The fall of super real estate mogul Rene Benko
Rene Benko, one of Europe’s most important real estate tycoons, has resigned as president of Signa Holding, the real estate empire he founded, amid an investor revolt and declining prospects for the industry. The Austrian entrepreneur – owner of the Chrysler Building in New York and the British department store Selfridges – has been a leading figure in the European real estate industry for more than two decades.
Signa’s problems have become a symbol of the repercussions of rising interest rates on companies who took out huge loans to grow. The group has holdings of 27 billion euros ($28.8 billion) and 25 billion euros in development. Its real estate division operates in Austria, Germany, Italy, Luxembourg and Switzerland.
Among the major purchases in 2010 was the headquarters of Deutsche Boerse, the German stock exchange operator, which was later sold. In 2011, Signa purchased the historic KaDeWe department store in Berlin as part of a €1.1 billion retail portfolio.
For years, the real estate sector in Germany and other parts of Europe has boomed thanks to low interest rates and strong demand. Now a sharp increase in rates and construction costs has put an end to this rush, driving builders into insolvency as bank financing dried up, transactions froze and prices fell.
The turmoil comes amid the biggest real estate crisis in decades in Germany, Signa’s most important market, where within a week Signa’s sporting goods retailer filed for bankruptcy and construction of a skyscraper was halted.
The embarrassment for Chancellor Scholz
The affair also casts shadows on Chancellor Olaf Scholz. As reported by Corriere della Sera, when he was mayor of Hamburg Scholz pushed Benko’s projects a lot. “Two projects stood out above all: the Elbphilharmonie, designed by Herzog and De Meuron (completed), and then the Elbtower, a 245 meter skyscraper designed by David Chipperfield. It was Benko who won the contract for the Elbtower, even then chatted. The opposition to the project was very strong. But Scholz was stubborn, he dreamed of the showcase: according to the news, he has rarely been so enthusiastic as he was at the presentation of the Elbtower in 2017”.
But then, says Corriere della Sera, after Covid “the easy money with which Benko had built his empire has given way to impossible debt installments to pay. Benko raised the white flag. The Elbtower has reached the twentieth floor. The cranes have been out of action for months. It will remain the skeleton for years, a nightmare, while the city’s SPD will struggle to find another developer.”
#Germany #Benkos #empire #shattered #Shadows #cast #Chancellor #Scholz