René Benko’s Signa Group is responsible for many large construction projects in German city centers. What will happen to the construction sites after bankruptcy?
Behind the construction fence at the Old Academy in Munich’s pedestrian zone there is silence. In Düsseldorf, work on the Carsch-Haus, a shopping temple near the Kö shopping mile, is at a standstill. On the edge of Hamburg’s Hafencity, the wind whistles through the stump of the Elbtower, which is not even half-finished. The traces of the dramatic financial crisis of his Signa Group can be seen in many large cities where the investor René Benko, who was previously celebrated as the “real estate king”, had established himself.
After the umbrella company of Benko’s group of real estate and retail chains had to file for bankruptcy last week and is now going through a restructuring process under self-administration, the situation has also worsened for the Signa projects in this country. Experts assume that work on the construction sites will not resume any time soon. In the current situation, it is completely unclear for construction companies whether and when their bills will be paid. It cannot be ruled out that further bankruptcies will follow in the Signa Group in the coming weeks – including from companies that are responsible for construction projects in Germany.
Longer standstills at Signa construction sites lead to higher costs
The longer the uncertainty lasts, the greater the risk of damage. A construction halt throws the calculations for construction projects out of the window; industry insiders estimate that this can increase the total costs by 30 to 50 percent – especially in winter, when frost and moisture affect the construction sites. Only when it is clear how these additional costs are to be financed will the contractors be willing to continue the work, which is unlikely to be the case at the moment. The construction company Lupp, for example, which was commissioned by Signa to build the shell of the Elbtower, recently said that there was no date for the resumption of construction work.
Düsseldorf Mayor Stephan Keller calls the Signa bankruptcy a “heavy mortgage for urban development.” Berlin’s Senator for Economic Affairs, Franziska Giffey, called the situation “very, very serious” – even if the consequences of the restructuring process for the German Signa companies are not yet clear.
The hope of politicians in Munich, Hamburg, Berlin and Stuttgart now rests on the fact that the restructuring of the insolvent company will actually succeed. But they hope even more for something else: that new, more solid investors can be found to take over Benko’s projects and complete them. There is speculation that Hamburg-based logistics billionaire Klaus-Michael Kühne could step in for the Elbtower. Kühne is a shareholder in Benko’s most important real estate company and could use the takeover to try to secure his investment. However, there are still no saviors in sight for real estate in other cities.
Source: Stern
