Property market in Berlin and Eastern Germany

Transcription

Rostock
Dresden
Erfurt
Rostock
Berlin
Leipzig
Potsdam
Property market in Berlin
and Eastern Germany
Office
Retail market
Hotel
2016
Contents
■
Contents
Editorial
Executive Summary
3
4
5
Economic Environment Berlin
Office Property Market Berlin
Retail Property Market Berlin
Hotel Property Market Berlin
8
12
16
20
Economic Environment eastern Germany
Office Property Market eastern Germany
Retail Property Market eastern Germany
Hotel Property Market eastern Germany
24
28
32
36
List of references
Contacts
Company and legal information
40
42
43
3
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Editorial
Executive Summary
Berlin
Dear readers,
Berlin's economic growth leaves the rest of
Germany in its wake
In 2016 we are continuing a success story that began almost
10 years ago. In the intervening decade, the German capital,
Berlin, and the country's eastern regions, have evolved. They
have shaken off their image of always lagging behind their
western counterparts, and have emerged to attract heightened
investor interest, including from international investors. Our
figures, which detail the growth in the region's office, retail
and hotel markets, confirm this positive trend. Growth was
recorded across the board for all relevant key market indicators
in Berlin and eastern Germany's regional centres: Dresden,
Leipzig, Rostock, Erfurt and Potsdam. The populations of all
six cities are on the rise, especially as a result of the large
numbers of young people they are attracting.
W
ith year-on-year growth of 3 percent, the German
capital's economy grew by almost twice the national
average (1.7 percent).
This positive growth in real GDP is reflected in the city's
labour market. Although the unemployment rate in Berlin
was still relatively high at the end of 2015 at 10.1 percent,
the year also saw significant employment growth in comparison to 2014. The number of people in active employment in
the Spree metropolis grew to 1.85 million last year. This is not
only the highest figure since 1991, it also strengthened
Berlin's position as the state with the fastest-growing labour
force in Germany. There is a direct correlation between the
growth in employment and the growth in the per capita
purchasing power, which averaged EUR 20,300 for the
12 months of 2015, and represented an increase of
2.6 percent over the previous year.
Berlin's robust economic environment has prompted
investors to view the city as one of the top investment
centres in Europe. This is reflected equally in both the
rankings of investment attractiveness and in the city's overall
property investment volume. Investment in commercial
property in Berlin totalled EUR 8.3 billion in 2015, breaking
single-year commercial property investment records not only
for Berlin, but for all German cities.
Leipzig's population alone has increased by 7.5 percent over
the last five years, and, at the same time, the city's unemployment rate has fallen by almost 25 percent. Berlin aside,
the quintet of eastern German cities comprising Dresden,
Leipzig, Rostock, Erfurt and Potsdam have seen their
unemployment rates drop to below 10 percent, a level that
beats even the Ruhr region's biggest cities. The five cities
have also been able to significantly expand their economies,
with double-digit GDP growth in Erfurt and Leipzig since
2010. The region's tourism industry has been a major
contributor. Taken together, overnight stays have surged by
21 percent over the last five years in Dresden, Erfurt, Leipzig,
Potsdam and Rostock.
For its part, the German capital enjoyed a record year in 2015.
Berlin was Germany's most important market for commercial
property investments, and the city also ranked first for retail
space take-up and transactions. In the office investment
market, Berlin narrowly lost out to the long-term reigning
champion, Frankfurt am Main, last year. Berlin's flourishing
hotel market is the direct result of the city's growing popularity, which has elevated the city to third place in Europe's
tourism league, trailing just behind London and Paris in terms
of overnight stays and visitor numbers. There were, admittedly, a number of large-scale, individual transactions in the
sector which attracted international attention, and gave a
major boost to the hotel market's exceptional results.
Nevertheless, the capital's sustained economic upswing
means that conditions will remain favourable in the long
term, enabling the city to maintain its key market position.
4
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Record transaction volume
for office property in Berlin
The number of office employees subject to social security
contributions in Berlin has been increasing steadily since
2010. There were a total of around 556,000 office employees
in Berlin in 2015, an increase of 2.9 percent over the
previous year. Young, innovative companies are driving much
of this growth. Each of Berlin's start-ups creates an average
of 28 jobs – far in excess of the national average, and more
than enough to place Berlin firmly at the top of national
rankings on this measure.
The strong rise in service sector employment also had a
positive impact on the take-up of office space in Berlin,
which amounted to 848,000 square metres for the year. The
central districts of Mitte and Kreuzberg secured a large slice
of this activity. They also recorded the strongest growth in
the development of new office space in 2015. One of the
most significant developments in Mitte last year was the
addition of substantial amounts of new office space in the
Europacity area around the main railway station and in the
Mediaspree area in Friedrichshain-Kreuzberg.
Throughout 2015, the availability of office space continued
to lag far behind demand, leading to further significant
reductions in vacancy rates. The average vacancy rate in
In this report, we are pleased to be able to present a full
range of detailed figures and indicators that document the
positive developments in eastern Germany's property
markets. Based on the information we have compiled, we
continue to view these markets as attractive locations that
offer highly profitable investment opportunities. With our
specific regional expertise, we are committed to helping our
region to write the next chapters of its success story. We
wish you an enjoyable and insightful read!
Peter Finkbeiner
Member of the Management Board
Niclas Karoff
Member of the
Management Board
Office Building Mediaspree, Berlin
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Executive Summary
Executive Summary
■
Eastern Germany
Eastern Germany's cities develop
into vital regional centres
Berlin's office sector was 3.8 percent in 2015, a decrease of
1.2 percent compared to 2014.
Berlin's booming economy has had a positive impact on
the city's office investment market. A new record was set in
2015, as the office transaction volume totalled around EUR
4.45 billion. As Berlin's office investment and rental markets
have gained in attractiveness and stability, net initial yields
have fallen. The yield for offices in central locations declined
from 4.6 percent in the previous year to 4.1 percent in 2015,
and from 6.5 percent to 6 percent in Berlin's city fringe
locations. In contrast, the rental market was characterised by
solid growth. Rents in the prime segment climbed to EUR
23.70/sqm in 2015, adding 5 percent to the prior year's
figure.
Berlin's retail property market – leading the way in
take-up and transactions
Berlin's retailers have benefited from the city's favourable
economic environment. The stable employment situation,
rising employment figures, positive wage growth and
greater purchasing power have all fuelled retail sales in the
city. For 2015, Berlin's retailers reported annualised sales
revenue growth of 2.2 percent At the same time, sales
Kurfürstendamm, Berlin
6
revenues per capita amounted to around EUR 6,140, which is
above the national average. Grocery and drinks retailers
were amongst the biggest winners. In real terms, sales
revenues in this segment were up by 3.6 percent in 2015,
compared to 2014.
These healthy retail performance indicators have, in turn,
had a positive impact on the rental and investment retail
property markets. As a result, Berlin has a strong lead at the
top of the German retail property league table, both in terms
of the highest take-up volume in Germany, at 42,000 square
metres, and the most spectacular transaction volume of
around EUR 2.1 billion. Strong investor demand throughout
2015 was seen to put increasing pressure on yields in
Berlin's retail property market. The biggest declines were
observed in central districts, where yields fell to a low of
3.9 percent in 2015. In parallel, rents for retail space
continued to rise – especially for large retailers and retail
chains in the non-food segment. In comparison to 2014, prime
rents for large retail spaces added as much as 19 percent.
Germany's capital shatters all tourism records
For a number of years, Berlin has been the leading
destination for city breaks within Germany and one of the
most important tourism centres in Europe. Berlin further
strengthened its leading position in 2015, with 12 million
tourists checking into the city's hotels, which translated
into more than 30 million overnight stays. Berlin has
established itself as an extremely attractive tourist
destination, which has fuelled a surge in demand for
rooms in the city's hotels and led to increased room
occupancy rates. This is demonstrated by the impressive
12 percent growth in hotel room occupancy rates since
2010. In the five years between 2010 and 2015, the
average daily rate (ADR) for a hotel room increased by
8 percent and the revenue per available room (RevPAR)
rose by 21 percent.
Berlin's hotel investment market responded enthusiastically to the city's charismatic performance on the tourist
stage and, with EUR 650 million of investment, set a new
record for hotel transaction volumes. As a result, Berlin
ranked second among Germany's major seven cities, just
behind Munich.
E
astern Germany's regions and, above all, its major
cities, Dresden, Leipzig, Rostock, Erfurt and Potsdam,
are increasingly developing into key drivers of the
German economy.
This has had a noticeably positive impact on the region's
labour markets. At the end of 2015, all of the five
above-mentioned cities reported single-digit unemployment
rates for the very first time. The jobless rates in Potsdam and
Dresden, at 6.9 percent and 7.7 percent were low, even in
relation to the national average. The five cities also reported
high rates of population growth. The highest nominal
population growth last year was recorded in Leipzig, which
added almost 13,000 inhabitants.
Leipzig's office workforce booms as vacancies plummet
Over the last five years, office workforces in eastern Germany's cities have experienced particularly rapid growth. This
boom was particularly strong in Leipzig, where the office
workforce grew by 12.9 percent in the period between 2011
and 2015.
The healthy jobs figures in these five cities had a positive
impact on office markets, fuelling demand for office space
and leading to reductions in vacancy rates. As the supply of
newly developed office space remained stagnant, largely as
a result of the region's relatively low rents, there was a
marked increase in the take-up of vacant space in existing
office schemes. Leipzig is once again setting the pace, with
vacancy rates falling by 6.1 percent since 2011.
Despite the economic gains made in the cities included in
this report, rents remained stable and rental yields solidified
at a relatively high level.
Retail market: Positive trends for rents
and purchasing power
With the exception of Erfurt, consumer purchasing power has
increased in all of these cities since 2014. Potsdam achieved
a purchasing power index score of 99, thereby almost
matching the national average, and establishing itself as the
top eastern German city, nearly three index points ahead of
Berlin. In terms of per capita retail spending and retail
centrality, retail markets in eastern Germany remained
stable during the same period.
Fishmarket, Erfurt
On the whole, rents in the retail property market are
trending positively in eastern Germany's cities. Prime rents
grew fastest in Leipzig and Rostock, adding 8 percent and
6 percent for smaller spaces up to 100 square metres and as
much as 11 percent and 18 percent for larger spaces over
150 square metres.
Tourists flock to eastern Germany's cities
Eastern Germany's positive employment and economic
growth has been given a significant boost by the region's
attractiveness as a tourist destination for both culture
lovers and recreational travellers. The five cities of
Dresden, Leipzig, Rostock, Erfurt and Potsdam have been
successfully attracting larger volumes of visitors for years,
along with a rising quantity of domestic and international
business travellers. With the exception of Dresden, the
number of overnight stays in the region's hotels was up
again in 2015, with the strongest growth recorded in
Potsdam and Erfurt, at almost 7 percent and just under
5 percent respectively. Increased demand from guests
pushed room prices higher in all five cities, correspondingly
resulting in an increase in revenues per room. Rostock's
near 8 percent jump in room revenues is particularly
striking.
7
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Economic Environment in Berlin
Economic Environment
in Berlin
Population development in Berlin
B
Highest
increase of
population in
Berlin-Lichtenberg
biggest increase in population was seen in
the districts of Mitte (+1.9 percent) and
Spandau (+1.8 percent). TempelhofSchöneberg and Treptow-Köpenick also ran
ahead of the national average, with both
districts reporting 1.6 percent more
inhabitants at the end of the year. SteglitzZehlendorf was the Berlin district with the
lowest rate of growth, at 0.2 percent.
Berlin – Germany’s new job creation engine
The labour market provided a range of positive
signals for Berlin’s commercial property sector
throughout 2015. The year-end unemployment
rate was 0.4 percent lower, having fallen to 10.1
percent according to the Federal Employment
2
Agency. Last year’s drop in unemployment was
accompanied by a steady rise in employment.
