DGAP-News: TLG IMMOBILIEN AG / Key word(s): Study/Market Report
TLG IMMOBILIEN again records heightened investor interest in eastern Germany
- "Property Market in Berlin and eastern Germany 2015" - Market Report published
- Highest transaction volume on Berlin property market since 2007
- Doubling of commercial investment in eastern German cities
- Booming tourism in Berlin and eastern German cities opens up new prospects for investors in the commercial property market
Berlin, 15 September 2015 - TLG IMMOBILIEN AG today published its latest annual Market Report, "Property Market Berlin and eastern Germany" in which it again records extremely positive developments and trends in the major commercial property markets of these regions.
Indeed, in 2014 the Berlin market for commercial property investments recorded its highest transaction volume since of 2007. At just under EUR 4.28 bn, investment volume grew year on year by 19% and exceeded the ten-year average by 27%. Office properties took the largest share of Berlin transaction volume, with 40%. "Overall, the Berlin office market has developed very positively, not only in prime locations, but especially in established B-locations," says Niclas Karoff, Member of the Management Board at TLG IMMOBILIEN, "Berlin is currently the focus of demand for domestic and international investors".
Other eastern German growth regions are also attracting investors in ever greater numbers. Compared to 2013, investment sales doubled in 2014, up from EUR 1.36 bn. to EUR 2.7 bn. Investment in the Leipzig commercial property market reached EUR 516 m last year, twice the 2013 total. The greatest portion of this was in retail (36.6%) and office properties (26.9%). Increased transaction volumes were also recorded in Magdeburg and Dresden. In Magdeburg, commercial investment rose sharply in 2014 compared to 2013 by 81% to EUR 156 m, about a third higher than the annual average between 2004 and 2013 of around EUR 116 m. Compared to the previous year, the 2014 Dresden commercial investment market registered a rise of almost 9%, reaching a transaction volume of EUR 336 m, equalling the 2004-2013 annual average (EUR 337 m).
Eastern German cities are not only attracting more investors, but also greater numbers of tourists, which is having a positive impact on the retail trade and hotel industry. With around 12 million tourists, overnight stays at Berlin hotels reached a record level of almost 28.7 million, a year on year rise of 6.5%. This result places the capital in top position in Germany for overnight stays, and corresponds to 7% of all overnight stays in the Federal Republic. From a Europe-wide perspective, Berlin is now in third place directly behind London and Paris. Average occupancy rates for the Berlin hotel industry were at a record high of 74.2% in 2014. Thus, Berlin is now 7th among the top 20 hotel locations in Europe. This sharp rise in key indicators is having a positive influence on the hotel investment market, with around 2,800 new hotel rooms planned or currently under construction.
Dresden reported an even higher year on year rise in overnight stays than Berlin, with a surge of 7.6%. The attractiveness to tourists of other eastern German cities like Leipzig, Magdeburg and Rostock was also greater in 2014.
It is not just the positive developments in tourism that are creating favourable conditions for investors in eastern Germany. The generally positive economic trends, especially in Berlin, are also resulting in investment opportunities. According to a report by the Institut der deutschen Wirtschaft Köln (German Economy Institute in Cologne), Berlin, Leipzig and Erfurt count among the ten most dynamic locations in Germany. Positive economic growth is also resulting in rising populations and falling unemployment rates in the eastern German cities. This is in turn also impacting positively on local demand for commercial properties.
The Berlin commercial property market is developing especially quickly. With a 5% decline in vacancy rates and sales of around 609,000 sqm in 2014, Berlin tops the five largest office market locations in Germany. Six out of seven major eastern German office markets also experienced a decline in vacancy rates over the past year. Although not among them, Potsdam recorded the lowest excess supply with an office vacancy rate of 4.9%, followed by Rostock with 7.6%.
Rents were stable in almost all office markets in 2014. However, there were again significant changes in Potsdam. Here, rents for prime offices with low to medium utility value rose by around 6% to 9.50 EUR/sqm, while those with good utility value climbed by as much as 12.5%. The latter commanded square metre rates of 9.50-13.50 EUR in 2014. The Berlin office market recorded a rise in average rents of 7.3%. However, in the top segment, rental rates remained virtually unchanged at +2.3%. Thus, rental price bands for office space in Berlin's best (1A) office locations were stable in 2014 at around 20-23 EUR/sqm.
It is not just the eastern German office property market that is experiencing positive trends, but also other sub-markets, such as the retail property market. Berlin is attracting more and more international retailers and, next to Munich, now counts as one of the ten most attractive commercial locations in Europe. Due to increased demand for retail space in 2014, prime rents in the capital reached 300 EUR/sqm. Even Potsdam, Dresden and Leipzig recorded rising rents, the highest to be found in the Leipzig commercial centre where the rate for smaller retail space stood at 130 EUR/sqm.
Since 1993, TLG IMMOBILIEN AG has documented property market trends in the eastern German cities of Dresden, Erfurt, Jena, Leipzig, Magdeburg, Potsdam and Rostock as well as Berlin, based on approx. 2,000 analyses of internal and external data. This market report provides important information on prevailing economic and demographic conditions, office and retail rents as well as investment volumes. It also presents key indicators relating to the office, retail and hotel markets, as well as price bands in the hospitality industry.
The complete study "Property Market in Berlin and eastern Germany 2015" is available online for download at: www.tlg.de> News & Publications> Publications,
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