Germany’s Housing Market Witnesses Supply-Demand Mismatch, Study Shows
...As Porsche Positions To Take Over Battery-Maker Subsidiary Varta
Finding accommodation in Germany’s main conurbations is becoming increasingly difficult due to soaring rentals for new tenants, according to a study published on Sunday.
A report by the German News Service (delivered by dpa) revealed that the mismatch between supply and demand had resulted in a dysfunctional market as a result of the widening difference between rentals for established tenants and new tenancies, the JLL estate agency found.
Tenants were staying put to avoid paying higher rentals for a new apartment, leading to a fall in supply in an already tight market, the study found.
This in turn was leading to further rent increases for new tenancies, it said, suggesting that true demand could currently be overstated.
The JLL study also found particularly large discrepancies between existing and new rental contracts in Munich and Berlin, with tenants reluctant to move to new premises where rentals were up to €8 ($9) higher per square metre.
They were followed by Frankfurt, where the difference was around €5. By contrast, in Duisburg in the Ruhr region and in Dresden in the east, moving was much easier with the difference coming in at €1.50.
JLL Manager, Roman Heidrich, called for churn in the market to be stimulated, alongside new buildings. Swaps could be promoted, along with moves to allow existing rentals to be raised more easily to market levels, as parts of Germany are experiencing a severe housing crisis.
Official statistics published for the first half of this year, at the weekend, showed that 106,700 new units came onto the market, down by 21 percent in the same period last year, which was itself seen as weak.
The situation is attributed to increased construction costs and high interest rates.
Meanwhile, German sports car manufacturer Porsche has disclosed its intent to invest in the financially troubled battery firm Varta.
The Stuttgart-based carmaker plans to acquire a majority stake in Varta’s car battery subsidiary V4Drive Battery, Porsche AG announced from its headquarters in Stuttgart on Saturday as Varta announced restructuring plans.
Porsche also expressed its willingness to participate “with further partners” in the financial reorganization of Varta AG, it said. Porsche’s investment would amount to €30 million ($33.1 million).
“In this context, it is planned that Porsche will acquire a majority stake in V4Drive Battery GmbH through a capital increase, mostly against contributions in kind,” Porsche said.
Varta, which is based in the south-western German town of Ellwangen, bundles its business for large-format lithium-ion round cells, which are used in the hybrid drive of the Porsche 911 Carrera GTS, in this company
Porsche explained that participation in the financial reorganization is to take place as part of the intended restructuring proceedings, adding that the takeover of V4Drive would be subject to antitrust approvals in various countries.
Varta announced on Saturday that it has reached agreement with creditors on a restructuring concept and that this concept will “significantly reduce the company’s debt and provide it with fresh liquidity.”
It envisages the involvement of a company controlled by Varta majority shareholder Michael Tojner, MT InvestCo and a Porsche investment company as new shareholders.
The reorganization concept is expected to secure the financing of Varta AG until the end of 2027.
According to the information provided, Varta’s debt burden is to be reduced from €485million to around €200million by means of a debt cut and the extension of loans.
MT InvestCo and the Porsche investment company would then inject a total of €60million in fresh capital and receive new Varta shares in return.
After completion of all capital measures, MT InvestCo and Porsche will each hold 32 percent of Varta, with the other financiers together holding 36 percent.
Tojner had said in early August that he hoped for a resolution of Varta’s future by the end of the year.
“We hope to have a solution by the end of August or early September,” Tojner told the broadsheet daily Frankfurter Allgemeine Zeitung. This outcome would then have to go through the procedure under the Corporate Stabilization and Restructuring Act (StaRUG).
Previous statements from company head, Michael Ostermann, confirmed that the battery firm applied for pre-insolvency restructuring proceedings in July. To secure production until 2027, the company needs around €100million in fresh cash and debt reduction.
