February 10th, 2023 | 12:37 CET
Real estate crash - alternatives to housing: Commerzbank, Alpina Holdings, Hypoport
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At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.
Commerzbank: Headwind from the real estate market
Commerzbank's sources of income by division are mainly net interest income (approx. 47%) and net commission income (34.8%), which hit the headlines. But what if in an important business area, such as real estate financing, activity falls like that of an animal in deep hibernation? As reported by strategy consultancy EY, trading activity around real estate slumped by EUR 40 billion last year to the same level as in 2016. Four-fifths of the experts surveyed by EY expect trading volumes to continue to fall in 2023. The analysts have identified massively rising construction costs, rising interest rates and inflation as the cause.
This emergency braking is also making itself felt among investors: After only 4%, 36% of those surveyed consider the German real estate market less attractive than the previous year. But are there alternatives? Banks like Commerzbank have earned good money from the real estate financing business for years. Although the margins were low, business was based on volume. Today, financiers have to offer class in order to be able to support the few remaining deals. Although rising interest rates would create room for larger margins, growing competitive pressure limits the theoretical scope. Banks are not a good investment in times of real estate worries.
Alpina Holdings: Energy refurbishments in the world's best real estate market
While Germany is puzzling over how to make the construction industry fit for the challenges of the coming years and initially maintain it, people in other regions are already thinking ahead. The city-state of Singapore has always been considered a real estate Mecca. The "Switzerland of Asia" has limited land but is extremely popular. From all over the Pacific region, companies and well-heeled people flock to Singapore to do business and live sheltered lives. It is not for nothing that Singapore is considered one of the most expensive cities in the world. The Company Alpina Holdings offers real estate services there. Only recently, it received an order to equip 1,198 apartment blocks and 57 government buildings with solar cells and smart electricity meters.
Contrary to many clichés, those who are active in the real estate business in Singapore do not only have to deal with speculators from abroad or investment companies. The city-state actively supports its citizens in buying real estate and grants generous subsidies. This is one of the reasons why the ownership rate in Singapore is around 80%. Those who have held on to their homes for a while are allowed to sell them and keep all the profits. It is not uncommon for the real estate of young families to grow gradually over the years thanks to government support at the beginning and price increases - the last home then finances retirement. This is another reason why there is a deep-rooted bond between the population and the real estate market in Singapore. Singaporeans are proud of their property and take care of it. Profiteers are companies such as Alpina Holdings, which has existed since 2003 and, with its more than 400 technicians, modernizes and maintains properties in Singapore. The share is a niche stock with a market capitalization of SGD 32.26 million and a flawless small cap. Interested investors should put the stock on their watchlist.
Hypoport remains expensive
On the watchlist, many investors certainly have the shares of Hypoport. The fintech around insurance, loans and real estate financing was the star on the stock exchange floor between 2016 and 2020. Investors could get rich even faster with the Hypoport share than with apartments. But the emergency braking on the German real estate market is mercilessly hitting Hypoport's business. In September, Hypoport even announced a profit warning. Once the cat was out of the bag, the share price stabilized somewhat. Nevertheless, it remains to be seen how the tech company, which is used to success, can make cuts in difficult times without losing long-term potential. Although the chart has bottomed out, the share is still not cheap.
Those who have held Hypoport shares in their portfolios for months should have survived the worst. However, a new investment looks rather unattractive. The same applies to Commerzbank, which could suffer from an interest rate pause by the central banks. A special situation exists around Alpina Holdings from Singapore. The real estate market there is considered robust, space is limited, and the city-state is internationally popular. In addition, real estate in the "Switzerland of Asia" is highly valued and subsidized by the state. In Singapore, making a home look good has been considered chic since before the pandemic. Alpina Holdings is benefiting from this trend. In addition, there is the special boom around sustainability and photovoltaics in construction. This niche is interesting!
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