The Nuremberg real estate developer Project has filed for bankruptcy with billions of euros planned nationwide. So far, three of the four companies in the Project Immobilien Group have filed for bankruptcy, according to the insolvency administrators at the Nuremberg law firm Schultze
According to the website of the Project real estate group, 120 projects with an investment volume of 3.2 billion euros were under construction or planned nationwide at the end of June. According to the insolvency administrator, Project manages around 60 projects across Germany.
In addition to the real estate companies, there is a second group of companies that is not insolvent. Project Investment, as the second arm of the company network, collected the investor money for the construction projects on the capital market by issuing funds. According to the company website, there are several dozen funds with a volume of 1.4 billion euros, signed by over 32,000 investors.
The information on the website also shows that the Project group of companies has expanded rapidly over the past ten years: in 2013 there were 9,300 investors and 286 million euros in capital.
Increased construction costs
“An important reason for the bankruptcy is the enormous increase in construction costs as a result of the Ukraine war. It was not possible to pass these cost increases on to customers,” the insolvency administrator said in a statement on Friday. The focus of the project group is on the metropolitan areas of Berlin, Munich, Hamburg, the Rhine-Main area, the Rhineland and Nuremberg.
The rapid increase in real estate interest rates combined with the increase in construction prices has already resulted in several insolvencies in the industry in recent months.
Nationwide, there are increasing reports that property developers cannot sell finished condominiums and houses, or only after months, because the hoped-for buyers do not want to or cannot pay the prices. If real estate developers get into financial difficulties, the consequential damage does not only affect investors and buyers. The contracted construction companies are often left with bills.
The Project Group has so far advertised that it draws “exclusively from equity capital for all construction projects”. “Our customers and investors enjoy the greatest possible security and reliability,” the website said on Saturday.
