The construction crisis is hitting a real estate giant from Wiesbaden particularly hard. Now the financial regulator BaFin has to intervene and file another insolvency application.
Frankfurt - The crisis at the Wiesbaden real estate company Deutsche Invest Immobilien (Dii) continues. On Wednesday, April 17th, the Federal Financial Supervisory Authority (BaFin) issued a ban on payments and sales against dii Investment GmbH and filed for insolvency. This is necessary “in order to secure the assets of dii Investment GmbH in an orderly procedure,” as BaFin announced on Thursday.
dii Investment GmbH is a subsidiary within the Dii Group and, unlike the parent company, is supervised by BaFin. The parent company had to file for bankruptcy before Easter. Earlier this week the company announced that further insolvency applications would have to be made within the group.
Insolvency and moratorium: Investors can contact BaFin
The company now affected, dii Investment GmbH, manages investment funds worth 621 million euros. The 16 funds invest mainly in real estate; private individuals are also allowed to invest their money in two of the funds. 14 funds are intended only for professional investors. This money is now to be secured with the moratorium and BaFin's bankruptcy filing.
The financial regulator asks affected investors if they have any questions to call the following number: 0800 2 100 500.
Investment companies such as dii Investment GmbH, which are supervised by BaFin, cannot file for insolvency of their own.
BaFin's intervention is seen as a sign of how deep the crisis at Dii really is. As BaFin explains on its website, such a moratorium will only be imposed if all other measures have failed. “However, if the institution is threatened with insolvency or excessive indebtedness, then the financial regulator will pull the ripcord,” it says.
The construction crisis is spreading more and more: bankruptcies are increasing
Dii is mainly active in the area of residential construction projects and, according to its own information, manages a portfolio of properties worth four billion euros at 50 different locations. The company employs 280 people, most of whom work at the company headquarters in Wiesbaden.
Dii is just one of many large bankruptcies in the construction and real estate industry, which has fallen into a deep crisis in the last two years. There is currently no significant improvement in sight. In German housing construction, almost every fifth company is currently affected by canceled orders. In March, 19.6 percent complained about this, as the Munich Ifo Institute found in its company survey. “The situation in housing construction remains tense,” said Ifo survey chief Klaus Wohlrabe. “There are too few new orders added to the cancellations.” In March, 56.2 percent of companies reported a lack of orders.
This means that bankruptcies in the construction industry are also increasing. In a new risk analysis, the insurer Atradius states: “We expect an increase in insolvencies in the construction industry of between 10 and 15 percent this year compared to the previous year.” That's what Michael Karrenberg, director of risk management at the credit insurer, says. In 2023, the number of bankruptcies in the construction industry rose by around 21 percent to 2,900 company bankruptcies compared to the previous year. This exceeded the pre-Corona level by a mid-single-digit percentage range - in 2019 the number of insolvencies in the construction industry was 2,770. “I fear that the wave of bankruptcies will only really become apparent this year,” predicts Michael Karrenberg.