property eu investment briefing germany
TRANSCRIPT
Office and Investment Market Germany Analysis and forecast
PropertyEU Investment Briefing Germany
London, 19 Sep 2013
Germany in European comparison
5
Germany – Key facts and leading commercial real estate markets
2012 Trend 2013
Population (31 December) 80.5 million
GDP growth 0.7%
Working population 41.6 million
Unemployment rate 6.8 %
Inflation rate +2.0% Government surplus as a
percentage of the GDP 0.2% General government debt
as a percentage of GDP 81.9%
German top 6 real estate markets
- Berlin
- Düsseldorf
- Frankfurt
- Hamburg
- Munich
- Stuttgart
6
Office stock (in million m²) in selected European markets – German top 6 cities
• No dominating office market in
Germany
• Munich region no. 3 in EMEA
• 3 German office markets in
the Top 10
… …
… …
7
Office take-up (in 1,000 m²) Selected European markets
• Germany‘s office tenants
exercise restraint during H1
• All in all total take-up result for
H1 2013: 1.25 million m²
8
Prime office rents in comparison (in EUR/m²) Selected European markets
• Low rent level compared with
leading EMEA markets
9
Commercial transaction volume (in million €) Selected European markets
• No single top city due to the
federal structure
10
CBD prime office yields (in %) Selected European markets
• Office properties in German
top cities are in keen demand
• On the other hand there‘s a
lack of especially new
buildings in top locations
• Result = decreasing yields
German office market – an overview
12
Take-up of office space (in 1,000 m²) Top 6 cities in total
Lehman • Germany’s office tenants
exercise restraint during first
half of year
Backup take-up
13
Vacancy rate (in %) Top 6 cities in comparison
• Positive net absorption –
office vacancy rate continues
to decline slightly
• Conversions from office into
residential, hotel, student
housings: > 500,000 m² from
2010 to 2012
• Continuing low completion
rates due to banks not willing
to finance speculative
constructions
14
Completions of office properties in Germany (in 1,000s of m²) - Top 6 cities in total
• Almost two-thirds of the
developments (2.6 mn m²)
have already been leased out
• (Possible) consequences:
• Lack of new office spaces
• Lack of investment
opportunities which result
in increasing purchase
prices for prime properties
• Declining vacancy rates
• Rising rent prices
15
Prime office rents (in EUR/m²) German top 6 cities in comparison
• Tendentially rising prime office
rents
• Top locations still in keen
demand e.g. by consulting
firms, law firms, financial
sector etc.
• Nevertheless, top segment is
a comparatively small
segment (3% of take-up)
Commercial investment market Germany
16
17
Commercial transaction volume in comparison (in billion euros)
17,5 €
13,1 €
6,4 €
3,4 €
3,3 €
1,3 €1,0 €
2,3 €1,1 €
2013
UK Germany France Sweden Russia The Netherlands Poland Italy Spain
2012 H1
2013
Sources: Colliers International, RCA
• Germany’s commercial real
estate market is No. 2 in
Europe
• Domestic as well as cross
border investors place a lot of
trust in the German market
(“safe haven”)
18
Commercial transaction volume (in billion euros) – Germany in total
• Transaction volume in H1
39% higher than previous
year’s level
• More than half of investment
volume in the top 6 cities
• Domestic investors: 73%
(€ 9.57 bn)
• Cross border investors: 27%
(€ 3.49 bn)
Deals
19
Transaction volume in the top 6 cities Market share: international buyers
• 3 cities benefited from big
investment transactions:
• Berlin
Hallen am Borsigturm
Lindencorso
K195 (Prime Portfolio)
• Düsseldorf
Kö-Bogen
• Frankfurt
T11, One Goetheplaza
(Prime Portfolio)
Skyper
Gallileo
Deals
20
Commercial transaction volume in millions of Euro by property type in H1 2013
• Two-tier market:
• Top 6 cities: office
• Outside top 6 cities: retail
and industrial
Deals
21
Prime yields for office properties Top 6 cities (gross initial yields)
• First-rate office properties in
prime locations are hard to
come by
• Result = they have become
even more expensive in some
cases
• Stable market conditions with
a lack of new office properties
23
Foreign Capital Flow into Germany (H1 2013) (Market share international buyers: 27%)
Other countries: 180,533,939 € (=5.2%)
Investment volume H1 2013:
3.492 billion euros
AMERICAS in % of total
USA 638,847,392 € 18.3%
Canada 630,790,157 € 18.1%
In total 1,269,637,550 € 36%
EMEA in % of total
Israel 439,642,000 € 12.6%
Great Britain 307,592,075 € 8.8%
Austria 194,445,020 € 5.6%
Switzerland 177,506,624 € 5.1%
Italy 151,900,000 € 4.3%
Angola 108,500,000 € 3.1%
Luxembourg 105,679,000 € 3.0%
France 76,275,500 € 2.2%
EMEA others 162,977,850 € 4.7%
In total 1,724,518,069 € 49%
APAC in % of total
South Korea 288,610,000 € 8.3%
Australia 18,987,500 € 0.5%
APAC others 9,765,000 € 0.3%
In total 317,362,500 € 9.1%
24
Buyers and sellers by sectors in million of euros – Germany in total
• Real estate funds and
private investors with
highest investment volume
• Special funds (SPV), which
were involved in a number
of transactions, often acted
on behalf of state and
pension funds
• Continuing attractiveness of
German commercial real
estate particularly for
security-oriented investors
Deals
25
Reasons to invest in Germany (“Safe haven”)
- One of the world’s leading economies with a continuing positive business
climate
- Decentralized / diversified real estate market with at least 6 top locations
- Diversified product availability – office, retail, industrial, residential
- Price stability, low yield volatility
- Market liquidity leads to easy market entry and exit
- Attractive risk-adjusted returns (yield spread government bonds / prime office
yields)
- High level of economic and political stability lead to low external risks
35
Outlook
- Office market to pick up – but only after a delay: take-up of 2.5-2.6 million m²
forecasted – an average year
- Peak of the current market cycle for prime rents almost reached
- Lateral trend in terms of vacancy rates
- Deal pipeline on the commercial investment market is still well stocked for the
last months of 2013
- Persistently low interest rates and uninterrupted excess demand for core real
estate
- A Germany-wide transaction volume of more than 25 billion Euros is realistic
Reasons
49
Contact information
Ignaz Trombello MRICS Head of Investment Germany
Managing Partner Colliers International Düsseldorf
DIR +4921186206250
EMAIL [email protected]
Andreas Trumpp Head of Research Germany
DIR +4989540411040
MOB + 4915155110942
EMAIL [email protected]