Billion Euro real estate deals flop in Germany, Switzerland

In the wake of the crisis on the financial market, several real estate deals in Germany have been, or might be, called off, as the Financial Times Deutschland reported. The sale of 200 buildings belonging to the Allianz Group for Euro 2 bln is on the razor’s edge.

In Switzerland, the country’s so far biggest sale of the Jelmoli real estate block for CHF 3.4 bln was called off. With a view to the changes in the global loan and real estate markets, the negotiated price was too high, argued the buyer, Delek Global Real Estate, when explaining the withdrawal.

The Financial Times Deutschland also reported that Karlheinz Weimar, the Minister of Finance in Hesse, stopped the sale of state-owned real estate for Euro 400 mln. “Naturally, the subprime crisis had an immediate impact on the quotes for the current Hessian real estate portfolio… A sale at any price though is out of the question,” he said.

Ulrich Höller, the head of the DIC, said that as regards the repercussions of the financial crisis on the real estate economy, “I do not believe that the financial crisis is a short-term phenomenon. Anyone who thinks that the party will continue unchecked by January at the latest has got the wrong idea.”

Within four months, he argues, sales prices had dropped by 5% to 15%, to some extent solely in order to compensate for the increased financing costs. “Meanwhile, many competitors are no longer active on the market.”