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Real estate industry in crisis: wave of insolvencies hits the construction industry
Find out more about the current real estate crisis in Germany: 630 bankruptcies so far and forecast developments until 2026. Experts warn of further challenges. #Real Estate #Bankruptcies #Real Estate Crisis
Real estate industry in crisis: wave of insolvencies hits the construction industry
The real estate industry in Germany is in a tense situation as the number of insolvencies continues to rise. After the first project developers had to file for bankruptcy last year due to a lack of orders, downstream areas are now also affected. The insolvency of the renowned real estate company Deutsche Invest Immobilien (D.i.i.) has shocked the industry and spread uncertainty.
An exclusive analysis by the Falkensteg management consultancy shows that 630 companies in the real estate industry had to file for bankruptcy in the first quarter of 2024. This represents 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, 1997 real estate companies in Germany filed for bankruptcy.
The head of the Real Estate division at Falkensteg, Christian Alpers, predicts that bankruptcies are likely to rise even further this year. Large companies with annual sales of over ten million euros are particularly affected by the wave of bankruptcies. In 2023 there were a total of 31 major bankruptcies in the real estate industry, while there were already 21 in the first quarter of 2024.
The construction crisis is expected to last until 2026, which could lead to further bankruptcies. The uncertain framework conditions make long-term investments in Germany questionable. Thomas Reimann, CEO of ALEA Hoch- und Industriebau GmbH, emphasized this negative trend at an industry meeting.
Despite the difficult situation, there is hope for the real estate industry in companies that specialize in energy-efficient renovation. Heating engineers, solar companies and craft businesses in these areas as well as companies in warehouse and logistics construction hardly record any bankruptcies. Bankruptcy rates have also increased beyond the real estate industry, pointing to broader economic challenges.