FRANKFURT (dpa-AFX) - Investors offloaded real estate stocks on Thursday. Vonovia came under the heaviest pressure, plunging nearly 11 percent as the biggest laggard in a sharply lower Dax. The European real estate sector fell by almost 3 percent to its lowest level since the start of the year. Driven by the conflict involving Iran, the sector has retreated 11 percent from its 2024 highs.
Vonovia released its 2025 financial results this morning, reaffirming its targets for the coming years. Analysts reacted positively to the company's statements. However, Neil Green of JPMorgan noted that sentiment across the industry could suffer due to global risks.
The expert specifically highlighted inflationary effects in this context. The escalating war in the Middle East has driven global energy prices higher. On Thursday, Brent crude surged by 10 percent. Given the rally in oil and gas, hopes for central bank interest rate cuts have suffered a major setback. Capital market rates have risen sharply recently, and there is even renewed discussion regarding potential benchmark rate hikes by central banks to combat inflation.
"Global events are pushing inflationary risks - and thus yields - higher," Green stated. German industry stocks typically suffer under such conditions. In the mid-cap segment, LEG Immobilien slumped by 7 percent, while TAG Immobilien dropped nearly 8 percent. Deutsche Wohnen lost 5.5 percent.
Capital market rates are a critical factor for the real estate industry. Rising rates increase the cost of internal refinancing for companies and make debt-financed acquisitions more expensive. Conversely, portfolio divestments become more difficult as financing costs rise for potential buyers./bek/ag/nas
