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Real estate industry in crisis: wave of insolvencies hits construction companies
The real estate industry in crisis: 630 bankruptcies so far - experts predict further bankruptcies until 2026. Find out more from us. #real estate crisis #bankruptcy wave
Real estate industry in crisis: wave of insolvencies hits construction companies
The current situation in the German real estate industry shows a worrying picture, as the number of insolvencies is increasing at an alarming rate. In the first quarter of 2024, 630 companies from the real estate sector had to file for bankruptcy. This marks an increase of 18.6 percent compared to the previous year and 17.3 percent compared to the previous quarter. In the entire year of 2023, there were a total of 1,997 real estate companies that had to decide to go to bankruptcy court.
The forecast for the future of the industry is bleak, with experts such as Falkensteg's Christian Alpers expecting bankruptcies to continue to rise. The construction crisis is expected to last until 2026, and the bankruptcy rate is expected to reach double digits. Large companies with annual sales of over ten million euros are particularly affected by this wave of bankruptcies. There were 31 major bankruptcies in 2023, while 21 such cases occurred in the first quarter of 2024 alone.
The reasons for these developments are diverse. The rising costs of housing construction have made it more difficult to create affordable housing, especially after important government funding programs such as the KfW 55 funding expired. The additional increase in key interest rates by the European Central Bank has made property purchases unaffordable for many. These factors have led to general uncertainty and a standstill in the industry.
Despite the bleak situation, there are also bright spots for the real estate industry. Companies in the field of energy renovation, such as heating engineers, solar companies and craft businesses, appear to be more stable and do not show a significant risk of insolvency. In addition, sectors such as warehouse and logistics construction and industrial construction have had a comparatively low insolvency rate. Overall, the number of insolvencies has increased alarmingly not only in the real estate industry, but also in other sectors and company sizes.
The ongoing crisis in the real estate industry requires urgent measures from the government and companies to contain the negative developments and find long-term solutions. It remains to be seen how the industry will develop in the coming years and whether it will be possible to overcome the current challenges.