German real estate market in crisis: What awaits Benkos Signa and Peach Property - analysis by a financial expert

German real estate market in crisis: What awaits Benkos Signa and Peach Property - analysis by a financial expert

According to a report from www.nzz.ch, valuation gains, high debts and the herd instinct in the real estate market could bring down René Benko's Signa Group. However, this is not an isolated case, as many real estate companies that have benefited from low interest rates in recent years are now faced with a decline in the value of their portfolio and rising refinancing costs.

The analysis shows that the interest rate turnaround could create a perfect storm for companies like Peach Property. The real estate company bought tens of thousands of rental apartments in less attractive cities and benefited for years from cheap loans and capital gains. However, it suffered a significant loss in the value of its real estate in the first half of 2023 and is now faced with the challenge of having to refinance significant portions of its debt capital.

The real estate company's difficult situation is also reflected in terms of personnel: the founder and long-time CEO left the company, as did the chairman of the board, which indicates internal differences. Nevertheless, the new Chairman of the Board of Directors is confident that the company is in a solid financial position and can overcome the challenges.

Switzerland, on the other hand, seems like an island of bliss compared to Germany, as it has been spared from dramatic price corrections. Although large real estate companies are also experiencing valuation losses here, the country is far removed from German conditions. The stricter rules for real estate loans, more conservative financing for investors and the comparatively low interest rates have helped to stabilize the market.

However, it is important to note that in Switzerland too, the rapid growth in residential property prices has slowed and corrections have occurred in some regions. However, demand remains high due to immigration and property loan rules remain strict.

The impact of the decline in value at real estate companies such as Peach Property could have long-term consequences for the real estate market and the industry as a whole. It will be exciting to see how the situation develops in the coming years and how companies deal with the challenges.