The German property collapse is happening in residential too

Higher interest rates have meant a 12 per cent annual decline in commercial valuations in the final quarter of last year — the largest on record, according to the association of Pfandbrief banks this week. The fallout from the implosion of René Benko’s luxury property group, Signa, has highlighted mounting distress in the commercial real estate sector. Residential property appears to be faring better, supported by strong demand from tenants and growing rents. Don’t believe that will last. Shares in big residential landlords like Vonovia, TAG and LEG have all rallied since the end of last year, outperforming commercial property owners. Chief executives have served up words of comfort: Vonovia’s Rolf Buch thinks the bottom is close and LEG’s Lars von Lackum said the market is not going to implode. In reality, further writedowns for property owners seem inevitable. But it is further up the value chain, with developers, that the real pain is being felt.

Source / Read More : Financial Times