crisis: Vonovia writes a loss of almost seven billion euros
Day-to-day business also went worse for the group in 2023, the group announced on Thursday (March 15) after the stock market closed.
Operating profit fell by nine percent to 1.8 billion euros.
Business with project development and additional services in particular developed weaker.
However, due to high demand for living space in metropolitan areas, rentals rose significantly.
The real estate crisis is hitting Germany's largest housing group Vonovia hard.
© Malte Ossowski/SVEN SIMON/imago
Rents rose by an average of 3.8 percent across the group at the end of December.
In Germany, the average rent at Vonovia was 7.63 euros per square meter (as of the end of December).
The shareholders should benefit from this: Management wants to propose a dividend of 90 cents per share to the general meeting.
A year earlier, the group paid out 85 cents.
For the current year, Vonovia expects adjusted earnings before interest, taxes, depreciation and amortization of 2.55 billion to 2.65 billion euros.
Extraordinary costs and income are deducted.
In the previous year the result was 2.58 billion euros.
The adjusted pre-tax profit should be between 1.7 billion and 1.8 billion euros.
Last year it was 1.87 billion euros.
Crisis on the German real estate market: construction plans are on hold
In 2023, Vonovia said it would initially forego building tens of thousands of new apartments due to high interest rates and construction costs.
The CEO also spoke out against a rent freeze.
“We have plans for a total of 60,000 apartments in the drawer,” said CEO Rolf Buch to the newspapers of the
Funke media group
.
“We get everything ready up to the building regulations.
And we hope that building will soon be worthwhile and profitable again.
Then we want to build again immediately.”
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Warning signals have been increasing on the German real estate market for some time now.
According to figures from the Federal Statistical Office, the construction of 21,000 apartments was approved across the sector in July 2023.
This corresponds to a drop of 31.5 percent or 9,600 compared to the previous year.
The reduced construction activity is affecting the housing market.
As early as January 2023, Construction Minister Klara Geywitz had to declare the federal government's goal of building 400,000 new apartments annually as unattainable for this year.
In the first seven months of the year, just 156,200 new apartments received approval.
Prices for apartments and office buildings are falling in the real estate crisis
In the real estate crisis, commercial properties are also coming under increasing pressure - primarily offices, which are suffering from the trend towards home offices and are increasingly putting a strain on banks' balance sheets.
According to the Association of German Pfandbrief Banks (VDP), prices for commercial real estate fell by a good 12 percent in the fourth quarter of 2023 compared to the same period last year or 4.9 percent compared to the previous quarter - driven by the decline in office properties.
The association, which represents the most important real estate financiers in Germany, recently spoke of the largest price decline in commercial real estate ever measured.
For comparison: Residential properties only fell in price by 6.1 percent within a year or 1.6 percent compared to the previous quarter.
(bohy/dpa)