Graphic: Germany's struggling property sector in five charts
01/08/2023 10:09
By Tom Sims
FRANKFURT, Aug 1 (Reuters) - Germany's property sector
is under stress, prompting firms to call for government support,
property developers to file for insolvency and share prices of
landlords to plunge.
The real estate industry in Europe's largest economy long
benefited from an era of cheap money that fed a decade-long
boom, but now it is grappling with a major about-face in
fortune, a dynamic also rearing its head in the United States
and Sweden.
Here are five charts that show the extent of the sector's
crisis in Germany:
1. CONSTRUCTION JOBS
Jobs in the building industry have risen steadily since the
financial crisis more than a decade ago, but growth is slowing
sharply.
Data published on Tuesday showed just a 0.1% year-on-year
increase in May in jobs, the slowest rise in 10 years.
"No improvement in the situation is foreseeable," the
federal labour office said.
2. PLUNGE IN NEW CONSTRUCTION
Cranes may still line the horizons of Berlin and Frankfurt,
but new construction plummeted in Germany during the first half
of the year.
It's just the latest in a flurry of indicators that show
real estate in Germany is in a deep funk.
New building permits in Germany dropped 27% during the first
five months of this year, compared with the same period last
year.
"Many, many property developers at the moment are postponing
projects or slowing them down," said Francesco Fedele, chief
executive of BF.direkt, a property financing consultant.
3. VONOVIA VS. THE DAX
Vonovia, Germany's largest real estate group, serves as a
bellwether for Germany's property sector. Its shares have
underperformed Germany's blue-chip DAX index.
Analysts at Stifel recently downgraded Vonovia and other
property companies to "sell" from "hold", noting they would be
subject to "a protracted hangover" after "a seemingly endless
party of growth fuelled by ever cheaper finance".
4. HOME PRICES
Germany now belongs to a small group of European countries,
including Sweden and Denmark, where residential prices have been
falling, marking a reversal from years of gains.
5. TRANSACTIONS
Germany is the largest real estate investment market on the
European continent.
Investment volumes are down across Europe, but the fall in
Germany brings transactions to 2012's levels, according to Jones
Lang LaSalle.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Vonovia underperforms https://tmsnrt.rs/3Ymas7N
Construction jobs https://tmsnrt.rs/3YdeJdw
New building slows https://tmsnrt.rs/43QWvzT
Transactions fizzle https://tmsnrt.rs/3Kjwy57
Home prices fall https://tmsnrt.rs/43MI93t
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(Reporting by Tom Sims; Additional reporting by Holger Hansen,
editing by Ed Osmond)
((Tom.Sims@thomsonreuters.com; +49 30 220 133 645;))