The largest landlord in Germany reported a loss of €6.8bn last week after writing down the value of its property portfolio.
Shares in Vonovia fell more than 7% in the wake of Thursday’s announcement, which is being taken as a sign that the end is not yet in sight for the country’s real estate woes.
The Bochum-based company manages 546,000 residential units and has a market value of €84bn.
It reported a 6.6% decline in the value of this portfolio in the first half of 2023 and a 4.2% decline in the second half.
The company commented that this was due to “changes in market conditions” – above all, the increase in inflation brought by the loss of cheap Russian energy, and the consequent rise in interest rates.
Rolf Buch, the company’s chief executive, said in a press statement that a growing number of analysts were confident that the fall in property value may have bottomed out, and that many were expecting the first interest rate cut “as early as this year”.
He said: “These are important signals for us. Once the market has stabilised, we will shift our focus back to an increase in earnings.”
The loss follows a €669m loss in 2022, following years of regular profit.
In a press conference held on Thursday after the results were posted, Buch told reporters that the collapse in valuation was “the worst we have ever seen”.
Germany’s property sector employs around 3.5 million people, working for 800,000 companies.
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