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Real estate industry in crisis: wave of insolvencies expected
630 bankruptcies in the real estate industry - industry in danger! Find out why large companies are going bankrupt and how the crisis could last until 2026. #real estate crisis #bankruptcy wave
Real estate industry in crisis: wave of insolvencies expected
The real estate industry in Germany is in a serious crisis, with increasing numbers of insolvencies increasing uncertainty among companies. In the first quarter of 2024, 630 companies in the real estate industry had to file for bankruptcy, an increase of 18.6 percent compared to the previous year. Insolvencies rose by 17.3 percent compared to the previous quarter. In the entire year 2023, there were 1997 bankruptcies of real estate companies in Germany.
The forecast by the head of the Real Estate division at Falkensteg, Christian Alpers, says that insolvencies in the industry will continue to rise. He expects at least a double-digit increase in bankruptcies this year. Large companies with annual sales of over ten million euros are particularly affected. There were 31 major bankruptcies in 2023, while 21 were recorded in the first quarter of 2024 alone.
The traffic light government and the European Central Bank are contributing to uncertainty in the construction industry. The costs of building housing have risen by 45 percent since 2020, while funding programs have expired and key interest rates have increased. This has deterred investors and made it more difficult to create affordable housing. The construction crisis is also affecting the number of approvals for apartments, which have fallen by 18 percent compared to the previous year.
Despite the difficult situation, there is hope for the real estate industry in areas such as energy renovation, heating construction, solar companies and craft businesses. Companies in these sectors are experiencing an upswing and have virtually no bankruptcies. Across all industries and company sizes, the first quarter of 2024 recorded a total of 4,520 insolvencies, which corresponds to an increase of 12.6 percent compared to the previous quarter and 25.8 percent compared to the previous year.