March 1st, 2021 | 09:57 CET
Vonovia, Pollux Properties, Deutsche Wohnen: Building a portfolio on a solid foundation
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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.
Vonovia: Waiting for the bottom
Vonovia is a popular stock among German investors. The Company recently even moved up into the EuroStoxx 50, making it a big player in Europe and the DAX. Vonovia focuses on residential real estate and has spread its portfolio across Germany, Austria and Sweden. In total, Vonovia has slightly less than 400,000 apartments in its portfolio. While savers often get more frustration than pleasure in their portfolio with a single apartment, such a diversified approach can pay off. Whether noisy neighbors next door are a nuisance or jobs are lost in a region is hardly relevant for Vonovia shareholders. After all, such factors are of little consequence in the case of just under 400,000 apartments.
The low level of rent losses and the vacancy rate of just 2.6%, which is even lower than in 2019, show that residential real estate is a good approach even in crisis times. Vonovia is convinced that size pays off and recently purchased another 1,000 apartments. On a one-year view, the share has hardly yielded a return but is still in an upward trend in the long term. The Company is interesting, but the stock should first find a bottom in the short term.
Pollux Properties: Singapore share as a valuation pearl
The shares of Pollux Properties are also developing rather leisurely in the long term. The Singapore Company operates in an exciting market. Singapore is considered the Switzerland of Asia and boasts an extremely high standard of living. Apartment and office space is scarce in the island state. Consequently, real estate prices are also climbing. In addition, the population is growing: In the past few years alone, the population has increased by around 13% every year. Pollux Properties manages a real estate portfolio in Singapore with an equivalent value of around EUR 200 million, offset by liabilities of roughly half that amount. On the stock exchange, the share is valued at around EUR 65 million. As a result, the price-to-book ratio is only 0.6.
The Pollux Properties share has been traded in Germany for several months. Although the Company is stable and operates in a conservative sector, prices in the cent range tempt many short-term investors to gamble. However, Pollux Properties is not just as much of a gambler. The Company operates as a local hero in a tight market and shines with low valuations. Investors can use this as an opportunity to look for a good entry point and leave the stock behind - after all, real estate is a safe bank.
Deutsche Wohnen: The price support has run out
Many investors also see the Deutsche Wohnen share as a safe bank. Given the stable figures for the past year, there is no denying this. The Company was able to improve slightly in terms of both vacancy rates and rental yields. Deutsche Wohnen focuses on properties in Germany and is particularly strong around Berlin, in the Rhine-Main region and in the Rhineland - all of which are popular metropolitan areas.
The Company is increasingly committed to climate protection and wants to live up to its responsibility as a real estate company. The Company prematurely ended a buyback program for its shares in the fall, and since then, the share price has weakened. On a one-year horizon, however, the share price still offers a narrow yield of 4%. In addition, there is a dividend yield of around 2%. Unlike Vonovia, Deutsche Wohnen's chart looks less straightforward in the long term. Nevertheless, the downside risk appears limited.
Real estate from boring to exotic
Whether Vonovia or Deutsche Wohnen - anyone looking for stability in their portfolio is well served by German real estate companies - after all, housing remains an elementary fundamental right. Those who want to avoid the highly regulated market in Germany and are looking for dynamism and low valuations can also take a closer look at Pollux Properties from Singapore. Besides a price-to-book ratio of 0.6, Pollux shines with expertise in one of the world's most exciting markets.
Conflict of interest
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