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Germany-based real estate company Vonovia reported a rise in the value of its property portfolio during the first half of the year, indicating that the country's residential property market continues to recover. However, the company also faced higher financing costs, which affected its earnings during the period. While Vonovia maintained its long-term targets for 2028, it said investment activity remained cautious due to ongoing market uncertainty. The company also noted that slower sales reflected a more careful approach from investors despite improving property valuations.
Germany's largest listed residential real estate company, Vonovia, reported that the value of its property portfolio increased by 1.5% during the first half of the year, reflecting the continued recovery in Germany's housing market after a prolonged period of price correction.
Despite the improvement in property values, the company said higher financing costs continued to put pressure on its financial performance. As a result, adjusted earnings before tax declined by 5.4% during the first half of the year compared with the corresponding period last year.
The company retained its financial and business targets for 2028, indicating that it remains confident about its long-term strategy despite current market challenges.
Vonovia also said its property sales business remained under pressure during the period. The company attributed this to ongoing uncertainty in the real estate market, which has made investors more cautious when making investment decisions. This cautious sentiment affected transaction activity even as property values showed signs of improvement.
Germany's residential property market has gradually started recovering after experiencing a sharp correction triggered by rising interest rates and higher borrowing costs over the past few years. Although property valuations have improved, elevated financing costs and cautious investor sentiment continue to influence transaction volumes across the sector.
Source Reuters
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