The workforce grew by 2 percent in 2015 in
comparison with 2014’s figures, reaching a total
of around 1.85 million. This means that
employment in Berlin is at its highest level since
1991 and this growth rate lifts Berlin to first
place among Germany’s 16 federal states.
Development of real gross domestic product
Change according to previous year in %
6 %
5 %
4 %
3 %
2 %
1 %
0 %
-1 %
-2 %
4.1
3.0
Berlin
Germany
3.7
3.0
3.6
2.1
0.3
1.6
2013
2014
0.4
-0.2
2010
2011
2012
2014
2015
Change in %
(2014-2015)
Pankow
384,367
389,976
1.5%
Mitte
356,506
363,236
1.9%
Tempelhof-Schöneberg
335,767
341,161
1.6%
Charlottenburg-Wilmersdorf
326,354
330,468
1.3%
Neukölln
325,716
328,062
0.7%
Steglitz-Zehlendorf
299,268
299,765
0.2%
Friedrichshain-Kreuzberg
275,691
278,393
1.0%
Lichtenberg
268,465
275,142
2.5%
Marzahn-Hellersdorf
256,173
259,373
1.2%
Reinickendorf
254,000
256,617
1.0%
Treptow-Köpenick
249,440
253,333
1.6%
Spandau
230,419
234,630
1.8%
Berlin
3,562,166
3,610,156
1.3%
District
Berlin is growing almost twice as fast as the rest of Germany
erlin’s commercial property market
continues to benefit from the city’s
sustained economic expansion and
generally favourable economic conditions. For
the third year in a row, Berlin’s economy grew.
With a 3 percent rise in real GDP, growth
significantly outstripped the national average
of 1.7 percent Among Germany’s 16 federal
states, Berlin ranked second, behind only
Baden-Württemberg.1
Constant population growth has had a
positive effect on the entire property
market, including the take-up of space by
commercial tenants. According to Berlin’s
official census statistics, the city had 3.6
million inhabitants at the end of 2015, 1.3
percent more than at the same time one
year earlier. The city’s population growth
has primarily been driven by the arrival of
large numbers of refugees and citizens from
other European Union countries. With
above-average annual growth of 2.5
percent, the district of Berlin-Lichtenberg
registered the largest gains. The next
■
1.7
0.2
2015
Source: Berlin-Brandenburg Office of Statistics, population register*
These new jobs are primarily concentrated in the service industry sector, and
are above all attributable to finance,
insurance and corporate service providers,
along with retail, transportation, hospitality
and information and communication
3
technology companies. With such strong
employment figures, Berlin can be described as one of Germany’s major job
creation engines.
Positive labour market developments in
Berlin have consequently led to an increase
in consumer purchasing power. According to
MB Research, per capita purchasing power
for the full year 2015 amounted to just
under EUR 20,300, which represents a
* These census statistics include data
from the population register maintained
by the Landesamt für Bürger- und
Ordnungsangelegenheiten (LABO).
In contrast to official census reports,
these population figures offer a more
detailed assessment of demographic
developments beyond district level and
are therefore viewed as more reliable,
a fact which is reflected in the debate
surrounding the lower than expected
official assessment of Berlin‘s total
population in the recent census. The
figures contained in the population
register statistics differ from the data
presented by the 2011 census and the
official assessment of Berlin‘s population figures. It is therefore not possible
to compare the population figures
presented in this report with the figures
presented in previous years.
year-on-year increase of 2.6 percent.
Nevertheless, with an index score of 92.9,
Berlin’s per capita purchasing power was
still 7 points lower than the national
average for 2015 of EUR 21,865. Two of
Berlin’s districts – Steglitz-Zehlendorf and
Charlottenburg-Wilmersdorf – recorded
above-average per capita purchasing power
of EUR 23,530 and EUR 22,890, respectively.
The lowest figures for per capita purchasing
power were reported in Lichtenberg (EUR
18,605 per person) and Marzahn-Hellersdorf
(EUR 18,756 per person), although these
two districts have registered the most
dynamic gains in per capita purchasing
power over the last two years.
Source: Federal States‘ Annual Accounts
8
1
Senate Department for Economics, Technology and Research, press release from 30 March 2016,
“Berliner Wirtschaft auf Wachstumskurs” [Berlin‘s Economy on Growth Trajectory]
2
Federal Employment Agency, “Arbeitsmarkt in Zahlen. Arbeitsmarktstatistik 2014 und 2015”
[Labour Market in Figures, employment statistics for 2014 and 2015]
3
BBS, press release from 17 March 2016, “Erwerbstätigkeit im 4. Quartal 2015: in Berlin weiterhin
höchster Anstieg aller Bundesländer, positive Entwicklung im Land Brandenburg” [Employment in Q4
2015: Berlin again registers fastest growth in Germany, positive growth in Brandenburg]
9
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Labour market in Berlin
2015
10.1%
2014
10.5%
2015
1,846,285
2014
1,810,256
2014 – 2015
2%
Unemployment rate
Size of workforce
Employment rate development
■
Sound economic conditions and a
healthy business environment are two of
the major factors that have enabled Berlin
to establish itself as one of Europe’s most
attractive property markets. This is demonstrated by the fact that Berlin has held onto
first place among Europe’s real estate
centres in PwC/ULI’s latest city ranking
Emerging Trends in Real Estate Europe 2016.
Berlin is hailed as the European city with the
best investment prospects for 2016, thanks
to its strong socio-economic conditions and
4
relatively low property prices.
Source: Federal Employment Agency, Berlin-Brandenburg Office for Statistics
Per capita purchasing power in Berlin
in EUR
2014
2015
Growth rate in % (2014-2015)
Lichtenberg
18,035
18,605
3.2 %
Marzahn-Hellersdorf
18,155
18,756
3.3%
Neukölln
18,547
18,987
2.4 %
Mitte
18,591
18,856
1.4 %
18,867
19,409
2.9 %
Pankow
19,175
19,771
3.1 %
Spandau
19,356
19,826
2.4 %
Treptow-Köpenick
19,472
20,128
3.4 %
Reinickendorf
20,214
20,675
2.3 %
20,331
20,834
2.5 %
22,887
23,375
2.1 %
Steglitz-Zehlendorf
23,531
24,077
2.3 %
Berlin
19,782
20,303
2.6 %
Deutschland
21,323
21,865
2.5 %
Source: MB Research
Investment volume surges to new record
Berlin’s transaction market broke all national
records in 2015. Investment in commercial
property surged to EUR 8.3 billion, more
than has ever been invested in a single
German city in any 12-month period. The
spectacular 94 percent surge in investment
volume in comparison to 2014 meant that
Berlin knocked the previous leaders,
Frankfurt and Munich, off the top of the
ranking tables. Berlin’s incredible transaction
volume is mainly due to a number of
large-scale deals of EUR 100 million and
more. In 2014, deals worth more than EUR
100 million accounted for 24 percent of
commercial property transactions, a share
that surged to 45 percent in 2015. The
biggest transactions in the EUR 100-million-plus category included the sale of the
Potsdamer Platz Ensemble and the deal for
the mixed-use The Q scheme.
Office properties continued to dominate
the investment market, accounting for 54
percent of all commercial property investment
in Berlin in 2015. In comparison with the
previous year, office properties extended their
lead over other property categories by a
further 14 percent. Retail properties also
increased their share of Berlin’s transaction
market during the course of 2015. The retail
property segment accounted for a quarter of
the total investment volume in 2015, adding
approximately 4 percent to the share it
achieved in the previous year. The third biggest
share of investment in 2015, at around 8
percent was taken by hotel property, which
slipped back 0.4 percent in comparison to 2014.
4
10
PwC/ULI, Emerging Trends in Real Estate, Europe 2016, London 2016
Oberbaumbrücke, Berlin
The edge of the city is getting more attractive
In terms of geography, investments in
commercial property were fairly evenly
spread across Berlin. Around 35 percent of
overall commercial property investment
was targeted at prime, central locations,
representing an increase of 9 percent over
the previous year. Much of this increase is
attributable to the deal for the Potsdamer
Platz Ensemble. City locations, with a 31
percent share of the 2015 transaction
market, were narrowly beaten into second
place. The share of investment in city
locations was actually down on 2014,
declining by roughly seven percentage
points. It is interesting to note that
commercial property investments in city
fringe locations became significantly more
attractive to investors in comparison with
2014. Thus, investment in city fringe
locations rose by around 5 percent climbing
to a share of 20.5 percent of overall
investment. Investment in commercial
properties in peripheral locations totalled
13 percent, a slight decline of 1.5 percent
in relation to the prior year.
Conditions in Berlin’s property investment market should remain positive
Growing interest in investment in city
fringe locations
throughout 2016. Sustained economic
growth and strong demand for property
investments create the ideal climate for
further healthy transaction volumes in
Berlin. That said, few expect that the
transaction volume for 2016 will beat the
record set in 2015.
Investment according to property type in Berlin
in %
2014
2015
16.7
Other
9.8
Development land
40.2
Office
8.2
Hotel
4.3
Logistics
20.8
Retail
7.1
Other
4.4
Development land
53.7
Office
7.8
Hotel
1.8
Logistics
25.2
Retail
Source: BNP Paribas Real Estate
11
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Further Gains in
Office Employment
D
emand for office space in Berlin continues to rise,
largely as a result of steady overall employment
growth. The number of office employees subject to
social security contributions has grown at an average
annualised rate of 2.9 percent since 2010. There were
around 556,000 office employees in Berlin in 2015, a rise
of 2.9 percent since 2014. The strongest employment
gains have been seen in the service sector, which ac5
counts for 88 percent of all employment in Berlin.
Mitte and Kreuzberg strengthen position
as magnets for office tenants
Employment in Berlin has been given a major boost by
the huge number of new start-ups in the city: Young and
innovative companies with a focus on e-commerce, the
media and creative economy, as well as business
6
advisory services and IT/software development. Figures
compiled by the German Start-Up Monitor reveal that
Germany's start-ups created an average of 18 jobs each
(including their founders), while start-ups in Berlin were
responsible for creating an average of 28 jobs each. This
placed Berlin at the top, yet again, when Germany's
7
cities are ranked according to this benchmark. A majority of Berlin's start-ups are located on the fringes of
central districts – largely following the sweep of the
city's circular commuter rail line, i. e. in the districts of
Kreuzberg or Prenzlauer Berg. Convenient links to
Berlin's public transportation system are clearly an
important factor. Interest in office space in the districts
of Mitte and Kreuzberg has been particularly pronounced.
This strong expansion of Berlin's start-up sector has
combined with the steady growth enjoyed by the city's
more established companies to have a positive impact on
the take-up of office space. Compared to 2014, office
space take-up in Berlin during 2015 surged by 24 percent.
Mitte and Kreuzberg shared first position among Berlin's
submarkets, each securing 11 percent of the overall
take-up volume. These two submarkets were closely
followed by Mediaspree and Mitte 1a, which each accounted
for 10 percent of the office take-up volume.
Shortage of available office space and dynamic
development of Europacity
At the end of 2015, Berlin had approximately 18.9 million
square metres of office space on offer, which represented
an increase of 1 percent compared to the previous year.
There has been no change in the share of total office
space across the city's submarkets since 2010, and the
largest volumes of office space continue to be in Mitte
and Berlin's southern and eastern peripheral locations.
These urban markets account for 11.8 percent, 10.9
percent and 10.5 percent of Berlin's office market,
respectively. The central area around Europacity at Berlin's
main train station has enjoyed reinforced office construction in recent years. The amount of office space in the
area grew by an enormous 42 percent between 2014 and
2015, whereas Berlin's largest office submarket, Mitte,
only added 6 percent more space over the same period.
Berlin's Senate approved the “Masterplan Berlin Heidestraße” in 2009, outlining its urban development concept
for the 40-hectare quarter between Nordhafen, Heidestraße and Humboldthafen. What was once seldom used
brownfield land has now become one of the biggest
construction sites in Berlin, and will soon be home to a
large number of residential and commercial properties.
