Risks for property buyers: What threatens the insolvency of project developers?

Risks for property buyers: What threatens the insolvency of project developers?

According to a report by www.maz-online.de,

The rising interest rates on construction money, high material costs and a collapse in demand due to high inflation are causing concerns for developers of residential projects. The insolvency of some real estate developers, such as Project Immobilien, represents a growing risk for buyers of construction projects that have already begun but are not yet completed.

The cost calculations of many property developers have been overturned by current developments. In the worst case, there is a standstill on the construction site and private developers are faced with the problem of having already paid down payments but finding an unfinished property. According to the Civil Code, if the project developer goes bankrupt, buyers have the right to withdraw from the purchase, although this can also be problematic.

For the real estate industry, this could mean that more future buyers are hesitant to invest in construction projects that have already begun. In addition, material costs could increase further as developers are forced to pay higher prices to complete construction projects.

The withdrawal of contracts that have already been concluded could also have a negative impact on real estate developers' sales and lead to further bankruptcies. This would weaken the overall real estate market and lead to a decline in construction projects, which in turn could affect the industry's growth.

Communication between buyers, developers and insolvency administrators will therefore be crucial in the future in order to find solutions and minimize the impact of insolvencies on real estate projects.

All in all, in the current economic situation, the real estate industry needs strong nerves and comprehensive advice for future developments.