The crisis in the German real estate market has hit the nationwide project developer Gerch. Several competitors have already gone bankrupt in the face of increased construction prices and interest rates.
The real estate developer Gerch is in crisis. Four umbrella companies of the nationwide company based in Düsseldorf had filed an application for judicial restructuring proceedings in self-administration at the Düsseldorf District Court due to impending insolvency, the company said.
remediation experts support the board
The umbrella companies Gerchgroup, Gerch Development, Marathon Beteiligungsgesellschaft and Gerch Beteiligungen are affected, but not the individual real estate project companies of Gerch. The court agreed to the application and ordered provisional self-administration.
CEO Mathias Düsterdick remains in office at the company, which was founded in 2016, and two restructuring experts from the Görg law firm support the board, explained Gerch. Attorney Jens Schmidt from the law firm Runkel Rechtsanwälte became the provisional trustee.
Projects worth 4 billion euros
Gerch specializes in office properties and district development. The company announced that the management is now focusing on a restructuring. The aim is to continue all projects. According to the company, the current projects have a volume of around four billion euros.
“Our primary goal is to implement all real estate projects and place them on the market despite the current crisis in the construction industry,” explained CEO Mathias Düsterdick. A comprehensive reorganization and restructuring program is planned for this purpose. The company is currently developing nine projects with a gross floor area of around 790,000 square meters and 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, the Laurenz Carré, a building site in downtown Cologne and a project on the site of the old police headquarters in downtown Frankfurt.
New business under construction has plummeted
The reason for the bankruptcy application was that Gerch was in crisis due to external factors. According to the company, the entire construction and project development industry is in trouble due to the Ukraine war, high inflation and the largely collapsed transaction market. “In addition, the drastically increased interest rates and the reluctance on the financing market are causing problems for project developers.”
The entire real estate and construction industry in Germany is currently struggling with the consequences of high interest rates, rising construction costs and uncertainty in view of falling real estate prices. 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.
Gerch CEO Düsterdick told the Reuters news agency last month that he expected difficulties for his industry. Further bankruptcies are to be expected in the coming months.
Current data from the ifo Institute also show how deeply the construction industry is obviously in the crisis. In July, 40.3 percent of companies complained about a lack of orders. “A storm is brewing,” says Klaus Wohlrabe, head of the ifo surveys. “After a long boom, the higher interest rates and the drastically increased construction costs are literally choking off new business.”