Now is the time to buy troubled properties at bargain prices, Allianz CEO says

ALLIANZ’S chief government officer Oliver Baete mentioned now’s the suitable second to snap up properties at cut price costs as some troubled homeowners are pressured into promoting.

“Look at the fallout of some of the real estate tycoons – they have to now sell prime assets at huge discounts,” Baete mentioned on Friday (Feb 23). “That is the time to buy, and not to sell.”

His feedback come amid turmoil in actual property markets, particularly for industrial properties akin to workplace buildings and retail developments, because the fast will increase in rates of interest imply homeowners face surging borrowing prices and plunging valuations. The ensuing credit score crunch has compelled some to promote property to service their money owed. 

One outstanding instance is the Signa group of corporations based by Austrian property tycoon Rene Benko, which has grow to be one in all Europe’s largest actual property meltdowns because the world monetary disaster. Some of Signa’s choicest property have been put in the marketplace as insolvency directors race to repay collectors.

“If you are an investor and you have to sell at the moment, you are in trouble,” Baete mentioned, including that Allianz is a possible purchaser. “We remain very bullish on the sector for the long run,” he mentioned.

The Munich-based firm is one in all Germany’s largest property buyers. Its actual property portfolio amounted to 58.4 billion euros (S$84.9 billion), in line with its fourth-quarter earnings report launched on Friday. This was down 6.2 per cent from 62.3 billion euros a yr earlier because the German insurer revalued some holdings and offered others.

Allianz faces portfolio stress in each its house market and the United States as costs and demand for industrial actual property decline sharply.

Investors are carefully watching to what extent monetary establishments, funds and different property homeowners are revising the values of their holdings or promoting because the market declines.

The share of Allianz’s portfolio allotted to workplace buildings fell to 49 per cent from 52 per cent over the course of final yr, dropping beneath 50 per cent for the primary time in not less than a decade. In 2013, it stood at 62 per cent.

At the identical time, its portfolio allocation to Germany – which goes via its most extreme actual property disaster in many years – edged all the way down to 17 per cent, in contrast with 18 per cent in 2022 and 29 per cent in 2013.

Its allocation to the United States additionally dropped barely.

As for Allianz’s This autumn outcomes, internet revenue practically doubled yr on yr. The firm mentioned that quarterly efficiency was helped by its life and medical health insurance enterprise, particularly within the US and Italy.

Net revenue attributable to shareholders rose to 2.15 billion euros from 1.1 billion euros, however was simply wanting a 2.2 billion euro consensus forecast.

A powerful fourth quarter helped the corporate carry full-year internet revenue by 33 per cent to eight.5 billion euros.

Allianz posted a 2023 working revenue of 14.75 billion euros and mentioned it was focusing on between 13.8 billion and 15.8 billion euros this yr. BLOOMBERG, REUTERS