The wave of bankruptcies in the Austrian real estate market continues unabated. Joining the ranks of insolvent entities like the Signa corporate conglomerate and the struggling real estate group VMF/VKM, the Viennese company BBB Immo GmbH has now filed for bankruptcy, as reported by the “Presse” on Wednesday. While the exact amount of liabilities remains undisclosed, according to the newspaper, the company is facing a substantial debt burden of approximately 100 million euros. It’s likely that the finance department will also have outstanding claims.
Creditors’ representatives haven’t provided APA with specific figures for the total liabilities but have estimated them to be broadly in line with the “Presse” report. If proven true, this would make it one of the largest real estate bankruptcies in recent years.
The bankruptcy is also likely to impact the finance department, although the extent of its claims remains unclear. The financial prosecutor’s office was initially unavailable for comment when contacted by APA.
Not the first bankruptcy in the Viennese real estate market
The bankruptcy was declared in late May upon the request of a financial firm. BBB’s subsequent appeal was recently rejected by the Vienna Commercial Court, effectively confirming the bankruptcy. According to the newspaper report, the list of creditors includes not only the financial firm but also smaller banks within the Raiffeisen Group, specifically, Raiffeisen Mittleres Mostviertel, Raiffeisenlandesbank Kärnten, and Raiffeisenbank Region Rohrbach.
This isn’t the first instance of a bankruptcy in the Vienna real estate market involving Raiffeisen banks from other Austrian states. In the case of VMF, a small, regional Raiffeisen bank from Salzburg, namely, Raiffeisenbank Flachgau Mitte, ventured out of its usual market territory and incurred presumed multi-million euro losses. The Salzburg Raiffeisen Association had to step in to rescue it. The WKStA (Austrian Financial Market Authority) is also conducting an investigation into the VMF case.
Primarily active in Vienna
BBB Immo GmbH is a subsidiary of BBB Holding GmbH, which itself is not insolvent. Based on information from the commercial register (“Wirtschafts-Compass”), BBB Holding is owned by the Swiss financial company Nara International Holding AG. According to the information on the company website, the group, primarily active in Vienna, pursues “a value creation strategy through the trading and development of old apartment buildings and condominium packages.”
Austrian Real Estate Faces Another Bankruptcy: BBB Immo GmbH Collapses
A Wave of Bankruptcies Hits Austrian Real Estate
The Austrian real estate market is facing a wave of bankruptcies, with several major players collapsing in recent months. The latest casualty is BBB Immo GmbH, a Viennese company with reported debts of around €100 million. This follows the insolvency of Signa, a corporate conglomerate, and the struggling real estate group VMF/VKM.
Bankruptcy Confirmed by Vienna Commercial Court
The bankruptcy was declared at the end of May at the request of a financial company. BBB Immo GmbH appealed the decision, but the Vienna Commercial Court ultimately confirmed the bankruptcy.
A Long List of Creditors
The list of creditors includes various entities, including:
- A financial company that initially requested the bankruptcy.
- Several smaller banks from the Raiffeisen Group, such as Raiffeisen Mittleres Mostviertel, Raiffeisenlandesbank Kärnten, and Raiffeisenbank Region Rohrbach.
Potential Impact on the Finance Department
The bankruptcy is likely to affect the finance department, although the exact amount of outstanding claims remains unclear. The financial prosecutor’s office was unavailable for comment.
A Pattern of Bankruptcies Involving Raiffeisen Banks
BBB Immo GmbH’s bankruptcy is not the first case involving Raiffeisen banks from other federal states. The VMF/VKM bankruptcy also involved a regional Raiffeisen bank, Raiffeisenbank Flachgau Mitte, which had expanded beyond its market and incurred significant financial losses. This situation required rescue by the Salzburg Raiffeisen Association, and the WKStA is currently investigating the VMF case.
BBB Immo: A Subsidiary of BBB Holding GmbH
BBB Immo GmbH is a subsidiary of BBB Holding GmbH, which is not insolvent. BBB Holding is owned by the Swiss financial company Nara International Holding AG. The company’s website states that BBB focuses on "a value creation strategy through the trading and development of old apartment buildings and condominium packages," primarily in Vienna.
Concerns regarding the Broader Austrian Real Estate Market
The continued wave of bankruptcies in the Austrian real estate market raises concerns regarding the sector’s overall health and stability. These events highlight the potential risks associated with real estate investment, even for established companies with a seemingly strong market presence.
Potential Causes of the Bankruptcies
The underlying causes of these bankruptcies are complex and may include:
- Rising interest rates: Increased borrowing costs make it more difficult for companies to manage debt and finance new projects.
- Inflation: The rising cost of materials and construction has squeezed profit margins and made it challenging for companies to maintain a healthy financial position.
- Overbuilding: An oversupply of properties in some markets can lead to lower prices and reduced rental income, further straining businesses.
- Changes in consumer demand: Shifts in housing preferences and the increasing popularity of alternative housing options may affect the demand for traditional real estate.
Lessons Learned for Investors and Developers
These bankruptcies offer valuable lessons for investors and developers in the Austrian real estate market:
- Thorough Due Diligence: It’s crucial to thoroughly research companies and projects before making investments. This includes examining their financial records, management team, and overall market position.
- Diversification: Don’t put all your eggs in one basket. Diversifying investments across different properties and markets can help mitigate risk.
- Sustainable Business Practices: Companies should focus on sustainable business practices to build resilience and weather economic downturns. This includes managing debt carefully, maintaining healthy profit margins, and adapting to changing market conditions.
The Future of Austrian Real Estate
The future of the Austrian real estate market remains uncertain. The challenges posed by rising interest rates, inflation, and changing consumer demand will require careful navigation. However, the market still offers opportunities for investors and developers with a long-term perspective and a sound understanding of the evolving landscape.