PROPERTY MARKET IN BERLIN AND EASTERN GERMANY 2015

BerlinDresden

LeipzigErfurt

Magdeburg

Potsdam

Rostock Jena

PROPERTY MARKET IN BERLIN AND EASTERN GERMANY 2015

Editorial 5

Executive Summary 6

Economic environment 10

Berlin 10

EasternGermany 12

Interview: DekaBank “Polarisation between

the most desirable cities and areas with declining population” 17

Transactions market 20

Berlin 20

EasternGermany 22

Office property market 24

Berlin 24

EasternGermany 26

Retail property market 30

Berlin 30

EasternGermany 33

Hotel property market 36

Berlin 36

EasternGermany 38

Listofsources 40

Contacts 42

Companyandlegalinformation 43

Contents

4 |Contents

Lastyear–some25yearsafterGermanreunification–east-

ern Germany recorded economic growth that can stand

comparison with Germany as a whole. According to the

WorkingGrouponNationalAccountsoftheGermanFederal

States,theoveralleconomyintheeasternGermanFederal

Statesgrewin2014by1.6%inrealterms.Thismeansthat

theeasternGermaneconomygrewatthesamerateasfor

Germanyasawhole.BerlinevenrecordedariseinrealGDP

of2.2%comparedtothepreviousyear.Thisisreflectedin

the increaseddemand for commercial real estate in line

withthecontinuedpositivetrendsinkeymarketindicators.

Inanumberoflocations,sizeoftheofficeworkforceand

spendingpowerwereontherisewhiletheunemployment

rate fell. What is more, tourism in the city continued to

flourish.InvestorsarekeenonGermancommercialproper-

ties–whetheroffices,retailpropertiesorhotels.Themar-

ket for commercial property investments in Berlin grew

in 2014 by around 19% compared to the previous year.

In eastern Germany, investment sales doubled in 2014

comparedto2013.

Thisyear,ourreport,“PropertyMarketsinBerlinandeast-

ernGermany”,looksathowthecommercialsub-markets

are benefiting from the robust economy. Besides Berlin,

which has expanded its leading position in the retail

segment even further, the large eastern German cities

arealsoworthalook.RentsofofficespaceinLeipzig,for

example, rose sharply in2014 compared to2013due to

growth in white-collar employment. It is also clear that

bothB-ratedcitiesandBratedorsub-centrelocationsare

increasinglyindemand.

Formorethan20years,TLGIMMOBILIENhavebeenactive

portfoliomanagersinBerlinandthegrowthregionsofeast-

ernGermany. InadditiontoBerlin,ourbusinessactivities

aretfocusedonthelargeeasternGermancitiesofDresden,

LeipzigandRostock.Furthermore,theregionalcentresand

importantsubmarketsofErfurt,Jena,MagdeburgandPots-

damalso occupy a prominent place in this report,which

discusses indetail the transaction,office, retailandhotel

property markets. The importance of analysing the

economic and demographic environment, as well as

currentmarkettrends,isclearlyhighlightedintheinterview

withDr.UlrichKater,ChiefEconomistofDekaBank,onpage

17to19.Oneofthecoremessagesoftheinterview,namely

the “Polarisation between the most desirable cities and

areaswithdecliningpopulation”,isthatthisissuewillhave

afargreatereffectontherealestatemarketsinthefuture

thanhasbeenthecasesofar.Wewishtotakethisoppor-

tunitytothankDr.Katerforhisinput.

Localexpertiseandtheabilitytoidentifytrendsaheadof

thepackareamongthekeyfactorsdeterminingthesuccess

ofinvestmentinrealestate.Asinpreviousyears,theaimof

thisreport,whichalsoincorporatesthemarketexpertiseof

ourlocalteams,istocontributetoincreasedmarkettrans-

parency.Wewishyouanenjoyableandinsightfulread!