Despite high levels of demand, the amount of office
space on offer in many of Berlin's submarkets remained
relatively flat between 2014 and 2015, with some
submarkets even retreating into negative territory. The
supply of available space in Tiergarten, home to both
Europe's largest inner-city green space and a concentration of embassies, registered a slight decline of 0.7
percent for the year. Potsdamer Platz and Leipziger Platz,
once the biggest office construction sites in Berlin, have
seen supply stagnate over the last two years. Potsdamer
Platz has lost a number of major tenants, including
Daimler, PriceWaterhouseCoopers (PwC) and JLL. The
centre of Berlin's office market has been steadily, and noticeably, gravitating towards Hauptbahnhof/Europacity,
which has already been able to attract a number of
significant tenants and towards Mediaspree, where a lot
of new offices are being built.
BBS, Volkswirtschaftliche Gesamtrechnungen, Bruttoinlandsprodukt und Bruttowertschöpfung im Land Berlin nach Wirtschaftsbereichen 1991 bis 2015, Berlin 2015
[National economic accounts, GDP and gross value added in Berlin by sector between 1991 and 2015, Berlin 2015]
6
JLL, “Berliner Start-Ups als Büronutzer… Auf dem Weg zum Establishment?”, [Berlin's start-ups as office tenants…on their way to joining the establishment?”], October 2015
7
KPMG, “3rd German Start-up Monitor”, 2015
■
Office-space turnover according to sub-market (2015)
Share of
Berlin
office space
stock
Office space
stock
change
(2014-2015)
Office
space
turnover
(sqm)
Share
of
Berlin
turnover
Sub-market
Office space
stock
(sqm)
Adlershof
355,333
1.9%
4.5%
61,000
7%
Charlottenburg
1,149,424
6.1%
0.2%
52,000
6%
Friedrichshain (without Mediaspree)
410,898
2.2%
0.0%
7,500
1%
Main train station / Europacity
183,651
1.0%
42.3%
32,900
4%
Kreuzberg
1,068,958
5.6%
0.2%
89,600
11%
Kurfürstendamm and side streets
507,384
2.7%
0.0%
31,000
4%
Mediaspree
572,114
3.0%
0.7%
89,000
10%
Mitte
2,224,359
11.8%
5.6%
90,000
11%
Mitte 1a
1,884,295
10.0%
0.3%
82,200
10%
Periphery North
1,588,116
8.4%
0.1%
50,361
6%
Periphery East
1,980,256
10.5%
-0.3%
34,100
4%
Periphery South
2,058,765
10.9%
-0.1%
35,000
4%
Periphery West
1,087,087
5.7%
-0.3%
31,800
4%
Potsdamer-/ Leipziger Platz
500,542
2.6%
0.0%
24,000
3%
Reinickendorf
449,353
2.4%
0.0%
20,500
2%
Schöneberg
696,144
3.7%
-0.1%
29,910
4%
Tiergarten
1,279,132
6.8%
-0.7%
52,100
6%
Wilmersdorf
933,616
4.9%
1.0%
35,029
4%
Berlin
18,929,427
100%
1.0%
848,000
100%
Source: Bulwiengesa, own research
5
12
13
■
Substantial reduction of office vacancies
in Berlin
Strong demand and relatively moderate levels
of office construction have led to significant
reductions in office vacancies in Berlin. The
average vacancy rate for office properties in
the city fell to 3.8 percent in 2015, a decline of
1.4 percent in the 12 months from 2014. In 10
of the 18 submarkets included in this report,
office vacancies were below the Berlin
average – with the greatest variance between
prime and city centre locations. The lowest
vacancy rate in 2015 of just 0.6 percent was
reported in Kreuzberg, followed by Mediaspree
(1.0 percent vacancy rate), Friedrichshain (1.2
percent) and Wilmersdorf (1.6 percent).
Reinickendorf, a district on the fringe of
the central business district, saw the biggest
decline in vacancies, which were 3.1 percentage points lower than in 2014, followed by
Kurfürstendamm and its side streets, which
enjoyed a decrease of 2.8 percent. There was
also a substantial decline in vacancies in the
district of Wilmersdorf, to the south of
Kurfürstendamm, with a 2.1 percent drop for
the year as a whole.
transaction volume of EUR
4.45
billion
for offices in Berlin – a
new record
Office property transaction volume
in Berlin
Transaction volume in EUR million
Change compared to previous year in %
5,000
4,500
4,000
3,500
3,000
2,500
159%
4,450
137%
2,000
-47%
1,500
1,000 1,487
794
500
0 2010 2011
1,881
2012
-14%
6%
1,621 1,720
2013
2014
2015
Source: BNP Paribas Real Estate, own research
2015 – Record year for Berlin's office
transaction market
Berlin's office transaction market celebrated a
new record high in 2015, as the transaction
volume climbed to EUR 4.45 billion. Compared
with 2014, this represents an increase of just
below 160 percent. This spectacular transaction
volume puts Berlin hot on the heels of the
current reigning champion, Frankfurt, which has
yet to lose its status as the leading German
office transaction market, and reported a
transaction volume of EUR 4.53 billion for 2015.
Berlin's record year-end transaction volume
was largely the result of the sale of the
Potsdamer Platz Ensemble for billions of euros
to the Canadian investor, Brookfield. The deal
involved 17 buildings, many of which are
high-rise office towers, for what was widely
reported as an estimated price of around EUR
1.4 billion. The scale of this portfolio sale
made it one of the biggest commercial
property transactions in Germany in recent
years.
According to BNPP RE, office property
accounted for around 54 percent of all
property transactions in Berlin during 2015,
which represents a rise of approximately 14
percent compared with 2014. This ensured
that the office segment strengthened its
8
position as the most popular property category.
Boosted by low interest rates and cheap loan
capital, in combination with a moderate
number of pipeline office developments and
rising office employment, demand for office
space in Berlin is set to remain at high levels
throughout 2016, and the city's office market
is forecast to enjoy further positive growth. At
the same time, this year's transaction volume
is not expected to beat the extraordinarily
positive result in 2015, unless we see similar
large-scale deals involving billions of euros, as
was the case for the Potsdamer Platz Ensemble mentioned above.
Pressure on office yields intensifies
Berlin's ongoing economic growth has served
to make investments in the city's office sector
more attractive than ever. The Spree metropolis is widely regarded as having stable
investment and rental markets, and enjoys
one of the highest levels of demand for office
8
14
BNPPB RE, “Investmentmarkt Deutschland. Property Report 2016“
space in Germany. The enormously high level of activity on
the transaction market, and rising demand for core properties, combined with the scarcity of available office properties, intensified pressure on yields in 2015.
Net initial yields for office properties in central and
peripheral locations in Berlin have been falling continuously
since 2010. This trend continued in 2014 and yields in central
submarkets were squeezed to 4.1 percent, which represents
a decrease of 0.5 percent in comparison with the previous
year. Year-on-year, the rate of return for office properties in
peripheral locations also fell by 0.5 percent and was down to
just under 6 percent by the end of 2015. The long-term trend
for the period between 2010 and 2015 has seen yields for
office properties in Berlin's central locations pushed 1.2
percent lower, with returns in peripheral locations sinking
over the same period by 1.5 percent.
■
market report for Berlin reports an average rent of EUR
15.60/sqm and prime rents of EUR 25.90/sqm.
Highest rents where recorded in Mitte, averaging EUR 16.80/
sqm, followed by the districts of Charlottenburg with EUR
15.80/sqm, Kreuzberg with EUR 15.20/sqm and Friedrichshain with EUR 14.70/sqm. Office owners in Prenzlauer Berg
and Tiergarten also achieved high rents of EUR 14.10/sqm
and EUR 13.40/sqm.
Initial net yields for office property in
central and peripheral locations in Berlin
Prime rents rise by 8 percent
In 2015 Berlin office prime rents rose to EUR 24.30/sqm, an
increase of 8 % in comparison with 2014's figure. This was
mainly the result of the district Mitte with the most sought
after office submarkets within Berlin. The lowest prime rents
were however recorded in the peripheral districts in eastern
Berlin.
Average office rents climbed to EUR 14.80/sqm. Current
analyses show that rents for office properties in Berlin are on
the rise as well in the first half of 2016. Thus, Savills office
Initial net yields for central office property in %
Initial net yields for peripheral office property in %
10 %
9 %
8 %
7.5
7.5
7.3
7.1
7 %
6.5
6 % 5.3
5.0
4.9
4.8
5 %
4.6
4 %
3 %
2 %
1 %
0 %
2010 2011
2012 2013
6.0
4.1
2014
2015
Source: bulwiengesa, own research
Office rents Berlin 2012-2016
Average rent prices in EUR/sqm
Prime rent prices in EUR/sqm
20.90
12.00
13.20
12.30
2012
2013
25.90
24.30
22.50
22.00
15.60
14.80
2014
2015
2016
Source: Savills
Average rent prices for Berlin office property (2015)
Average rent prices (EUR/sqm)
16.80
15.80
15.20
14.70
14.10
13.40
Mitte
Charlottenburg
Kreuzberg
Friedrichshain
Prenzlauer Berg
Tiergarten
14.80
Berlin
Source: Savills
15
■
■
Retail Property
Market – Berlin
S
trong economic growth had a positive impact on both
consumer confidence and consumer spending in 2015.
The increase in consumer spending has fuelled retail
growth and consequently given a boost to the retail property
market. The German market research company GfK's
Consumer Confidence Index, which serves as an important
indicator for consumer spending, rose to 9.3 points in
December 2015, an increase of 0.6 points compared to the
9
same prior year month. A significant increase was also
registered in price-adjusted private consumer spending in
Germany, which grew at a faster rate than at any point in the
last 15 years, finishing the year 1.9 percent higher than at
the same point in 2014.
Key retail indicators trending upwards
The retail market in Berlin benefits from a range of favourable
economic conditions. A stable labour market and steady
wage growth, both of which are set to continue for the
foreseeable future, have been key contributors to retail
growth. A further key factor is retail-related consumer
purchasing power, assessed as the proportion of households'
disposable incomes used for retail purchases. The retail-related purchasing power for households in Berlin in 2015 was
EUR 6,226 per head of population, which represents an
increase of 1 percent compared to 2014. The Berlin purchasing power index climbed to just 3.6 points below the
national average in 2015. The districts with the highest
levels of purchasing power were Steglitz-Zehlendorf and
Charlottenburg-Wilmersdorf, where purchase power index
scores of 106.8 and 104.7 points were significantly higher
than the national average. Households in the central district
of Mitte had the most limited budgets for retail purchases
(91.2 index points), which is a direct result of the high
proportion of low-income households in the area (e.g.
students and people with a migration background). Purchasing power was only slightly higher in other districts with
comparatively large numbers of low-income households,
such as Lichtenberg (91.8 points) and Marzahn-Hellersdorf
(92 points).
Berlin's economic growth, driven by higher employment,
increased purchasing power and buoyant consumer confidence, contributed to strong retail sales growth in 2015.
Sales for the year were 2.2 percent higher than in 2014, and
Berlin's retailers generated sales revenues of EUR 21.3
billion. Retail spending per capita rose to EUR 6,140, which is
around EUR 380 higher than the national average. Food and
Development of private consumer expenditure in Germany
3.0
2.0
1.6
0.8
1.0
0.1
0
9
16
1.3
0.6
0.4
0.2
1.0
0.4
0.6
0.9
0
-0.8
-1.0
-2.0
1.9
1.5
2001
2002
2003
2004
2005
2006
2007
2008
2009
Gfk, press release from 27 January 2016, “Konsumklima steigt wieder leicht” [Consumer climate improves marginally]
2010
2011
2012
2013
2014
2015
Source: Federal Office of Statistics. Volkswirtschaftliche Gesamtrechnungen
Mall of Berlin, Leipziger Platz, Berlin
drink retailers were the biggest winners as
consumer confidence picked up. Real retail
sales in this segment rose by 3.6 percent in
2015. Within Berlin, Mitte's strong retail
market and large department stores accounted
for the greatest share of total retail sales (15
percent). The district of Charlottenburg-Wilmersdorf, home to a multitude of luxury retailers
and fashion boutiques along Kurfürstendamm,
ended up 0.7 percentage points behind Mitte.
