Instone Real Estate Group SE recorded significant setbacks on the demand side in the third quarter of 2026. Geopolitical and macroeconomic uncertainties, along with a noticeable rise in interest rates over the summer, led to a decline in sales, particularly in retail distribution to private investors. Institutional clients also acted more hesitantly, extending decision-making processes and delaying individual transactions. Despite an adjusted full-year guidance for 2026, the company maintained above-average profitability thanks to disciplined cost management.
Earnings performance and strong margins in the first nine months
In the first three quarters of 2026, adjusted revenues amounted to EUR 288.1 million, compared to EUR 347.5 million in the prior-year period. This decline stems primarily from weaker momentum in retail sales and reduced construction activity. In contrast, the adjusted gross profit margin rose significantly to 29.4 per cent, up from 23.3 per cent in the previous year, surpassing the company's own expectations.
The high margin is based on a high degree of vertical integration, conservative cost estimates, and the resulting release of cost reserves during final account settlements. In addition, in-house planning services provided by subsidiary nyoo sustainably eased project budgets. Adjusted operating profit before interest and tax stood at EUR 33.0 million, only slightly below the previous year's figure of EUR 35.2 million. Adjusted earnings after tax amounted to EUR 12.2 million, affected by an expectedly negative net financial result in connection with the scheduled reversal of capitalised interest.
Sales channels between interest rate volatility and fiscal incentives
Total sales volume reached EUR 173.3 million in the first nine months, compared to EUR 229.0 million in the previous year's period, which had already included institutional sales. While cumulative private sales volume remained at the previous year's level at EUR 167.3 million, demand slumped in the third quarter. Lengthier loan approvals by financing banks and an above-average cancellation rate for reservations hampered closings.
Housing concepts specifically aimed at buy-to-let investors and institutional demand for affordable housing have proven to be stabilising factors:
- —Utilisation of tax incentives under the Growth Opportunities Act via declining-balance depreciation of 5.0 per cent and special linear depreciation of a further 5.0 per cent over four years for energy-efficient new builds
- —Sustained strong institutional interest in subsidised housing projects, driven by the group's established expertise
- —Signing of an initial institutional transaction in November 2026 with a volume of EUR 45 million
- —Anticipated closing of further institutional sales in the fourth quarter of 2026, notwithstanding isolated postponements into the first quarter of 2027
Based on projected institutional business and seasonal catch-up effects in retail sales, Instone expects a significant increase in revenue in the final quarter. At the same time, recent land acquisitions and the focus on affordable housing form the foundation for the targeted return to a sustainable growth path.
