Monday 12 August 2013

Real estate stocks bubbling?

Real estate, water, Karlskrona, Sweden

I have in a previous article talked about the housing bubble that we currently have in especially Berlin but also to a certain extent in the rest of Germany also. For this reason I found it of interest to take a look at some of the real estate and rental companies in the German speaking part of Europe that we in Germany can easily become shareholders in.

The analysis of the companies will follow in the next couple of days but the P/E of the companies seems to be very high at a first glance. I am not surprised because I can imagine that some investors that did not want to buy real estate themselves decided to put their money into those types of companies instead. Generally not a bad idea but one always have to be careful with the P/E when it deviates too far from what is normal and that it has now. So I would even claim that the rental and real estate companies are in a bubble and the worst thing there is that for the companies it is two fold. If the real estate prices would drop by 20-30% they get pounded twice due to that they must write down the value and then investors would probably try to run away very quickly especially since the P/Es are so high as they are.

If you have any further suggestions for “immobilien” companies that I should analyse then please just let me know here.

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