The real estate company Vonovia is suspending all new construction projects planned for the year. The rental prices required to cover costs would be unrealistic.
Due to rising construction costs and interest rates, real estate giant Vonovia is pulling the plug and stopping all new construction projects planned for 2023. “Inflation and interest rates have risen enormously, and we cannot turn a blind eye to that,” Vonovia board member Daniel Riedl told the “Westdeutsche Allgemeine Zeitung”. Plans in Berlin and Dresden are particularly affected.
“For properties that we used to be able to offer for twelve euros in basic rent per square meter, we would now have to go towards 20 euros to recoup our costs of 5,000 euros per square meter,” said Riedl. These rents are “completely unrealistic” in large parts of Germany. In order to cover the nationwide need for 700,000 apartments, rents of eight or nine euros are necessary. The federal government must intervene and provide clear funding guidelines and promote the digitization of building applications.
In November, Vonovia boss Rolf Buch had already scaled back investments for new construction to around 350 million euros, below the previous year’s figures, citing the increased costs. The managing director of the German Construction Industry Association, Tim-Oliver Müller, had recently warned that the urgently needed new housing construction would be slowed down by the cost explosion. “Many projects have been put on hold or even canceled,” he said.
