interest and construction costs
Real estate developer Gerchgroup probably insolvent
08/23/2023, 6:18 p.m
The real estate industry in Germany is not doing well. According to a report, the large developer Gerchgroup is also suffering and is now filing for bankruptcy. What will become of the current projects is unclear. Consumer advocates are demanding more security for customers.
According to “Wirtschaftswoche”, another major real estate project developer in Germany is insolvent. The Gerchgroup has filed for insolvency in self-administration for several holding companies at the Düsseldorf district court, reported the “Wirtschaftswoche”. The court granted the application.
Previously, companies such as Euroboden in Munich, Nuremberg-based Project Immobilien and the Düsseldorf real estate company Centrum and Development Partner had filed for bankruptcy. The construction and real estate industry is suffering from increased construction prices in combination with the sharp rise in interest rates.
In response, the Association for Home Ownership called for buyers to be protected in the event of the insolvency of a construction company. In other European countries such as France or the Netherlands, such cases have “long since been settled”. Binding protection is “overdue” in Germany.
Gerchgroup recently managed nine projects
Homeownership suggested two options: either the property developer waives down payments from the buyer until the property is ready for occupancy and handover, or he secures the down payments, for example with insurance. According to the association, such protection should at least be mandatory for property development contracts where the buyers are consumers.
According to “Wirtschaftswoche”, Gerch is a nationwide project developer specializing in the construction of office properties and districts in major German cities. According to information on the company’s website, the nine current project developments have a total volume of around four billion euros. Current projects include the conversion of a former railway site in Augsburg, a residential and administrative center in Nuremberg and the Laurenz Carré, a building area in downtown Cologne.
The background to the bankruptcy application initially remains open. The company has so far left unanswered an inquiry by “Wirtschaftswoche” about the financial situation and possible restructuring plans.