Berlin,September2015

PeterFinkbeiner NiclasKaroff

MitglieddesVorstandes MitglieddesVorstandes

Ladies and Gentlemen,

PeterFinkbeinerandNiclasKaroff

BERLIN STRENGTHENS ITS LEAD,

STRONG MOMENTUM IN LEIPZIG

The Report “Property Markets in Berlin and eastern Ger-

many”,publishedbyTLGIMMOBILIENsince1992,offersnot

onlydetailedinsightsintothecommercialpropertymarket

oftheGermancapital,butalsogivesanoverviewofreal

estate markets in the eastern German cities of Dresden,

Erfurt, Jena, Leipzig, Magdeburg, Potsdam, and Rostock.

WhiletheboomingpropertymarketinBerlinkeepsattract-

ing increasing amounts of capital, Leipzig, Dresden and

Rostockappealwithsolidfundamentalsandrisingrents.

BERLIN

Office property market in Berlin:

Vacancy rate drops to 5 %, rising average rents

and stable prime rents

In2014,realGDPinthecapitalgrewby2.2%overthepre-

viousyear,whichissignificantlyhigherthantheGerman

average (+1.6%).1 Thispositiveeconomicdevelopment is

reflected inasharp rise in thenumberofofficeworkers.

In 2014, the office workforce in Berlin reached 695,400,

anincreaseof2.7%comparedtothepreviousyear.2Growth

inBerlin’seconomyandofficeemploymentismainlydriv-

enbytheservicesector.Thishashadadirecteffectonthe

availabilityofofficespace–the2014vacancyrateof5%

wasvery lowcomparedwithothermajorGermancities;

in 2011, it was 7%.3 The high demand was reflected in

averagerentsforofficespaceinBerlin,whichroseby7.3%

in2014comparedto2013.Intheprimesegment,however,

rentsremainedlargelyflat(+2.3%),4withrentsinprimeof-

ficelocationsinBerlinrangingbetweenEUR20and23/sqm.

Retail property market in Berlin:

Prime rents reach EUR 300/sqm as the capital attracts

international retailers

Conditions in Berlin’s retail property market are particu-

larlyencouraging:whiletheunemploymentratedropped

furtherfrom11%to10.5%betweenJune2014andJune

2015,Berlin’sper capita retail spending roseby3.4% in

2014toEUR5,493.TheSpreemetropolisagainregistered

a record number of overnight stays last year, reaching

almost28.7million.Thesefactorsexplaintosomeextent

thepopularityofBerlinasa retail location.According to

Jones Lang LaSalle (JLL), Berlin, together with Munich,

is among the 10 most attractive retail destinations in

Europeandisseenasanimportantgatewaybyinternation-

alretailerslookingtoexpandtoEurope.5Intermsofrent

growth,primelocationsandcentralbusinessdistrictsben-

efitedmostfromthehighdemandforspace.Retailrents

inprimelocationsonceagainrecordedthefastestgrowth

in2014.While in2013,rentsfor largerprimespaceover

150 square metres increased from EUR 180 to 250/sqm

year-on-year, in 2014, they climbed up to EUR 300/sqm.

Atthesametime,rentsforsmallerspacesupto100square

metresalsoshowedsignificantgrowth.InBerlin’scommer-

cialcentres,toprentsreachedEUR180/sqminsomecases

in2014–representingayear-on-yearriseof12.5%.

1 FederalStatisticalOffice2 bulwiengesa20153 bulwiengesa20154 SavillsResearch

5 JLL(2014):pressreleasedated27.11.2014,MunichandBerlinamongthetenmostattractiveretaillocationsinEurope

EXECUTIVE

SUMMARY

6 |ExecutiveSummary

Hotel market in Berlin:

Higher room revenues and occupancy rates

despite competitive pressures; Berlin added

1,700 new hotel rooms in 2014

In 2014, some 12 million tourists checked into Berlin’s

hotels, representing nearly 28.7 million overnight stays.

