Luka Mucic, the new CEO of the property conglomerate Vonovia, stated that he currently sees no signs of devaluation risk for the company’s real estate portfolio, attributing the confidence to the prevailing geopolitical climate. Speaking to the “Frankfurter Allgemeine Zeitung” (FAZ), Mucic asserted that demand for residential property remains stable and that the market is robust. He anticipates a steady uplift in values, projecting an annual growth trend of two to three percent, noting that depreciation is not currently predicted in market analyses.
For Mucic, the critical determinant remains the development of actual rent levels based on local rent indexes. He maintained that the company’s underlying assumptions are realistic. While emphasizing that the demand for housing is immense, he cautioned that underdevelopment, particularly in major urban centers, could exacerbate the housing shortage in the near term, although the situation is expected to improve later. The CEO, who has been leading the DAX conglomerate since the beginning of the year, acknowledged that the housing search represents a massive challenge for an increasing number of people.
To reduce overall corporate debt, Mucic has already designated large segments of the portfolio for potential sales. These transactions have garnered interest from various potential buyers. He detailed the company’s primary assets: the core portfolio typically consists of well-located residences in urban centers, which generally yield lower returns. These properties, according to Mucic, are best suited for investors with high equity capital, such as Family Offices. He mentioned already holding preliminary discussions with such investors, including those from foreign markets. He suggested that while these overseas buyers might perceive Germany as “perhaps a little boring” they recognize the security and stability the country offers. The company also stated its openness to discussions with local municipal providers.
Beyond the core urban units, assets located outside major population centers, alongside the care facilities within the portfolio, are also sale candidates. These care facilities tend to generate higher returns but are located in more suburban areas, making them attractive to financial investors who finance projects using a higher proportion of debt capital. He anticipates that institutional investors are most likely to participate in the sale of the foreign corporate entities. However, Vonovia intends to continue managing these residential buildings itself. Concluding his remarks, Mucic remarked that any financial investor acquiring properties from the company would be greatly disadvantaged if they did not entrust Vonovia with the ongoing property management, asserting that no one could match the company’s combination of cost efficiency and quality.
