It was a message that had it all. When Vonovia announced at the end of January that it would stop all new construction projects planned for 2023, it not only shook up the real estate industry. Politicians were also caught off guard by the news.
In the Berlin House of Representatives there is now resistance to the decision of the largest housing group in Europe. Berlin's CDU general secretary, Stefan Evers, wants to use funds against Vonovia's construction freeze.
"Berlin cannot afford to do without new apartments," Evers told WELT. If necessary, he wants to use legal means to force Vonovia to build new projects. “We will take a very close look at the legal framework surrounding the construction freeze announced by Vonovia. For example, if building bids come into question, they must also be enforced,” says Evers.
Evers is also calling on the Berlin Senate to negotiate with Vonovia about selling the land. According to Evers, the Berlin Senate should “negotiate with Vonovia about taking over the land in question so that state-owned housing companies can build there if necessary”.
The politician was also surprised "that Vonovia, of all people, allegedly does not see itself in a financial position to continue its construction activities".
Vonovia announced that the group saw “no reason” to part with building plots. According to the group, these would not lie idle. "Our planning department advances the projects and prepares them for construction as far as possible," said Vonovia.
Vonovia also calls for the discussion to be “objectified”. “We cannot turn a blind eye to economic facts. Just as little as many responsible property developers who have also put the new building on hold are currently doing it," said Vonovia. The group calls on "all actors" to sit down with the group "to talk about reliable political framework conditions and funding instruments that make the construction of new apartments affordable again".
However, it is questionable whether the building bids demanded by CDU politician Evers against Vonovia can be enforced at all. Lawyer Olaf Dziallas, construction law expert at the law firm FPS, sees only a few legal and de facto options for enforcing such concerns.
“Building bids are generally extremely difficult to enforce. They are actually only applicable in concrete individual cases under certain conditions. I think it is extremely unlikely that Vonovia will be legally forced to build, especially since the projects are only temporarily on hold,” says Dziallas.
On the other hand, Dziallas sees negotiations with Vonovia about selling the land to the Senate as positive. “This could mean a win-win situation for both Vonovia and the Berlin Senate. The only question is whether the Senate can pay the amounts demanded by Vonovia and to what extent the state-owned housing companies want to finance construction work at all," said Dziallas.
On the other hand, Elias Halbig, portfolio manager at Union Investment, sees a "only selective solution" in the demand for the sale of Vonovia's land to the Berlin Senate. "Vonovia's construction freeze is not the cause of the unfortunate situation, but merely the symptom. The fact that affordable rental apartments can no longer be built due to the increased construction costs applies not only to Vonovia, but to all private and public landlords and property developers,” says Halbig.
Halbig is also critical of a possible sale of the land from Vonovia's point of view. A sale of the land to the Berlin Senate would be "helpful in the short term" for the group, since it could use the money to reduce debt.
“On the other hand, it is of course questionable when Vonovia sells its own business model. That would send a clearer signal to the industry,” said Halbig.
Halbig describes Vonovia's decision to discontinue the new building in the current year as "economically sensible". “Given the difficult environment, Vonovia has few options to reduce its high debt. Either the group sells apartments, which is difficult given the collapse in demand, or it lowers the dividend. The third option for Vonovia is to discontinue the new building, as it cannot currently be operated to cover costs due to the high material costs and the interest rate environment.”
The industrial trade union Bauen-Agrar-Umwelt (IG BAU) voiced sharp criticism of Vonovia's decision. The deputy federal chairman of the IG Bau, Harald Schaum, called for state involvement in Vonovia.
“It is high time that the federal government got involved with Vonovia. He has to acquire a share of 25 percent plus one share - i.e. the lowest and thus most favorable blocking minority in the general meeting and a correspondingly effective influence on the supervisory boards," said Schaum.
There was also sharp criticism of Vonovia from the Federal Ministry of Building. Parliamentary State Secretary Cansel Kiziltepe (SPD) demanded that Vonovia stop paying dividends and use the money to secure the new building.
"Even if we have turbulent times in the construction industry due to the turnaround in interest rates: Vonovia, as the largest housing company, cannot shirk its responsibilities," Kiziltepe told the "Handelsblatt".
Demands to reduce the dividend are also coming from investors. “If you have to stop investing in the future of the business model in this way, you should also question whether you can still afford to pay a dividend of this amount. The priorities should be clarified here, ”said portfolio manager Halbig from Union Investment to this newspaper. Halbig expects "heavy discussions" on the topic of dividends at Vonovia.
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