The largest German housing group Vonovia is stopping its new construction projects that it has planned for the year.

This applies above all to planning in Berlin and Dresden.

“We will not have any new construction projects starting this year.

Inflation and interest rates have risen enormously and we cannot turn a blind eye to this," Vonovia CEO Daniel Riedl told the Westdeutsche Allgemeine Zeitung.

Jonas Jansen

Business correspondent in Düsseldorf.

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In order to refinance the costs of EUR 5,000 per square meter, Vonovia would have to “go closer to EUR 20” in rent excluding costs, and that for properties that would previously have cost EUR 12 per square meter.

However, these rents are “completely unrealistic” in large parts of Germany.

In order to meet the needs of 700,000 apartments, rents of eight or nine euros are required.

However, this does not change anything in terms of investment planning for this year, as a Vonovia spokeswoman explained when asked.

As early as November, the Dax group had reduced its investments in new construction and modernization due to rising interest rates and high construction costs.

Vonovia is investing half a billion euros in modernization and 350 million euros in new construction, which is significantly less than in previous years.

For the past year, the Bochum-based company had calculated 800 to 900 million euros for modernization and half a billion euros for new construction.

What the company has already started is being completed, which is why the budget of 350 million euros remains.

As early as November, Vonovia boss Rolf Buch said that a new building on “reasonable terms” was no longer possible.

Of course, this contradicts the federal government's new construction targets of 400,000 apartments per year, which, according to Buchs, would require investments of 150 billion euros each year.