The Importance of Responsibility: Investors Must Address the Consequences of the Real Estate Boom

The outrage over René Benko and his signa makes many forget: property is an obligation. Investors must take responsibility now.

“Getting rich has never been so boring.” This is how Signa once advertised its first closed-end real estate fund. At that time it was about a property in a prime location in Linz. Today, the future of the real estate company and its founder, René Benko, is uncertain.

The Signa symbolizes the real estate boom of recent years, in which cheap money was readily distributed for every project, no matter how daring. A perfect environment for Benko, who took out dizzying amounts of loans without shame. Sustainability didn’t play a role. Everything was subordinated to the rising house prices. Many people used this time to make money just by waiting.

Likewise, Signa now stands prominently for the quake that is shaking the industry. Triggered by the interest rate shock. Building became more expensive and investors had to take depreciation on their properties. Other real estate companies also suffered devaluations and have billions in debt. Building on credit is standard practice in the industry. Large German real estate groups put their projects on hold at an early stage and clearly justified this with the weak market. But transparency is basically the antithesis of signa. The conglomerate with more than 1,000 companies is tailored to Benko. To date, there is no group report that openly presents the balance sheet of the entire Signa Group.

» Transparency is essentially the antithesis of signa«