Germany's real estate industry, now in its third year of turmoil, is expected to face more challenges as more companies are likely to go bankrupt, according to Rolf Buch, the CEO of Vonovia, Germany's largest landlord. Buch's grim outlook challenges any hopes for a quick recovery, stating that the sector is experiencing its worst crisis in decades.

Buch predicted a significant number of bankruptcies over the coming months and possibly years, noting that many were already occurring. He described the situation as dire.

For several years, the German property sector thrived due to low interest rates and a strong economy, contributing approximately 730 billion euros annually to the nation's economy, about a fifth of Germany's total output. However, this boom ended when rampant inflation led the European Central Bank to rapidly increase borrowing costs. Consequently, real-estate financing dried up, deals fell through, projects stalled, major developers went bankrupt, and some banks were destabilized.

The industry has urged the German government to step in and provide support.

Buch, who expanded Vonovia through numerous multi-billion-euro acquisitions, accumulated significant debt just as the property crisis hit, forcing the company to sell large numbers of homes. Vonovia, which owns around 550,000 apartments, reduced the value of its properties by nearly 11 billion euros in 2023, leading to a record loss of 6.7 billion euros. Since 2022, the company has cut the value of its properties by more than a fifth, excluding rent increases, as rising interest rates drove down prices.

Despite the challenges, Buch mentioned that Vonovia had completed major writedowns but suggested there could still be minor adjustments in the future.