Nearby Tauentzienstraße, the most frequented
street in Berlin (7,576 pedestrians per hour),
made a major contribution to the district's
impressive retail sales volume.10 The smallest
share of retail sales (5 percent) was reported
in Lichtenberg, which is an overwhelmingly
residential district.
The relationship between retail sales and
retail-relevant purchasing power is commonly
referred to as retail centrality, and acts as a
measure of a city's attractiveness as a retail
10
BNPPBRE, “Retailmarkt Deutschland. Property Report 2016“;
Retail property transaction volumes in Berlin
Change according to previous year in %
ascending
descending
2,500
2,300
135%
2,100
2,090
1,900
1,700
1,500
1,376
23%
1,300
-32%
1,100
1,153
900
12%
1,297
940
888
700
500
2010
2011
-32%
2012
2013
2014
2015
17
■
Retail relevant purchasing power in
Berlin (2015)
Retail centrality scores in Berlin
according to city district (2015)
Purchasing power index, Germany = 100
Retail centrality score, Germany = 100
Steglitz-Zehlendorf
106.8
Mitte
176.3
104.7
160.2
98.0
121.3
Treptow-Köpenick
96.9
Spandau
111.7
Reinickendorf
96.9
Steglitz-Zehlendorf
101.5
Pankow
95.7
Reinickendorf
100.3
94.8
Treptow-Köpenick
96.6
Spandau
94.7
Marzahn-Hellersdorf
94.0
Neukölln
92.6
Neukölln
93.0
Marzahn-Hellersdorf
92.0
86.6
Lichtenberg
91.8
Pankow
84.7
Mitte
91.2
Lichtenberg
77.5
96.4
110
Berlin
110.5
60 80 100 120 140 160 180
Berlin
80
90
100
Source: MB Research
Source: MB Research
Share of Berlin retail turnover according
to city district (2015)
in %
Mitte
15.0
14.3
10.5
Steglitz-Zehlendorf
8.6
Pankow
8.2
Neukölln
7.4
Reinickendorf
6.5
Spandau
6.4
Treptow-Köpenick
6.1
6.0
Marzahn-Hellersdorf
5.8
Lichtenberg
5.0
0 %
5 %
10 %
15 %
Source: MB Research, own research
centre. Berlin had a retail centrality score of 110.5 in 2015,
placing the city well ahead of the national average of 100. In
comparison with the previous year, Berlin's retail centrality
increased by 0.7 points. Nevertheless, retail centrality in the
Spree metropolis varies considerably from district to district.
Major tourist destinations, such as Mitte and Charlottenburg-Wilmersdorf, had incredibly high retail centrality scores
of 175 and 160 respectively. As these two districts are
popular among both tourists and business travellers, it is no
surprise that the volume of sales attributable to these
guests, and the correspondingly high retail centrality scores,
are so significant. These two districts are by far the most
important and most attractive retail centres in Berlin. In
marked contrast, Lichtenberg's retail centrality score of 77.5
was far below the national average in 2015.
accounted for the lion's share of take-up volume. First place
was seized by Kurfürstendamm, with a total of 16 concluded
leases in the luxury and consumer segments.
Berlin is also the absolute pace setter in terms of retail
property transactions. At around EUR 2.1 billion, the volume
of retail property transactions in the Spree metropolis in
2015 was nothing short of spectacular, and more than
doubled the EUR 910 million result achieved by second-place
Düsseldorf. In comparison with 2014, the transaction volume
in Berlin's retail property segment grew by an exceptional
135 percent. This noteworthy developments owes much to a
number of large-scale shopping centre transactions, including, for example, the sale of the Potsdamer Platz Ensemble
and deals for centrally-located commercial properties such as
the Gloria Galerie on Kurfürstendamm.12
Retail property yields continue to slip
After stagnating in 2012, the net initial yield for retail
property in Berlin has steadily declined. As a result of further
price rises in 2015, pressure on retail property yields
continued to intensify. Strong demand combined with fierce
competition between investors to squeeze yields even
further. The net initial yield in Berlin's central retail locations
suffered the sharpest drop, falling by around 6 percent in
comparison with the previous year, and finished the year at
3.9 percent. In Berlin's peripheral locations, the net initial
yield in 2015 stood at 5.9 percent, a year-on-year decline of
5 percent. Higher yields in peripheral locations are a direct
reflection of the elevated investment risk in these areas.
Strongest demand for larger retail spaces
DRents for retail spaces in Berlin vary significantly by location
and size. The prime rent for smaller retail spaces of up to
100 square metres rose to around EUR 320/sqm in 2015,
which represents a year-on-year increase of almost 7
percent. The rate of increase was faster still for larger spaces
over 150 square metres, which are primarily let to non-food
Berlin – Number one for take-up and transactions
Berlin's retail property market was the top performer in
Germany in two respects: Take-up volume and transaction
volume. At 42,000 square metres, Berlin reported by far the
highest take-up volume for retail space among Germany's
top ten cities.* The full-year result meant that Berlin beat
11
second-place Cologne by almost 11,200 square metres.
At 23,410 square metres, the city's central A-rated locations
18
*Berlin, Cologne, Düsseldorf, Munich, Hamburg, Stuttgart, Frankfurt, Leipzig, Nuremberg, Hanover.
BNPPBRE, “At a Glance 2015. Focus retail“
11
Prime rents in Berlin (EUR/sqm)
2015
2014
Change
compared
to previous
Retail space
up to
100 sqm
320
300
7%
Retail space
from
150 sqm
250
210
19%
Source: Wüest & Partner
retailers and saw rents surge by 19 percent. The prime rent
for these larger spaces in Berlin climbed to EUR 250/sqm in
2015. Charlottenburg-Wilmersdorf is one of the most
sought-after and expensive retail destinations in the city. On
the other side of the city, in Berlin's eastern districts, retail
rents ranged between EUR 80 - 100/sqm, with prime rents
of EUR 120/sqm for larger spaces and EUR 150/sqm for
smaller spaces. As a result, retail rents in the east of the city
remain at approximately 50 percent of the level seen in
western districts.
Unsurprisingly, retail rents vary strongly by location.
Rents for retail spaces of up to 100 square metres in Berlin's
peripheral locations averaged EUR 25/sqm in 2015, with an
average of EUR 16/sqm payable for larger spaces in the
same areas. In contrast, average retail rents in central
locations reached EUR 90/sqm for spaces up to 100 square
metres and EUR 70/sqm for larger spaces over 150 square
metres. Irrespective of location or size, there was a general
rise in retail rents in Berlin in 2015.
Average rents in Berlin 2015 (EUR/sqm)
Low to medium utility
/ peripheral location
■
ascending
Change compared to
previous year
constant
High utility / central
location
Change compared to
previous year
Retail space up to
100 sqm
25
+
90
+
Retail space from
150 sqm
16
+/-
70
+
12
BNPP RE, “German Retail Property Market. Property Report 2016”
19
■
Hotel Property
Market – Berlin
Berlin – Europe's newest tourist magnet
I
n the space of just a few short years, Berlin has established
itself as a major tourism centre and has risen to become
the third most popular tourist destination in Europe, behind
only London and Paris.13 Berlin is also the top travel destination
for domestic travellers. The city’s tourism industry had a
record year in 2015; it was the first time that Berlin registered
more than 30 million overnight stays. An impressive 45
percent of visitors came from overseas, with British and U.S.
tourists among the most heavily represented. Figures for the
last five years show continuous growth in the number of
overnight stays in Berlin. This peaked in 2012, when overnight
stays shot up by more than 11 percent in comparison with
the preceding year. The rate of growth may have lost some
of its momentum since 2012, but the 5.5 percent growth
registered in 2015 was still more than many other cities
could dream of.
As overnight stays reached a new peak, so did the
number of individual tourist visitors in Berlin. Some 12
million guests were registered in the city on the Spree
last year, an increase of 4.2 percent over 2014's figure. In
terms of visitor numbers and overnight stays, the most
popular districts in Berlin last year were Mitte, Charlotten14
burg-Wilmersdorf and Friedrichshain-Kreuzber. Berlin
continues to exert a strong appeal to both holidaymakers
and business travellers. A large proportion of visitors
came to Berlin to attend trade fairs, conferences and
congresses. There has also been a noticeable recent
15
increase in medical tourism.
Lobby Hotel Adlon, Berlin
20
13
Deloitte, “Hotelmarkt Berlin. Eine Hauptstadt meistert Wachstum” [Berlin Hotel Property
Market. A capital mastering growth], 2016
14
BBS, “Statistischer Bericht. Gäste, Übernachtungen und Beherbergungskapazität im Land
Berlin.” [Statistical report. Guests, overnight stays and hotel capacity in Berlin], 2015 edition
15
Deloitte, “Hotelmarkt Berlin. Eine Hauptstadt meistert Wachstum” [Berlin Hotel Property
Market. A capital mastering growth], 2016
Key hotel market indicators paint a clear
picture: Demand is outpacing supply
Strong growth in tourist numbers has been
matched by a sizeable increase in Berlin's
hotel capacity. Although the number of hotel
operators in Berlin has “only” increased by
around 4 percent since 2010, rising to 780 in
2015 according to figures compiled by the
Federal Office of Statistics, there has been an
impressive 23 percent increase in hotel
capacity over the same period. The number of
hotel beds on offer in Berlin has risen from
114,100 to 140,00 over the past five years.16
The mismatch between the number of hotel
operators and the number of hotel beds is
explained by a strong trend towards larger
hotels. This was most pronounced towards the
top end of the market, in the three-, four- and
five-star segments. Berlin celebrated a
number of major hotel openings in the luxury,
first class and comfort segments in 2015.
These included, for example, the five-star
Hotel Titanic Deluxe Berlin (208 rooms), the
four-star Hotel Riu Plaza Berlin (357 rooms)
and the three-star Hotel Amano Grand Central
(250 rooms).
Given the strong appeal of Berlin as a
travel and tourism destination, the supply of
new hotel rooms has so far been unable to
keep pace with the hike in demand. As the
market has grown, new capacity has been
absorbed almost immediately, leaving
substantial potential for further growth. The
fact that demand exceeds supply is clearly
mirrored in rising occupancy rates. On average,
Berlin's hotels reported an occupancy rate of
76.5 percent in 2015, which translates to an
impressive rise of 12 percent since 2010.
Compared to the previous year, room occupancy in Berlin rose by a notable 3 percent in
2015. Berlin's City East and City West central
submarkets have both enjoyed significant
increases in room occupancy rates over the
last six years. The room occupancy rate in City
East has risen by 8 percent since 2010,
reaching 81 percent in 2015. Over the same
period, there has been a more rapid increase
in the room occupancy rate in City West, which
has risen by 12 percent. Nevertheless,
occupancy rates, at 78.3 percent, were still
lower for hotels in City West. Berlin's healthy
16
BBS, “Statistischer Bericht. Gäste, Übernachtungen und Beherbergungskapazität
im Land Berlin.” [Statistical report. Guests, overnight stays and hotel capacity in
Berlin], 2010 and 2015 editions
■
Number of overnight stays in Berlin
Overnight stays
ascending
45,000,000
40,000,000
11.3
10.2
8.2
7.5
35,000,000
6.5
5.4
30,000,000
30,250,000
28,689,000
26,942,000
25,000,000
24,896,000
20,000,000
22,359,000
20,796,000
15,000,000
2010
2011
2012
2013
2014
2015
Source: Berlin-Brandenburg Office of Statistics, own research
Average room occupancy rate in %
Berlin East
Berlin West
Berlin
90
85
78.5
80
75
70
74.7
75.5
72.9
70.0
70.0
68.6
69.3
78.7
73.6
80.5
81.0
78.3
75.0
76.5
74.3
72.4
72.5
2012
2013
65
60
2010
2011
2014
2015
Source: STR Global
It should be noted that the City East and City West submarkets do not necessarily
represent the entirety of the Berlin hotel market. A number of other submarkets
(e.g. peripheral locations) are included in the figures for Berlin as a whole.
