Vonovia SE on the Capital Market

Shares in Vonovia

The capital markets continue to be mainly influenced by the outlook for the macroeconomic environment and thus, in particular, the interest rate trend. To date, the expectation of imminent interest-rate cuts in the USA and Europe which was prevalent in the fourth quarter of 2023 has not been borne out. At the same time, the market has further postponed the expected timing of initial interest rate cuts. As things currently stand, the ECB is generally expected to implement its first key interest-rate cut in June. Most capital market players now anticipate that an initial cut from the Fed will follow at a later moment in time. Moreover, a number of market observers expect that the Fed will not make any changes at all in 2024. The evolving view of the interest rate landscape is likely to remain a key factor driving market developments.

In the first three months of 2024, the German Stock Index (DAX 40) achieved a positive performance of +10.4% and reached a new all-time high of 18,513.83 points. Various indices have also realized strong gains in the USA. On the one hand, this has been driven by the high level of demand for tech stocks. On the other, the U.S. economy has on the whole delivered a more robust performance than had been generally expected.

The European real estate sector declined by -3.5% in the first three months of the year. This is likely primarily attributable to the dampening of expectations of imminent interest rate cuts by comparison with the fourth quarter of 2023.

At the end of the first quarter, shares in Vonovia were trading at € 27.40 and were thus down 4.0% on the closing price for 2023. In our view, the interest rate situation is once again the key factor here.

As a result, we are still observing an ever-wider gap between capital market expectations on the one hand, and what remains a very attractive market situation for residential real estate on the other. The residential property markets in which we operate are characterized by a high level of excess demand. Moreover, real estate value adjustments contrast with rising rents and a significant supply shortage.

As a result, we remain confident that the fundamental conditions in our markets will ensure positive development in the long run. Besides the favorable relationship (from an owner’s point of view) between supply and demand in urban regions, the relevant factors here include, above all, structural momentum on the revenue side as well as support from the key megatrends.

Vonovia’s market capitalization amounted to around € 22.3 billion as of March 31, 2024.

Share Price Development