Signa insolvency: Is there now a threat of building ruins in city centers?

René Benko - Signa insolvency: Is there now a threat of building ruins in city centers?

Silence reigns behind the construction fence at the Alte Akademie in Munich's pedestrian zone. 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 not even half-finished Elbtower. In many major cities where the investor René Benko, formerly celebrated as the "real estate king", had spread his wings, the traces of his Signa Group's dramatic financial crisis can be seen.

After the parent company of Benko's group of real estate and retail chains had to file for insolvency last week and is now undergoing restructuring proceedings under self-administration, the situation has also worsened for Signa projects in this country. Experts assume that work on the construction sites will not resume as soon as possible. This is because, in the current situation, it is completely unclear for the construction companies whether and when their invoices will be paid. Moreover, it cannot be ruled out that further insolvencies will follow in the Signa Group in the coming weeks - including those of companies responsible for construction projects in Germany.

Longer standstill of Signa construction sites leads to higher costs

The longer the uncertainty lasts, the greater the damage threatens to be. According to estimates by industry insiders, this can increase the total costs by 30 to 50 percent - especially in winter, when frost and moisture can affect construction sites. Only when it is clear how these additional costs are to be financed are contractors likely to be prepared to continue work, which is unlikely to be the case at present. The construction company Lupp, for example, which was commissioned by Signa to build the shell of the Elbtower, recently stated that there is no date for the resumption of construction work.

The mayor of Düsseldorf, Stephan Keller, therefore calls the Signa bankruptcy a "heavy burden 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.

Politicians in Munich, Hamburg, Berlin and Stuttgart are now hoping that the restructuring of the insolvent company will actually succeed. But they are hoping even more for something else: that new, more solid investors can be found to take over and complete Benko's projects. In the case of the Elbtower, there is speculation that logistics billionaire Klaus-Michael Kühne from Hamburg could step in. Kühne is a shareholder in Benko's most important real estate company and could be trying to secure his investment with the takeover. However, there are no saviors in sight for properties in other cities.