21
■
Average daily rate and revenue per
available room in Berlin
Average daily rate (ADR) in EUR
Revenue per available room (RevPAR) in EUR
100
90
93.70
86.60
84.60
87.90
87.50
88.90
80
71.70
70
60
63.60
59.40
63.40
66.10
58.60
50
40
2010
2011
2012
2013
2014
2015
Source: STR Global
Hotel transaction volume in Berlin
ascending
descending
810
710
650
610
194%
510
104%
410
76%
432
310
-54%
85%
351
210
110
10
200
147
72
2010
2011
2012
2013
2014
2015
22
■
room occupancy figures in 2015 owe a great deal
to the large number of events that took place in
the city during the year, as well as to Berlin's
popularity as a conference and congress destination. Berlin's hotels benefited in particular from
the UEFA Champions League Final, the visit of
Britain's Queen Elizabeth II, the fashion industry's
Panorama and Fashion Week events, and from
numerous medical congresses (e.g. the EAN
Congress).
As room occupancy rates have increased, so
have room revenues. Over the last six years,
Berlin's hotel market has registered a significant
rise in average revenues per available room
(RevPAR), which have increased by 21 percent to
reach EUR 71.70 for the year 2015.
High demand, primarily measured in terms of
the growth in overnight stays, has not only had a
positive impact on the RevPAR figures, but also
on the average daily rate (ADR) for hotel rooms
in Berlin. The average daily rate in Berlin has
risen by 8 percent since 2010 and reached EUR
93.70 in 2015.
Transaction volume races to new record in
Berlin's hotel property market
The importance of Berlin, both as Germany's
capital and as an overwhelmingly popular city
break destination, has had a major impact on the
city's hotel transaction market. The Spree
metropolis continues to attract large numbers of
both institutional and private investors. With a
number of interesting hotel openings and
projects under development, competition in the
market has intensified and put pressure on room
rates (ADR) and room revenues (RevPAR), which
remain relatively low in comparison to the levels
recorded in Germany's other top seven cities.*
Following the above-mentioned hotel
openings at the top end of the market, it is now
likely that investors will shift their medium-range
focus to the value and mid-market segments. For
example, the two new hotels being developed by
Motel One are set to add a further 1,300 rooms
to the city's hotel market by 2017. And Berlin will
be home to Germany's tallest hotel when the
Estrel Tower in Neukölln opens its doors in
2020.17
The attractiveness of Berlin's hotel investment
market is reflected in a sharp rise in the volume of
hotel property transactions. Following a short-term
* Berlin, Hamburg, Munich, Cologne, Düsseldorf, Frankfurt, Stuttgart
17
Deloitte, “Hotelmarkt Berlin. Eine Hauptstadt meistert Wachstum”
[Berlin Hotel Property Market...A capital mastering growth], 2016
nhow Hotel, Berlin
reverse to around EUR 200 million in 2013, the
transaction volume in the hotel sector has risen
consistently over the last three years and set a
new record in 2015 as it reached EUR 650
million. A long-term comparison for the years
2010 to 2015 shows that the volume of hotel
property transactions in Berlin has grown nine
fold. Last year alone, the transaction volume
swelled by 85 percent. This means that Berlin
was only beaten by Munich, which recorded a
transaction volume of EUR 747 million in 2015 to
once again confirm its position as the leading
hotel investment market among Germany's top
seven cities. Still, Berlin's result meant that it
raced past Frankfurt, which registered EUR 250
million of hotel investment in 2015, to seize
second place in the major cities' ranking.18
Nine fold
increase
in hotel
transaction
volume since
2010
The impressive volume of hotel transactions in Berlin in 2015 was given a significant boost by a number of large-scale
individual transactions. These deals included
the acquisition of the Steigenberger Hotel
am Kanzleramt Berlin by a joint venture
between Amundi Real Estate and the
investment arm of Electricité de France (EDF
Invest), a Berlin-based private investor
buying the Ramada Hotel Mitte and Foncière
des Murs snapping up the Motel One
Berlin-Mitte. As if this wasn't enough, Union
Investment Real Estate acquired the fourstar andel's Hotel Berlin for a total of EUR
105 million, along with the four-star Hotel
Meliá Berlin, for a figure in the high doubledigit millions.19
BNPP RE, “At a Glance. Hotel-Investmentmarkt Deutschland. Q4 2015”
Deloitte, “Hotelmarkt Berlin. Eine Hauptstadt meistert Wachstum”
[Berlin Hotel Property Market...A capital mastering growth], 2016
18
19
23
■
Economic Environment in eastern Germany
■
Property Markets in
eastern Germany
Eastern Germany profits from net inward migration
T
he population exodus from eastern
Germany since German reunification has
become a thing of the past. According to
the Berlin-based Institute for Population and
Development, 2012 was the turning point. Since
the, net outward migration from Germany's
eastern regions has transformed into net gains,
as increasing numbers of people have relocated
from western Germany and overseas.20 The
major beneficiaries have been eastern Germany's biggest cities, Dresden, Leipzig, Rostock,
Erfurt and Potsdam. Above all, these eastern
German cities are drawing growing numbers of
young people, apprentices and university
students, many of whom are attracted by the
region's relatively low cost of living. Unfortunately, only a minority of the region's smaller
municipalities have been able to ride this trend.
In 85 percent of eastern Germany's communities,
population decline is still the overwhelming
reality. Nevertheless, eastern Germany still
boasts a number of cities that are enjoying
dynamic economic and population growth, and
are well positioned to compete both nationally
and internationally.
Dresden – cultural riches and economic dynamism in the Florence on the Elbe
Dresden can't seem to stop growing. Last year
alone, the population of the city on the Elbe River
increased by around 4,900. This continues an
established, long-term trend. Over the last few
years, net inward migration has added some
19,000 people to Dresden's population.21 As the
number of people living in Dresden has grown, so
has the city's economy and workforce. Compared
to 2014, the city's unemployment rate fell by 0.5
percent to 7.4 percent in 2015. This robust
development is reflected in an increase in GDP per
24
Attracting
students and
trainees
employed person, which rose by 4.2 percent in
2015. Dresden has also strengthened its position
as a city with a strong arts scene and large
numbers of culture lovers. During the 2013/2014
theatre season, the average person in Dresden
went to the theatre or opera 1.8 times – a
frequency that no other major German city could
match, and which owes a great deal to the city's
importance as a culture and tourism centre.22 But
Saxony's capital has more to offer than just
cultural riches; it is also an important centre of
scientific research. There are a projected 20.7
research institutes for every 1 million inhabitants.
Large numbers of academics have also made
Dresden their home and, in 2014, around one
quarter of all employees subject to social security
contributions were university graduates.23
Leipzig – economy continues to soar
Leipzig's economy is also booming: Between
2010 and 2013, GDP per employed person rose
by 14.4 percent. The city's unemployment rate,
admittedly high in comparison with other
German cities, fell from 11.6 percent in 2011 to
8.8 percent in 2015.24 Thus, Leipzig's labour
market is confirmed as the most dynamic in
Germany. The number of employees subject to
social security contributions also rose by 23.2
percent between 2009 and 2014.25 As a result,
Leipzig has become an increasingly attractive city
for working-age people. On the back of these
positive developments, Leipzig's population
increased by around 12,700 last year. With
548,456 inhabitants, the city has established
itself as Saxony's biggest city.26
Rostock – major growth in tourism
The sustained economic success of the Hanseatic City
of Rostock is demonstrated by its GDP growth and its
20
Berlin Institute for Population and Development (2016): Im Osten auf Wanderschaft [Population migration in eastern Germany]; 21 Saxony Office of Statistics; 22 IW Cologne Consult/
Wirtschaftswoche/Immobilienscout24 (2015): Städteranking 2015 – Deutsche Großstädte im Vergleich [2015 city ranking – Germany's major cities compared]; 23 IW Cologne Consult/
Wirtschaftswoche/Immobilienscout24 (2015): Städteranking 2015 – Deutsche Großstädte im Vergleich [2015 city ranking – Germany's major cities compared]; 24 Federal Employment
Agency (2015); 25 IW Cologne Consult/Wirtschaftswoche/Immobilienscout24 (2015): Städteranking 2015 – Deutsche Großstädte im Vergleich [2015 city ranking – Germany's major cities
compared]; 26 Saxony Office of Statistics;
Zwinger, Dresden
Unemployment rate (2011-2015)
with regard to civilian workforce in December
in %
Dresden
Leipzig
Rostock
Erfurt
Potsdam
15.0
14.0
13.0
12.3
11.6
12.0
11.0
10.0
9.0
8.0
7.0
11.6
10.8
9.1
8.9
8.9
8.8
7.4
11.2
10.4
8.4
7.2
8.0
7.3
2012
2013
6.0
5.0
2011
9.9
10.3
9.4
7.9
7.7
8.8
7.7
6.7
7.4
6.9
2014
2015
Source: Federal Employment Agency
Town hall, Leipzig
25
■
declining unemployment rate. Over the four years
from 2011 to 2015, the city's jobless rate fell from
12.3 percent to 9.9 percent.27 Between 2010 and
2013, GDP rose by 5.2 percent. Rostock has
become especially attractive for young families.
The city had a day nursery place available for every
single child between the ages of three and six in
March 2014 – something no other major city in
Germany could equal.28 Such extensive provision of
childcare facilities is one reason why 57 percent of
working-age women in Rostock are in active
employment – an economic factor that, in relation
to the growing nationwide shortage of skilled
workers, is sure to play a key role in business
relocation decisions. An average of 50 percent of
working-age women are currently in employment
in Germany's major cities. Tourists have also been
flocking to Rostock in ever-greater numbers. Since
2011, the number of overnight stays in Rostock has
increased by around 28 percent, equivalent to
average annual growth of 5.5 percent.
■
percent in the period from 2009 to 2014. At the
same time, the proportion of long-term unemployed in the population decreased by 2.5
percent. No other major German city recorded
such a significant drop in long-term unemployment as Erfurt during the period in question.30
The fact that Erfurt has become a more attractive
city is reflected in its population growth figures.
In the 12 months between June 2014 and June
2015, Erfurt added approximately 2,500
inhabitants, increasing its population to 207,656.
Since 2011
overnight stays
in Rostock
have risen by
28 %
Potsdam – dynamic centre for science and
research
Within eastern Germany, Potsdam is one of the
most appealing cities to live and work. In 2015,
the city had a population of 165,165 – up 2,740
in comparison with the previous year.31 One
reason for this growth is the city's dynamic
economy, another its proximity to Berlin.
