Vonovia expects the price decline to end

Vonovia expects the price decline to end

Germany's leading real estate group, Vonovia, is optimistic that the fall in real estate prices will soon come to an end. According to CEO Rolf Buch, the bottom in performance is tangible and a return to growth is in sight. In the past, Vonovia had to reduce the value of its portfolio several times due to the real estate crisis, which led to losses worth billions. The portfolio value is now stabilizing and a revaluation was not necessary recently. In the first quarter of 2023, Vonovia recorded a profit of 335.5 million euros compared to a loss of around two billion euros in the same period last year.

In business operations, adjusted profit before taxes fell by 7.3 percent to 416.5 million euros from January to March, while rents rose by 3.8 percent. For the current financial year, Vonovia expects adjusted EBITDA between 2.55 and 2.65 billion euros and adjusted EBT between 1.7 and 1.8 billion euros. Expectations for organic rental growth were raised to 3.8 to 4.1 percent. Vonovia aims to further reduce its debt ratio and end up in the targeted corridor of between 40 and 45 percent at the end of the year.

A possible turning point for real estate prices could emerge from an expected interest rate turnaround by the European Central Bank in the second half of the year, according to the Association of German Pfandbrief Banks (VdP). Despite current challenges and high construction costs and interest rates, the real estate industry is confident that the market will recover in the current year. Vonovia also plans to increase organic value growth to 3 billion euros annually from 2025, mainly due to continued strong demand for apartments. Despite reluctance to build new buildings, investments in modernization are expected to increase while ongoing projects are completed.