Germany’s largest real estate group, Vonovia, is putting the brakes on new residential construction more than announced at the beginning of November. “We will not have any new construction projects this year,” Development Director Daniel Riedl told the Westdeutsche Allgemeine Zeitung. “Inflation and interest rates have risen enormously and we cannot turn a blind eye to that.” It is therefore necessary to wait until capital is available again at an acceptable rate of interest or until a corresponding subsidy is made available for construction.
The Federal Building Ministry criticized the announcement. “Even if we have turbulent times in the construction industry due to the turnaround in interest rates: Vonovia, as the largest housing company, cannot shirk its responsibilities,” Parliamentary State Secretary Cansel Kiziltepe (SPD) told the “Handelsblatt”. “Vonovia should stop paying dividends and use the money to secure the new building.”
The goal of building a new traffic light is a long way off
The deputy chairman of the Union faction in the German Bundestag, Ulrich Lange, rated the Vonovia announcement in the newspapers of the Bayern media group as “fatal testimony to the construction policy of the traffic light government”. “In terms of construction policy, we are already on the brink – the goals of the traffic lights are missed with a bang, and there is no trend reversal in sight.” For a long time, Clara Geywitz (SPD), Minister of Construction, called for “a strategy for new housing construction”. This included, for example, clear funding guidelines that created planning security for the companies.
In the WAZ interview, Vonovia board member Riedl did not give any precise information about the number of projects affected. “We would have already had a significant number of construction starts this year, for example in Berlin or Dresden, and have postponed them – just like most property developers are currently doing.” If the framework conditions on the capital market were to settle down again, one would be prepared and able to implement the projects. Given the sharp rise in construction costs over the past year, he expects a slight relaxation in the current year. He cited a drop in demand for the construction of apartments as the reason.
At the beginning of November, Vonovia announced that it would invest significantly less in modernization and new construction in view of the rise in interest rates and construction costs. In 2023 it should therefore be 850 million euros. It was not initially known what investment volume Vonovia plans to use after the new construction stop.