Potsdam is also a world-renowned science
centre, home to the Hasso-Plattner-Institute for
Software System Technology, and SAP's “Innovation Lab2, among others. The proportion of
employees with university and master's degrees
rose by 1.6 percent from 2009 to 2014, and is 0.6
percent higher than the average across Germany's other major cities.32 The unemployment rate
may have risen by 0.2 percent from 2014 to
2015, climbing to 6.9 percent, but it has still
fallen by 0.5 percent overall since 2011.33
Erfurt – Knowledge-intensive service
industries fuel economic growth
Erfurt's economy is strong and dynamic: GDP per
employed person rose by 10.9 percent between
2010 and 2013. The city's unemployment rate
fell to 7.7 percent in 2015, well below the
eastern German average of 9.2 percent.29 The
proportion of employees engaged in the
knowledge-intensive service sector grew by 2.2
Historic lighthouse, Rostock-Warnemünde
Benediktplatz, Erfurt – modern meets historic
Demographics and economy
City
Population
on 30.6.2015
Absolute
population growth
(30.6.2014 /
30.6.2015)
GDP per
employed person
in EUR
(2013)
Change in GDP per Change in GDP per
employed person employed person
in %
in %
(2010/2013)
(2012/2013)
Dresden
536,911
4,929
55,837
3.6
4.2
Leipzig
548,456
12,724
55,099
14.4
2.8
Rostock*
206,033
1,866
60,477
5.2
4.0
Erfurt
207,656
2,380
51,183
10.9
3.2
Potsdam
165,165
2,740
53,538
6.7
3.5
*Population as of 31.12.2015, Source: City of Rostock, Federal Employment Agency
Federal Employment Agency (2015); 28 IW Cologne Consult/Wirtschaftswoche/Immobilienscout24 (2015): Städteranking 2015 – Deutsche Großstädte im Vergleich [2015 city ranking –
Germany's major cities compared]; 29 Federal Employment Agency (2015); 30 IW Cologne Consult/Wirtschaftswoche/Immobilienscout24 (2015): Städteranking 2015 – Deutsche Großstädte im
Vergleich [2015 city ranking – Germany's major cities compared]; 31 Berlin-Brandenburg Office of Statistics; 32 IW Cologne Consult/Wirtschaftswoche/Immobilienscout24 (2015): Städteranking
2015 – Deutsche Großstädte im Vergleich [2015 city ranking – Germany's major cities compared]; 33 Federal Employment Agency (2015)
Hans Otto theatre, Potsdam
27
26
27
■
■
Office Property Market in eastern Germany
Office Property Market in eastern Germany Office Property Market in
eastern Germany
E
mployment in eastern Germany's regional
centres has increased as a result of the
region's generally strong economic development. Consequently, there has been a corresponding increase in office employment. At the
same time, the region's comparatively low rents
have meant that almost no new office space has
been developed in the eastern German cities
included in this report. Rather, the substantial
oversupply of office space from the 1990s is
being steadily absorbed. The last few years have
seen significant reductions in office vacancy
rates, and a great deal of progress has been
made since their peak of 25 percent. Having said
that, there is little chance of an accelerated
increase in office capacity any time soon,
particularly as vacancy rates remain stubbornly
high, and office rents low, in a number of areas.
Overall, office rents are expected to continue
their gradual upward trend.
Expecting
Uptrend for
office space
Vacancy rates down in all five cities
Vacancy rates have been declining for a
number of years and the trend continued in
2015. The biggest fall was registered in
Leipzig, where the vacancy rate fell by 6.1
percent between 2011 and 2015, finishing
the year at 12.6 percent. It is assumed that
strong demand from service sector companies was the driving force behind this
reduction. In Potsdam, in contrast, the
vacancy rate was only down by a slight 0.1
percent over the last five years. Still, at 4.3
percent, Brandenburg's state capital has the
lowest vacancy rate of these five eastern
German cities. This owes a great deal to the
large public administration presence and
the city's extensive TMT sector (technology,
media and telecommunication). Despite
falling from 17.2 percent in 2011 to 15.5
percent in 2015, Erfurt still registered the
Leipzig
highest vacancy rate. Rostock's 7.2 percent and Dresden's
8.6 percent mean both cities clearly undershot the 10
percent threshold. Dresden's vacancy rate fell by one full
percentage point during 2015 alone.
Employment boom in eastern Germany's metropolises
One major reason for the reduction in office vacancies is the
strong growth in employment recorded in these five eastern
German cities. In particular, Rostock, Dresden and Leipzig,
each of which plays a key role in its region, have enjoyed
continuous increases in office employment over the previous
five years. Leipzig has set the pace, with a 12.9 percent
increase in office employment over the last five years. A
popular conference and congress location, Leipzig added 2.4
percent to its office workforce last year alone. Office employ-
ment in Dresden increased by 6.6 percent over the same
period, and Rostock also experienced strong office employment growth of 5 percent. Office employment also showed
healthy development in Potsdam and Erfurt during the same
period from 2011 to 2015, but a slight recent reverse has
resulted in more moderate overall growth. Overall, there
were 1.9 percent more office employees in the two cities
than in 2011. The figure for Potsdam was 2.6 percent, and in
Erfurt office employment was 1.0 percent higher.
Moderate growth in total office space
The fact that almost no new office space has been added in
the region over the last few years is another reason for
declining vacancy rates in these five eastern German cities.
The most new space was added in Rostock, where total
Office property figures
Number of
office workers
(2015)
Change in number
of office workers
in %
(2014/2015)
Change in number
of office workers
in %
(2011/2015)
Office vacancy rate
in %
(2015)
Change in
vacancy rate
in percentage points
(2014/2015)
Change in
vacancy rate
in percentage points
(2011/2015)
Office space stock
in sqm
(2015)
Change in
office space stock
in %
(2014/2015)
Change in
office space stock
in %
(2011/2015)
Dresden
112,634
1.6
6.6
8.6
-1.0
-2.0
2,642,098
-1.6
-1.8
Leipzig
112,552
2.4
12.9
12.6
-0.9
-6.1
2,733,407
-0.3
-1.5
Rostock
39,585
1.0
5.0
7.2
-0.4
-1.0
995,302
0.6
2.0
Erfurt
52,726
1.0
1.9
15.5
-0.3
-1.7
1,617,575
0.0
1.3
Potsdam
41,123
2.6
1.9
4.3
-0.6
-0.1
1,331,705
0.8
1.9
City
28
29
■
■
Office Property Market in eastern Germany
office space grew by 2.0 percent between
2011 and 2015. Potsdam was next, adding 1.9
percent, followed by Erfurt with 1.3 percent.
The amount of office space in Leipzig and
Dresden actually fell during the same period,
by 1.5 percent in Leipzig and 1.8 percent in
Dresden. The reduction in total office space in
Dresden from 2014 to 2015 amounted to
roughly 42.000 square metres, equivalent to
1.6 percent. The development in Leipzig was
very similar to the year before.
Even with these reductions, Leipzig and
Dresden are still the biggest office centres in
eastern Germany – excluding Berlin. With
approximately 112,000 office employees each,
and around 2.7 and 2.6 million square metres
of office space, these two cities play a key role
in the region's labour market. As the state
capital of Saxony, employment in Dresden is
boosted by the sizeable public sector workforce, and the city's universities and research
institutions are also major engines of job
creation. In contrast, Leipzig's office workforce
is largely made up of employees in other
service sector companies and an increasing
number of internet and communication service
providers.34 Leipzig benefits from its proximity
to Berlin and relatively low cost of living,
which has fuelled a flourishing start-up scene
in the city.
Rents remain stable
Despite the strong development of prices,
office markets in the five eastern German cities
have so far been largely unaffected. Rents have
tended to develop sideways rather than
upwards. In Dresden, Rostock and Erfurt, rents
for offices in peripheral locations averaged EUR
6.00/sqm last year. While rents in Leipzig were
at the lower end of the scale, averaging EUR
5.80/sqm, Potsdam put some distance between
itself and the other four cities, registering an
average rent of EUR 8.00/sqm in this segment.
Brandenburg's state capital also recorded the
highest average rent for offices in central
locations at EUR 11.50/sqm. Dresden and
Leipzig followed, with rents for central office
space in both cities stable at around EUR 10.00/
sqm. Rostock and Erfurt brought up the rear,
with rents in this segment averaging EUR 9.00
and EUR 8.00/sqm, respectively.
34
30
BNP Paribas Real Estate: Leipzig Office Property Market, Q1 2016
Office Property Market in eastern Germany Average rents according to location in
eastern German cities (2015)
in EUR, low to medium utility / peripheral location
in EUR, high utility / central location
13
12
11
10
9
8
7
6
5
4
11.50
10.00
10.00
9.00
8.00
6.00
5.80
6.00
Dresden
Leipzig
Rostock
8.00
6.00
Erfurt
Potsdam
Prime rents for office property (2015)
in EUR/sqm, 2014
in EUR/sqm, 2015
16
15
14.00 14.00
13.80 14.00
14
12.50 12.60
13
12.00 12.20
12
11
10.10 10.00
10
9
8
Dresden
Leipzig
Rostock
Erfurt
Potsdam
Net initial yields for office property (2015)
in %, net initial yields for central office property
in %, net initial yields for peripheral office property
10
6
5.4
8.8
8.6
7.6
8
8.5
7.4
5.2
6.0
6.1
5.6
4
2
0
Dresden
Leipzig
Rostock
Erfurt
Potsdam
Quartier 1a at Neumarkt, office and retail, Dresden – historical centre
In the prime segment, it is still possible to rent office in
all five cities for EUR 10.00/sqm. Nevertheless, with prime
rents in Potsdam and Rostock averaging EUR 14.00/sqm,
these two eastern German cities have caught up with the
likes of Wiesbaden and Mannhei.35 In Leipzig and Dresden,
where prime rents reached EUR 12.60 and EUR 12.20/sqm,
the market situation is now similar to that of Mainz. Erfurt
continues to offer significant upside potential, particularly as
the prime rent of EUR 10.00/sqm belies the city's function as
an important centre of higher education.
Major yield potential in eastern Germany's office markets
Although office rents in the region have only enjoyed
moderate growth, office property in eastern Germany
remains attractive to potential investors. Net initial yields of
up to 7.4 percent were achieved in peripheral locations in
Leipzig last year, and in Dresden the figure was even higher,
at 7.6 percent. In the remaining three cities included in this
report, yields of over 8 percent are par for the course. Erfurt
35
takes the lead in this office property segment. Yields for
office properties with fair to average utility value and for
office space in peripheral locations in Erfurt stood at 8.8
percent. Rostock was hot on Erfurt's heels, with offices
generating yields of up to 8.6 percent, closely followed by
Potsdam at 8.5 percent. Space in central locations, or with
good utility value, generated yields of just 5.2 percent in
Leipzig and 5.4 percent in Dresden. The other three eastern
German cities, however, offer investors the prospect of very
attractive returns. Yields of 6.1 percent can be achieved in
Erfurt, 6.0 percent in Rostock and 5.6 percent in Potsdam.
Overall, net initial yields for office properties in each of these
five eastern German cities fell in comparison with the
previous year, a direct result of the increased demand for
office space in the region as a whole. The only locations in
which yields remained stable at previous year levels were
the central peripheries of Erfurt and Rostock, where rates of
return were unmoved at 8.8 percent and 8.6 percent,
respectively.
Catella German Office Property Market 2015, Rental and Investment Markets, 2015
31
■
■
Retail Property Market in eastern Germany
Retail Property Market in eastern Germany Retail Property Market in
eastern Germany
Key retail market indicators positive across
the board – above all in Leipzig
R
etail property markets in Dresden, Leipzig, Rostock,
Erfurt and Potsdam are booming, and this growth is
mirrored by the strong retail sales performances in
each of these five cities. Retail spending has risen across
the whole of Germany, and this increase has combined
with the specifically favourable eastern German population
and economic indicators. The Federal Office of Statistics
calculated that private consumer spending increased by a
national average of 1.9 percent last year, the strongest
result in the last 15 years (2.1 percent). In combination
with GDP growth of 1.7 percent, falling energy costs and
low interest rates, retailers can expect to have another
successful year in 2016.
Mädlerpassage, Leipzig
The populations in all five cities are experiencing
significant growth. Leipzig registered the biggest population
increase, adding 13,000 inhabitants over the last year.
Dresden's population has been growing by an average of
more than 1 percent per year since 2011, and similar
developments have been registered in Erfurt und Rostock.
