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January 25th, 2023 | 13:48 CET

Vonovia, Alpina Holdings, Commerzbank - Has the real estate market bottomed out?

  • Investments
  • RealEstate
Photo credits: pixabay.com

The past few years have been an El Dorado for the real estate sector. But since interest rates started rising, dark clouds have gathered over the real estate market. In addition, the sharp rise in construction costs and inflation are pulling money out of the pockets of interested real estate buyers and making them reluctant to make purchasing decisions. According to a study by EY Real Estate, the real estate investment market slumped by 40% in 2022. In 2023, transaction volumes could fall further. We take a look at three companies around the real estate sector and highlight the opportunities and risks.

time to read: 4 minutes | Author: Armin Schulz
ISIN: VONOVIA SE NA O.N. | DE000A1ML7J1 , ALPINA HOLDINGS LIMITED | SGXE21011833 , COMMERZBANK AG | DE000CBK1001

Table of contents:


    Vonovia - Entry into timber construction startup

    You can see how hard rising interest rates have hit the real estate sector in the example of Vonovia, whose shares lost more than 63% of their value at their peak in 2022. Fears were high that tenants would not be able to pay their utility bills because there would be no more money available due to inflation and high energy prices. Vonovia has to refinance part of its debt in 2023. Since mid-October, however, the share has been on the up again. From the low, it went up more than 50%. Experts see this as confirmation of an exaggeration.

    Vonovia has a broad portfolio with investments ranging from affordable housing to luxury properties. Moreover, the Company is not limited to Germany but holds about 20% of its investments outside Germany, mainly in Sweden and Austria. On January 24, the Company announced that it had acquired a stake in Austrian startup Gropyus. As a result, Vonovia Management Board member Daniel Riedl will have a seat on the supervisory board. Riedl commented, "Gropyus is digitizing and transforming the housing and construction industry, and we would like to use this access for our projects in the future to further advance resource-efficient housing."

    There must be some promise from the investment, as it was originally intended to scale back investment as the cost of capital is set to climb upward due to rising interest rates. It also remains to be seen whether the Company can keep its dividend constant. If it stays at EUR 1.66, that would be a dividend yield of over 6%. Currently, the share is available for EUR 26.70. In January, there were 3 buy recommendations for the share from Warburg Research, Goldman Sachs and RBC Capital Markets. The price targets are between EUR 35.70 and EUR 45.40. Given the lack of housing in Germany, the prospects for Vonovia are good.

    Alpina Holdings - Large order for solar cell installation

    In contrast to Germany, the real estate market is booming in Singapore, which is one of the most expensive patches in the world. Alpina Holdings is active here, offering integrated building services, mechanical and electrical engineering services, and renovation and expansion work. The Company has a track record of more than 17 years and primarily manages public sector projects. Alpina Holdings holds the highest licenses issued to construction companies in Singapore, allowing it to bid on public sector projects without bidding restrictions or limits on project value.

    Subsidiary Digo Corporation and Terrenus Energy together won a 70 MWp project to install solar panels in 1,198 residential blocks and 57 government buildings, as well as smart electricity meters in residential blocks. The project is part of the SolarNova program, a Singapore government initiative to accelerate the deployment of solar photovoltaic systems. Installation of the solar panels is expected to begin in March 2023 and be completed in the first quarter of 2025. In the coming years, the Building and Construction Authority (BCA) of Singapore expects construction demand to continue to pick up. Between SGD 14 billion and SGD 18 billion is available annually in the public sector.

    In 2021, revenue was SGD 52 million, and profit was around SGD 9.3 million. With a current market capitalization of SGD 29.49, the price-to-earnings (P/E) ratio is just 3. The Company plans to distribute at least 50% of profits to shareholders through a dividend. Revenue and profit in 2022 were smaller than the previous year, according to a company release on January 20, because some projects ended in 2021, and there was a shortage of skilled workers, which led to higher labour costs. The Company will provide more precise figures by March 1 at the latest. The P/E ratio will rise then. The stock exited trading last Friday at SGD 0.16. Due to the Chinese New Year, there is currently no trading in Singapore.

    Commerzbank - Rising yields

    A rising interest rate environment is ideal for Commerzbank. A large part of the core business is lending; therefore, Commerzbank's figures are susceptible to interest rates. If interest rates rise by 1%, the bank earns about EUR 625 million more. The key interest rate is now 2.5%, but that is not the end of the story. After ECB chief Lagarde had long resisted rising interest rates, she recently said: "...made it clear that ECB interest rates still have to rise significantly and steadily to reach a sufficiently restrictive level". Good for Commerzbank.

    One could see the positive interest rate effect in the last quarterly figures. In the first 9 months, revenues rose by 12% to EUR 7.1 billion. The operating result increased by more than EUR 500 million to EUR 1.57 billion. The figures for the 4th quarter will be presented on February 16. Expectations are high, as many analysts expect high net interest income. A dividend and a share buyback program also seem possible. An income of EUR 200 million could come from the lawsuit against the auditing firm EY. Commerzbank wants compensation for the losses it has suffered.

    After the share has shot up since mid-December and currently costs EUR 9.61, it is considered one of the candidates for promotion to the DAX. That could give the share an additional boost. In January, 6 analyst firms covered the share. After the significant price increase, there were 4 hold recommendations and 2 buy recommendations from Deutsche Bank and UBS. The price targets of all analysts were between EUR 9 and EUR 13. As long as the ECB turns the interest rate screw, the figures at Commerzbank will continue to improve.


    Caution is the order of the day in Germany. However, the shares of real estate companies were knocked down excessively. Vonovia has already recovered to some extent, and there could be further pressure on the share in the event of a dividend cut. The real estate market in Singapore is booming. Ideal conditions for Alpina Holdings, which holds the highest licenses. Sales should climb again if it succeeds in bringing more skilled workers on board. Commerzbank can be pleased about the turnaround in interest rates. The upcoming figures will be interesting to see.


    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Armin Schulz

    Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.

    About the author



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