Vonovia SE on the Capital Market

Shares in Vonovia

The war in Ukraine and the resulting consequences remained the main focus on the capital markets in the first half of the year. Developments on the stock exchange were dominated by inflation, the interest rate trend and the monetary policy pursued by central banks, in particular. Although the broad-based DAX (+16.0%) and EuroStoxx 50 (+16.0%) indices reported positive performance after a weak previous year, the real estate sector as a whole, and German residential real estate stocks in particular, reported marked price losses in some cases. The EPRA Europe, for example, closed the first half of the year down by 10.2%, with shares in some German residential real estate companies reporting even heftier losses. 

In this exceptionally difficult market, shares in Vonovia reported above-average losses, trading at € 17.90 at the end of the second quarter, down by 18.7% on the closing price for 2022. This was due, in particular, to the negative correlation with rising interest rates and climbing government bond yields. In particular, the increased interest rates and the pessimistic view taken by the capital market with regard to the impact on income and real estate values, at least in the short term, were the main factors driving this negative performance.

As a result, we are still observing an ever-wider gap between capital market expectations on the one hand, and what remains fairly stable development on the residential real estate market on the other. While the capital market appears to be pricing in a massive correction, the residential property markets in which we operate remain extremely robust. The less pronounced real estate value adjustments compared with capital market expectations are countered by an increasing trend towards higher rents and much shorter supply.

As a result, we remain confident that the fundamental conditions in our markets will ensure positive development in the long run. These include, in particular, the favorable relationship, from an owner’s point of view, between supply and demand in urban regions as well as the structural momentum on the revenue side.

The company’s market capitalization amounted to around € 14.6 billion as of June 30, 2023.

Share Price Development