Benefiting from its proximity to Berlin, Potsdam is an
established population magnet, and grew by 2.4 percent in
2015 to around 167,000 inhabitants. Major university cities
such as Leipzig and Rostock attracted above average
numbers of students and academics; in Rostock, the largest
city in Mecklenburg-Vorpommern, the university was
founded in the 15th century and continues to be the city's
Centrum-Galerie, Dresden
largest employer. Favourable demographic developments
have been accompanied by a definite economic upturn in
these five eastern German cities, each of which now as an
unemployment rate of below 10 percent. This places them
ahead of most of the towns and cities in western Germany's
Ruhr metropolitan region. Furthermore, eastern Germany's
urban centres, largely unscathed during the Second World
War and extensively refurbished since the fall of the Berlin
Wall, are major tourist magnets. The region's tourism
industry had a very successful 2015, registering growth in
terms of both foreign and domestic visitors. The number of
overnight stays in the region rose to an impressive 26.5
million for the year.
Purchasing power continued to increase in all five cities –
with the biggest rises in Leipzig and Rostock
The economic upswing in the five eastern German cities
was reflected in yet another jump in retail purchasing power in
comparison with 2014. Potsdam occupied the top spot in this
regard, scoring more than 99 points on the purchasing power
index, equivalent to the national average and three points
higher then Germany's capital. Brandenburg's state capital
appeals to the wealthy and well educated, who are attracted by
its exceptional cultural sites and extensive green spaces, and
are looking for an alternative to the metropolitan atmosphere
in Berlin. The next two places on the purchasing power index
are occupied by Dresden and Erfurt, which scored 94.7 and 94.4
Key retail market indicators
(2014 / 2015)
Retail
centrality
D = 100
(2014)
Retail
centrality
D = 100
(2015)
Change
in
index points
(2014 / 2015)
5,922
0.3%
108.4
108.6
0.2
5,720
5,710
-0.2%
109.3
108.6
-0.7
92.3
5,526
5,554
0.5%
104.3
104.4
0.1
0.9
94.4
6,538
6,425
-1.7%
120.2
118.1
-2.1
6,402
1.3
99.1
5,504
5,442
-1.1%
96.8
95.3
-1.5
5,808
5,884
1.3
91.1
5,161
5,181
0.4%
98.7
98.7
0.0
Western Germany
6,536
6,599
1.0
102.2
5,898
5,905
0.1%
100.3
100.3
0.0
Germany
6,392
6,459
1.0
100.0
5,752
5,762
0.2%
100.0
100.0
0.0
Retail-relevant
purchasing
power
(2014)
Retail-relevant
purchasing
power
(2015)
(2014 / 2015)
Retail-relevant
purchasing
power Index,
Germany = 100 (2015)
Retail turnover
in EUR
per inhabitant
(2014)
Dresden
6,053
6,113
1.0
94.7
5,903
Leipzig
5,814
5,892
1.3
91.2
Rostock
5,886
5,963
1.3
Erfurt
6,044
6,098
Potsdam
6,318
Eastern Germany
(incl. Berlin)
City
Change
in %
Retail turnover
in EUR
per inhabitant
(2015)
Change
in %
Source: MB Research, own research
32
33
■
■
Retail Property Market in eastern Germany
Retail Property Market in eastern Germany index points, respectively. At the same time, only Dresden and
Rostock registered increases in per capita retail spending, and
even these increases were moderate, at 0.3 percent and 0.5
percent. The biggest fall was seen in Erfurt, where per capita
retail spending declined by 1.7 percent, but Thuringia's state
capital still maintained its tight grip on first place in absolute
terms, with retail spending of more than EUR 6,400 per
inhabitant (Dresden: EUR 5,900). Erfurt's unique position can be
explained by its ability to draw significant spending power from
its surrounding communities. As Erfurt's retail catchment area
extends across almost the whole of the state of Thuringia, it is
no surprise that this 210,000-inhabitant city has an elevated
retail centrality score of 118.1. Dresden and Leipzig both scored
108.6, which also confirms that they are well positioned to
attract consumers from a fairly wide region.
In contrast, Potsdam sacrifices purchasing power to
neighbouring Berlin, which is why it is the only one of these
five cities to register a below-average purchasing power
rating of 95.3. This situation is reflected in Potsdam's
average retail rents, both in relation to smaller spaces up to
100 square metres and larger spaces over 150 square
metres. Alongside Erfurt, retail rents in these categories are
the lowest of the five eastern German cities. Nevertheless,
there are no signs of a downtrend in Brandenburg's state
capital. If anything, Potsdam's central and city fringe
locations have registered moderate rental growth. Net initial
yields for retail property investments in central Potsdam
ranged between 5.5 percent and 6 percent in 2015, rising to
between 7.4 percent and 8.2 percent in peripheral locations.
Overall, there has been a decline in yields in the retail
Average rents for retail space in eastern Germany (2015)
in EUR
City
Average rents
for retail space
up to ca. 100 sqm
Good utility value/
City centre
up to ca. 100 sqm
Fair to average utility
value/fringe locations
from ca. 150 sqm
Good utility value/
City centre
from ca. 150 sqm
Dresden
25.00
80.00
11.50
55.00
Leipzig
25.00
90.00
12.00
70.00
Rostock
25.00
60.00
9.50
30.00
Erfurt
8.50
80.00
6.50
50.00
Potsdam
12.00
50.00
8.00
25.00
Prime rents for retail space in eastern Germany (2015)
in EUR
Prime rents
for retail spaces
up to ca. 100 sqm
(2015)
Prime rents
for retail spaces
up to ca. 100 sqm
(2014)
Prime rents for
retail spaces
from ca. 150 sqm
(2015)
Prime rents for
retail spaces
from ca. 150 sqm
(2014)
Dresden
110.00
110.00
80.00
80.00
Leipzig
140.00
130.00
100.00
90.00
City
Rostock
90.00
85.00
65.00
55.00
Erfurt
90.00
90.00
70.00
70.00
Potsdam
80.00
80.00
60.00
60.00
property sector in the period from 2011 to 2015, which
suggests that investment risk has also decreased.
In terms of rents, Leipzig and Rostock registered the most
positive developments. In 2015, Rostock's retail property
market improved across all size and location categories in
comparison to the previous year. The Hanseatic City benefits
from its position as one of Germany's largest cruise ship
terminals and its large number of transit travellers with
relatively high purchasing power. Prime rents of EUR 90/sqm can
now be achieved for smaller retail spaces in Rostock, an
increase of 6 percent over the previous year. Rents for larger
retail spaces in Rostock rank in the middle of the pack for
eastern Germany's cities, averaging EUR 65/sqm. Nevertheless, retail sales revenues grew faster in Rostock (+0.5 percent
last year) than in any other city in the region. Net initial yields
in Rostock may be trending down, but the 8 percent achievable in city fringe locations and the 6.7 percent on offer in
central locations, are the best in eastern Germany.
Booming market in Leipzig
Leipzig held onto the record for prime retail rents. The prime
rent in the city's main shopping area around Grimmaische
Straße and Petersstraße was EUR 120/sqm. Dresden's Prager
Straße had to be content with a prime rent of EUR 100/
sqm.36 According to BNP Paribas, a boom is underway in
Leipzig's retail property market. The transaction volume for
retail property in 2015 rose to EUR 565 million, a threefold
increase in comparison to 2014. Above all, it was the city's
central locations that benefited most from this enormous
increase. Measured in relation to the number of transactions,
city fringe locations in Leipzig accounted for 18 percent of
transactions and 31.1 of transactions involved retail properties in peripheral locations, compared with a subdued 9.8
percent in 2014.37 Average rents of EUR 25/sqm for spaces
up to 100 square metres and EUR 12.00/sqm for spaces over
150 square metres put Saxony's biggest city at the top of the
eastern German rankings. Net initial yields ranged between
5 percent in central locations and 7.3 percent in Leipzig's city
fringe locations.
Dresden, Erfurt and Potsdam registered minimal upward
movements in rents. In each of the three cities, prime rents
remained stable at 2014 levels, and average rents also
stagnated at between EUR 50.00/sqm to EUR 80.00/sqm in
Potsdam for smaller retail spaces up to 100 square metres in
central locations. At the same time, there was an increase in
the development of new retail space in Dresden, much of
which was taken up by fashion and clothing retailers. An
additional 5,800 square metres of prime retail space is in the
pipeline, with the Prager Carrée scheduled for completion in
2017. The developer has already secured a number of key
anchor tenants for the development.
36
37
34
BNP German Retail Property Market, Property Report 2016
BNP German Investment Property Market, Property Report 2016
Kröpeliner Tor Center, Rostock
Net initial yield for retail property in
eastern German cities (2015)
in %, net initial yield for central retail property
in %, net initial yield for peripheral retail property
12
10
8
6
7.3
6.8
5.0
5.1
Dresden
Leipzig
8.0
7.4
7.0
6.7
5.6
5.5
4
2
0
Rostock
Erfurt
Potsdam
35
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■
Hotel Property Market in eastern Germany
Hotel Property Market in eastern Germany Hotel Property Market
in eastern Germany
G
Hotel Neptun, Rostock-Warnemünde
ermany has become an increasingly popular tourist destination, and not only among foreign visitors. Holidaying within their own country has also become a major
trend for German tourists. The precarious political situation in
a number of traditionally popular destinations along the
southern Mediterranean has encouraged large numbers of
German tourists to look for alternative destinations, including
at home. This has been compounded by an increase in
business travel and a surge in the number of short trips and
city breaks. Over the last five years, the number of overnight
stays in Germany has increased by 11 percent. In comparison
with 2014, around 6 million more visitors came to Germany
last year, an increase of roughly 3.7 percent. The city break
category was the biggest winner, with 22 percent more guests
attracted to Germany's cities than in 2011. The number of
overnight stays in cities with more than 100,000 inhabitants
rose by 5.5 million last year alone.38
Eastern Germany was able to profit from the general increase in
popularity of Germany as a tourist destination and from the
simultaneous rise in business travellers. Around 1.3 million
more guests stayed in eastern Germany's hotels (excluding
Berlin) last year than the year before, an increase of 1.7
percent, and largely due to the disproportionate growth in
foreign visitor numbers. About 2.2 million overseas guests
chose to travel to eastern Germany last year (excluding Berlin),
compared with 2.1 million in 2014. This is almost 5 percent
more visitors than in 2014 and around 21 percent more than in
2011. The number of domestic visitors also increased, and a
growing number of travellers chose to visit eastern Germany's
regions. In comparison with 2014, the number of domestic
tourists rose by 2.1 percent to 24.1 million.39
Beyond Berlin, Dresden, Leipzig, Erfurt and Potsdam, with
their historical monuments and cultural sites, are among
eastern Germany's major tourist magnets, along with towns
along the Baltic Sea coastline, such as Rostock. All five of these
cities have registered growth in visitor numbers and overnight
Hotel and office building Wiener Platz, Dresden
stays, and key hotel performance indicators, in particular room
revenues, have risen significantly across the board.
The biggest winners have been hoteliers in Potsdam and
Erfurt, who reported a substantial increase in overnight
guests in 2015. Overnight stays in Potsdam were up by 6.7
percent in comparison with 2014, and Erfurt's figure increased by 4.8 percent.
Dresden
Saxony's state capital has enjoyed continuous growth in both
visitor numbers and overnight stays. Between 2011 and 2015,
overnight stays increased by 13.4 percent. After Berlin,
Dresden is the eastern German city with the largest volume of
visitors. Only recently, the tripadvisor website selected
Dresden as its fourth most attractive German travel destination, praising the city's rich cultural traditions, and ranking
Dresden just behind Germany's top three metropolises, Berlin,
Munich and Hamburg.40 It was in 2014 that hotels in Dresden
first registered more than 4.4 million overnight stays. The
regular political rallies in the centre of the city, staged in close
proximity to popular landmarks and tourist attractions such as
the Semperoper and Zwinger, had a negative impact on
Dresden's tourism industry in 2015. The number of overnight
stays suffered its first reversal in years, falling by 3 percent to
4.3 million, which pushed the room occupancy rate 0.9
percent lower to 65.9 percent. In the face of this development, Dresden's hotels nevertheless managed to increase
their room revenues (RevPAR) by 1.8 percent, although this
growth was not as strong as the growth reported in other
major hotel markets in eastern Germany. The increased room
revenues can be attributed to a 3 percent rise in room prices
over the same period. The average daily rate (ADR) rose to
EUR 74.49 EUR, with Dresden sandwiched between Leipzig
(EUR 77.90) and Potsdam (EUR 70.27).