The record result with a year-on-year surge in overnight

staysof6.5%6ismainlyattributabletoBerlin’simportant

roleasabusinessandholidaydestination.Itshighappeal

to both groups often results in higher and more stable

roomoccupancyratesinthecapital.In2014,theaverage

roomoccupancyofhotelsinBerlinreachedarecordhigh

of74.2%.Inaddition,in2014,revenueperavailableroom

(RevPAR)increasedinBerlinbyaround4.2%yearonyear

toEUR66.35.Theaveragedailyrate(ADR)reachedEUR89

(+2%)andwasthusEUR2abovetheGermanaverage.7

Investment market in Berlin:

Transaction volume 27 % above the

10-year average

In 2014, Berlin’s market for investment in commercial

property registeredgrowthofaround19%yearonyear

andreachedatransactionvolumeofnearlyEUR4.28bil-

lion. This is 27%above the 10-year average and is the

bestresultsince2007.Theenduringgrowthin2013–2014

isprimarilyattributabletoinvestmentinhotelproperties,

development sites and mixed-use properties. Although

some of these segments have increased their turnover

sharesignificantly,thebiggestslicewasagaincommand-

edbyofficeproperties,witharound40%ofthetotal in-

vestmentvolumein2014(EUR1.72billion).8Whilein2014,

investmentinofficepropertiesinBerlinroseby6.1%year

on year, investment in retail properties fell by around

31%.9 This ismainlydue to the fact that long-termbuy-

erswanttoholdontothepropertiespurchasedinrecent

years10,thuscreatingasupplyconstraintinthemarket.

6 AmtfürStatistikBerlin-Brandenburg(2015)[Berlin-BrandenburgStatisticsOffice]:Pressreleasedated18.2.2015“TourismusinBerlinauch2014wiedermitneuenHöchstzahlen”[TourisminBerlinagainpostsrecordfigures]

7 ColliersInternational(2014):HotelmarktBerlin[HotelmarketinBerlin]2014/2015,PwC(2015):Roomforgrowth–Europeancitieshotelforecastfor2015and2016for20gatewaycitiesfromAmsterdamtoZurich,STRGlobal2015

8 BNPParibasRealEstate(2015):InvestmentMarketGermany–PropertyReport20159 BNPParibasRealEstate10CBRE(2015):InvestmentmarketinBerlin,4/2014

ExecutiveSummary| 7

EASTERNGERMANY

Office markets in eastern Germany:

Growth in white-collar employment

reflected in falling vacancy rates

TheofficepropertymarketsineasternGermancitieshave

benefited from the favourable conditionsandgrowth in

theGermaneconomy. The unemployment rate inmany

largereasternGermanycitieshasbeenfallingatasteady

rate.WiththeexceptionofPotsdam,white-collaremploy-

ment in eastern German cities rose in 2013–2014, with

LeipzigandJenashowingstrongestgrowthatjustunder

4%and2.6%respectively.Positivetrendswerealsoseen

intheDresdenandRostockofficemarkets,whichgrewby

1.6%and1.2%respectively.Astheconstructionofnew

offices isnotquitekeepingpacewiththegrowth inthe

workforce,vacancyratescontinuedtofalllastyearinsix

ofthesevencities.AlthoughPotsdamisnotamongthem,

itdoeshavethelowestsupplysurpluswithavacancyrate

of4.9%,followedbyRostockwithanofficevacancyrate

of7.6%.Positivedynamicsintheemploymentmarketdid

notaffectpropertymarketsintheeasternGermancities

tothesameextent.InDresdenandMagdeburg,rentlev-

elsacrossallofficesegmentsremainedflatcomparedto

the previous year. In contrast, top rents for offices with

goodutilityvalueinLeipzigrosebyaround4%compared

with2013,reachingEUR12.50/sqm.

Retail markets in eastern Germany:

Higher purchasing power and rising rents – not only

in central business districts

While retail spending power in most growth regions

of eastern Germany is still below the German average,

ithasbeenrisingsteadily inmost largeeasternGerman

cities,withLeipzigrecordingthehighestincreaseof8.3%

between 2011 and 2014. At EUR 5,672 per head, Pots-

damsurpassedtheGermanaverageofEUR5,657forthe

firsttimein2014.11Leipzigscoreshighlybothintermsof

purchasingpowerandrent levels.Leipzigcommandsthe

highestprimerentsforlargerandsmallerretailspacesin

centralbusinessdistricts (EUR85/sqmandEUR130/sqm,

respectively).Rentsoutsideprimelocationsarealsoonthe

rise.InRostock,rentshavebeenrisingmainlyinsub-cen-

trelocations.Toprentsforlargerareasover150squareme-

tresreachedEUR11.50/sqm,representinga4.5%increase

compared to theprevious year. Rents for smaller spaces

up to 100 squaremetres in sub-centre locations roseby

aroundone-thirdfromahighofEUR30upto40/sqm.

