Germany’s Real Estate Crisis: More Bankruptcies on Horizon, Warns Vonovia CEO

Germany's real estate industry faces severe challenges, with a significant number of companies expected to declare bankruptcy, according to Vonovia CEO Rolf Buch. The sector, long buoyed by low interest rates and a strong economy, is now struggling due to high borrowing costs and economic uncertainty. Berlin has been urged to intervene.

Germany's real estate industry, already in its third year of upheaval, faces prolonged difficulties as more companies are expected to succumb to bankruptcy, according to the CEO of Germany's largest landlord. Rolf Buch, CEO of Vonovia, painted a grim picture, casting doubt on hopes for a quick recovery amid the sector's worst crisis in decades.

"We're going to see an extreme number of bankruptcies over the next few months, maybe over the next few years. We're already seeing them today," Buch disclosed to journalists on Tuesday. "It is going to be bitter."

Previously sustained by low interest rates and a robust economy, the German property sector is reeling from the impact of increased borrowing costs imposed by the European Central Bank to counter rampant inflation. Financing has dried up, halting projects, causing major developers to collapse, and putting banks at risk.

(With inputs from agencies.)