The German group pulls the ripcord because of rising construction costs and high interest rates. Plans in Berlin and Dresden are particularly affected.
German real estate giant Vonovia is pulling the cord due to rising construction costs and interest rates and halting all new construction projects planned for 2023. “We won’t have new construction projects from this year onwards. Inflation and rates interest rates have gone up enormously and we cannot close our eyes to that”, said Vonovia’s CEO, Daniel Riedl, to the “Westdeutsche Allgemeine Zeitung” (Tuesday’s edition). Plans in Berlin and Dresden are particularly affected.
“For properties that we were previously able to offer for 12 euros per square meter rent-free, we would now have to go to 20 euros to recoup our costs of 5,000 euros per square meter,” said Riedl. Such rents are “completely unrealistic” in large parts of Germany. To cover the demand for 700,000 apartments across Germany, rents of eight or nine euros are also needed. The German federal government must step in and provide clear funding guidelines and promote the digitization of construction applications.
Explosion of costs is decreasing the need for new housing construction
In November, the boss of Vonovia, Rolf Buch, had already reduced the investments for the new building to around 350 million euros below the values of the previous year, referring to the increase in costs.
The general manager of Germany’s leading construction industry association, Tim-Oliver Müller, recently warned that urgently needed new housing construction would be slowed down by exploding costs. “Many projects were initially put on hold or even cancelled,” he said.
In Austria, Buwog and Conwert belong to Vonovia. Last week, the German real estate giant also joined local Gropyus AG. Vonovia participated as lead investor in the company’s €100 million funding round.
(APA)