German Real Estate Cash Fears Are Overdone, Deutsche Bank Says

(Bloomberg) — Beleaguered German real estate stocks are getting a vote of confidence from Deutsche Bank AG.

Residential firms will likely get through the downward cycle in house prices without having to raise capital, analyst Thomas Rothaeusler wrote in a note, turning more positive on the stocks. His view is in contrast with peers at Stifel Nicolaus & Co., who said this month the industry faces “potentially enormous” rights issues as asset values ​​sink.

A slump in German property prices and a subsequent jump in loan-to-value ratios have spurred worries about refinancing, making real estate the worst-performing sector in Europe in the past year. Deutsche Bank said there’s a good chance house prices will stabilize in the second half of 2023, and predicts German residential values ​​won’t drop more than 20% from peak to trough.

Rothaeusler pointed to data from the property listings website Immocscout, which suggests a recovery in house prices driven by growth in the rental market. Meanwhile, LEG Immobilien SE’s upgraded rental growth guidance indicates “higher market dynamics,” the analyst said in a note. He upgraded Vonovia SE to buy from hold and raised TAG Immobilien AG to hold from sell.

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