The next merger is likely to follow on the property market

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Flags in front of the headquarters of the real estate group LEG

The housing group talks to its competitor TAG Immobilien about a merger.

(Photo: dpa)

Frankfurt As it should be for the happy month of May, the domestic real estate companies are looking for a partner. It has now become known that the LEG housing group is negotiating a merger with rival TAG Immobilien.

It would not be the first marriage in the industry. ADO Properties has already said yes to Adler Real Estate, and the two market leaders Vonovia and Deutsche Wohnen dance around in a kind of permanent flirtation, with which it is not yet clear whether it will end in a steady relationship or not. The German commercial property market also recently had a billion-euro merger: Aroundtown merged with TLG Immobilien.

As in many other industries, the corona crisis acts like a catalyst that reinforces existing trends and increases the pressure to act. Even before the pandemic broke out, it was clear that the real estate industry was becoming more and more of a scale business. The long boom was slowly but surely coming to an end, and the less the market grows, the more efficiency and size advantages are important. Added to this is the growing regulation of the housing market, see Berlin rental cover.

Both trends are accelerated by the corona crisis. The pandemic initially shocked the success-spoiled industry, and no one knows how it will go on economically afterwards. But you don’t have to be a prophet to foresee that in the face of bankruptcies and rising unemployment, the pressure will increase to regulate even more. This is already shown by the termination ban for defaulting tenants, which is scheduled until the end of June.

Greece is already going one step further. There, the government orders discounts of up to 40 percent for unemployed tenants and companies that have had to close temporarily. That may be an extreme example. But it shows why more and more real estate companies are coming to the conclusion that together they can better get through increasingly difficult times.

More: Fear of the crash: The real estate market in corona times – who wins, who loses.



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