Key Hotel market indicators
Number of
overnight stays
(2015)
Overnight stays,
change in %
(2014 / 2015)
Average
occupancy
rate in %
(2015)
Average
occupancy rate,
change in % points
(2014 / 2015)
Revenue per room
in EUR,
RevPAR
(2015)
Revenue
per room, RevPAR
change in %
(2014 / 2015)
Average
room rate
in EUR, ADR
(2015)
Dresden
4,308,631
-3.0
65.9
-0.9
49.12
1.8
74.49
3.2
Leipzig
2,829,824
2.3
69.1
0.3
53.86
3.0
77.9
2.5
Rostock
1,931,119
1.7
71.0
1.8
66.97
7.9
94.26
5.0
Erfurt
809,306
4.8
61.5*
-1.3
39.74*
4.4
64.43*
6.2
Potsdam
1,105,264
6.7
65.7
1.4
46.81
3.6
70.27
0.1
Berlin
30,250,066
5.4
76.5
2.2
71.70
8.5
93.68
5.4
City
Room price,
ADR
change in %
(2014 / 2015)
* Erfurt 2015: data for January to August and December; Source: STR Global
38
39
36
Federal Office of Statistics
Federal Office of Statistics
40
https://www.tripadvisor.de/TravelersChoice-Destinations-cTop-g187275
37
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■
Hotel Property Market in eastern Germany
Hotel Property Market in eastern Germany Erfurt
Erfurt scored highly due to its central location at the heart of
Germany, and its direct connection to the A4 motorway that
runs across the breadth of Germany. This makes the city easily
accessible to tourists, business travellers and conference and
congress guests. In spite of the rise in overnights stays, which
for the first time topped 800,000, the occupancy rate across
Erfurt's hotel rooms slipped back by 1.3 percent last year. This
could well be the result of new capacity being added to the
city's 5,000 hotel beds, which equated to an extra 200 beds in
2015. Firstly, the B&B Group opened a new hotel in central
Erfurt. Secondly, the Bachmann Hotel Group expanded its
Erfurt hotel by 100 beds.41 In comparison with Dresden,
Leipzig, Rostock and Potsdam, hoteliers in Erfurt were able to
increase their average room rates the most, adding 4.4
percent to their average room revenues (RevPAR). Erfurt's
hotel rooms remained the cheapest among the five eastern
German cities (excluding Berlin), costing an average of EUR
64.63 per room, which is nevertheless equivalent to a
year-on-year increase of 6.2 percent.
Hotel Jägertor, Potsdam
Leipzig
There was positive development in all of the key hotel
market indicators in Leipzig in 2015. The number of overnight stays rose by 2.3 percent last year, climbing above 2.8
million for the first time. From 2011 to 2015, the number of
overnight stays increased by 32.5 percent, almost as rapidly
as in the much-hyped German capital, Berlin (+ 35.3
percent). Leipzig's hotels reported an occupancy rate of 69.1
percent, which is not far off the healthy result in Rostock. At
an average of EUR 77.90 per room, Leipzig's hoteliers were
able to continue the steady increases seen over the last few
years. A direct comparison of 2015's room rates with prices
in 2011 reveals that the ADR in Leipzig has risen by 16.2
percent, more than in any other eastern German city,
including Berlin (+ 10.7 percent). During this same five year
period, room revenues (RevPAR) rose by 25.1 percent to EUR
53.86, meaning that Leipzig comes third in the region,
currently trailing just Berlin (EUR 71.70) and Rostock (EUR
66.97). Leipzig, a traditional conference, congress and
university city, as well as home to a number of Nobel Prize
winners, has developed a strong reputation as a major
European logistics hub and has raised its international
profile, attracting significant numbers of tourists and
domestic and international business travellers.
38
Rostock
The hotel market in the Hanseatic City on the Baltic coast
has been enjoying remarkably positive growth. The only
eastern German city to experience a faster rise in the
number of overnight stays was Leipzig. In comparison with
2011, Rostock registered around 27.7 percent more overnight stays in 2015 (Leipzig: 32.5 percent). Given last year's
total of 1,930,000 overnight stays, it is highly likely that the
city will surpass the 2 million mark this year. Even stronger
growth was registered in room prices and room revenues. At
an average of EUR 94.26, the average daily rate (ADR)
added yet another 5 percent in comparison with 2014 and
again landed slightly above the average rate for a hotel
room in Berlin. Revenue per room (RevPAR) rose by an even
stronger 7.9 percent last year, reaching just under EUR 67.00.
The hotel occupancy rate rose above 70 percent for the first
time, finishing the year at an average of 71 percent. This
placed Rostock second among eastern Germany's major
cities, behind only Berlin. These healthy results certainly
owe a great deal to Rostock's ideal position on the Baltic Sea
coastline, which is a massively popular tourist destination.
Potsdam
The hotel property market in Brandenburg's state capital,
Potsdam, has been boosted in recent years by the strong
appeal of the city's numerous historical palaces, gardens,
unspoilt nature and proliferation of lakes, all of which draw
large numbers of tourists and recreational travellers. In
addition, Potsdam profits from its proximity to Berlin, which
makes it an ideal destination for conference and congress
visitors wishing to avoid the elevated costs of hotel
accommodation in the nearby capital.
It is therefore no surprise that all of the key hotel market
performance indicators for Potsdam reflect the market's
outstanding growth and unparalleled appeal. Alongside an
increase in overnight stays, occupancy rates also improved
from 64.3 percent to 65.7 percent last year. Room revenues
achieved by Potsdam's hoteliers (RevPAR) rose by 3.6 percent
to EUR 46.81. Despite this increase, room revenues are still
lower than in four of the other five eastern German cities,
which lands Potsdam in second-to-last position. Nevertheless,
room revenues have been enjoying constant growth over the
last five years, and have increased by 13.9 percent since 2011.
Germany's hoteliers are in a positive mood and expect
their businesses to develop positively in the short to medium-term. Their sentiment is buoyed by strong economic
growth in Germany, the growing popularity of city-breaks,
rising numbers of international and domestic business
travellers, and increases in consumer spending power.42 Given
the strength of these developments, it is to be fully expected
that the hotel markets in these eastern German cities will
continue to enjoy strong growth.
41
http://erfurt.thueringer-allgemeine.de/web/lokal/leben/detail/-/specific/Zwei-neue-Hotelsbuhlen-in-der-City-von-Erfurt-um-Besucher-325701864; accessed on 06.05.2015
42
Dehoga Market Report, Autumn 2015
Half-timbered house beside Radisson Hotel, Erfurt
Lobby Maritim Hotel, Dresden
39
■
■
List of references
List of references List of references
Berlin-Brandenburg Office of Statistics, population register
Federal Office of Statistics: Annual Accounts
Berlin-Brandenburg Office of Statistics: Presse release as of 17 March 2016, “Erwerbstätigkeit im 4. Quartal”
Gfk: Press Release as of 27 Januara 2016, “Konsumklima steigt wieder leicht”
Berlin-Brandenburg Office of Statistics: Statistical report. Guests, overnight stays and accommodation
IW Köln Consult/Wirtschaftswoche/Immobilienscout24: City Ranking 2015 – German Cities
capacity in Berlin, edition 2010
JLL: Press Release as of 13 January 2016, “Und es ging noch mehr: Die Glanzleistung von 2014 ist Geschichte
Berlin-Brandenburg Office of Statistics: Statistical report. Guests, overnight stays and accommodation
- Auf deutschem Hotelinvestmentmarkt werden über vier Mrd. EUR umgesetzt”
capacity in Berlin, edition 2015
JLL: Berliner Start-Ups als Büronutzer… Auf dem Weg zum Establishment?, 2015
Berlin-Brandenburg Office of Statistics: National accounts and gross domestic in Berlin by economic sectors
KPMG: 3rd German Startup Monitor, 2015
1991 to 2015, Berlin 2015
MB Research
Berlin Institute for Population and Development: Im Osten auf Wanderschaft, 2016
PwC/ULI: Emerging Trends in Real Estate, Europe 2016, London 2016
BNP Paribas Real Estate: At a Glance 2015. Focus retail
Savills: Office market report Berlin, 1st half of 2016
BNP Paribas Real Estate: Office market Leipzig, Q1 2016
Senate Department for Economics, Technology and Research Berlin: Press Release as fo 30 March 2016,
BNP Paribas Real Estate: Investment market Germany. Property Report 2016
“Berliner Wirtschaft auf Wachstumskurs“
BNP Paribas Real Estate: Retail market Germany. Property Report 2016
Statistical Offices of the German States of Mecklenburg-Vorpommern, Sachsen-Anhalt, Sachsen und Thüringen
Bulwiengesa AG
STR Global
Catella: Office market Gemany 2015. Rental and investors markets
Wüest & Partner Germany, W&P Immobilienberatung GmbH
Dehoga: Industry Report, Autumn 2015
Deloitte: Hotel market Berlin. Eine Hauptstadt meistert Wachstum, 2016
Websites:
Federal Employment Agency: Labour market in figures. Labour market statistics 2014 und 2015
http://erfurt.thueringer-allgemeine.de/web/lokal/leben/detail/-/specific/Zwei-neue-Hotels-buhlen-in-der-
Federal Office of Statistics: Annual Accounts of the federal states
City-von-Erfurt-um-Besucher-325701864; 6 May 2015
Picture credits
Cover: Boris Breytman/Fotolia; LianeM/Fotolia; Sean Pavone/Alamy Stock Photo; [email protected]/Fotolia; pure-life-pictures/Fotolia; Rico Ködder/
Fotolia; Page 4: Michael Fahrig; Page 5: hanohiki/Alamy Stock Photo; Page 6: Julie g Woodhouse/Alamy Stock Photo; Page 7: steschum/Fotolia;
Page 11: Christian Draghici/Shutterstock; Page 17: Iain Masterton/Alamy Stock Photo; Page 20: travelstock44/Alamy Stock Photo; Page 23: Iain
Masterton/Alamy Stock Photo; Page 25: Max Yashin/Shutterstock; Lauca Images/Alamy Stock Photo;
40
Page 27: Manfred Ruckszio/Alamy Stock Photo; Ernst Wrba/Alamy Stock Photo; imageBROKER/Alamy Stock Photo; Page 29: Jorg Hackemann/
Shutterstock; Page 31: imageBROKER/Alamy Stock Photo; Page 33: Novarc Images/Alamy Stock Photo; imageBROKER/Alamy Stock Photo; Page 35:
Novarc Images/Alamy Stock Photo; Page 37: Kuttig -Travel-2/Alamy Stock Photo; Karsten Prauße; Page 38: Juergen Schwarz/Alamy Stock Photo;
Page 39: imageBROKER/Alamy Stock Photo; M. Timothy O'Keefe/Alamy Stock Photo
41
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Publisher:
TLG IMMOBILIEN AG
Coporate Communication
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Concept, project management, editorial content:
RUECKERCONSULT GmbH, Berlin
Art direction:
Dominik Arndt
Data:
Wüest & Partner Deutschland, W&P Immobilienberatung GmbH
Data as of 02/2016
No liability is accepted for the accuracy and completeness of the information contained herein.
Copyright:
07/2016 © TLG IMMOBILIEN AG, Berlin
This publication (including tables and charts) is protected by copyright. Any use without
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Property market in Berlin and Eastern Germany

Transcription

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