11 GfKGeoMarketing,2015

EXECUTIVE

SUMMARY

8 |ExecutiveSummary

Hotel markets in eastern Germany:

Dresden, Leipzig and Rostock are setting the pace

Dresden and Leipzig are increasingly turning into tourist

magnetsandin2014theyrecordedthehighestnumberof

overnightstaysofalltheeasternGermancities(excluding

Berlin) with a combined total of 7.2 million. In Dresden,

overnightstaysshotupby7.6%,thesharpestriserecorded

inanymajoreasternGermancity–includingBerlin!Asin

thepreviousyear,hotels inRostockandLeipzigrecorded

thehighestrevenueperavailableroom(RevPAR)withEUR

63.78andEUR52.25respectively.Itis,therefore,hardlysur-

prisingthathotelsinthesetwocitieshavethehighestroom

occupancyratesatcloseto69%,andaveragedailyrates

andEUR92.91(Rostock)andEUR75.82(Leipzig).Dresden

commanded the third highest average daily rate at EUR

72.2012, increasingitsoccupancyratesubstantiallyto just

under67%in2014.

Investment markets in eastern Germany:

Investment in commercial properties doubles

An analysis of the eastern German states (excluding

Berlin) shows increased investor interest in smaller

markets. Investment turnover doubled here in 2014

compared to2013 fromEUR1.36 to2.7billion.13 Leipzig,

inparticular,isoneofthemostdynamiccitiesinGermany

andisincreasinglysoughtafterbyinvestorsthankstoits

above-averageGDPandpopulationgrowth.14Investment

volumeinthiscity,famousforitstradefairs,doubledin

2014 compared to 2013. Last year, EUR 516 million was

invested in commercial real estate in Leipzig, the bulk

of which went into retail (36.6%) and office properties

(26.9%).Besidesthesesectors,transactionvolumesalso

rosesharplyinthelogisticsandhotelsegments15,which

speaksvolumesforthegrowingimportanceofLeipzigasa

logisticshubandasadestinationforbusinessandleisure

travellers.

12 StatistischeLandesämter[StatisticalOfficesoftheGermanLänder],STRGlobal20113 Savills(2015):AnalysisforTLGIMMOBILIENAG14 Aengevelt(2015):Pressreleasedated17.4.2015,Leipzig–DeutlicherUmsatzanstieg

[Leipzig–sharpincreaseinsales]15 BNPParibasRealEstate(2015)

ExecutiveSummary| 9

BERLIN’S PROPERTY MARKET: FLOURISHING

ECONOMY OPENS INVESTMENT OPPORTUNITIES

Largest investment opportunities – Property markets

ingeneral,and thepropertymarket in theGermancapital

inparticular,arebenefitingfromincreasedinvestordemand.

Thisisfuelledbylowyieldsinmanyassetclasses.Whilethere

arefeweravailablepropertieseveninBerlinthankstointense

competition for lucrative properties, prices are moderate

comparedtoLondon,ParisorMunich.Accordingtothereport

“EmergingTrendsinRealEstateEurope2015”,publishedbythe

UrbanLandInstitute(ULI)andPricewaterhouseCoopers(PwC),

Berlin ranksfirstas thecitywith thebest investmentpros-

pects in the realestatemarket.The report isbasedonsur-

veysandinterviewswitharound500influentialleadersinthe

realestateindustryinEurope,includingfundandinvestment

managers,projectdevelopers,assetandpropertymanagers

andfinanciers.AsMunichisperceivedbymanyinvestorsto

be tooexpensive, investmentmaynotbeworthwhileany-

more.Asaresult,Munichdroppedfromthetopspotitheld

inthesurveylastyeardownto11thplacein2015.Incontrast,

Berlinclimbedfrom4thlastyeartobecomethetop-ratedcity

in2015.Theassessmentofmarketexpertsismainlybased

onlowpricesandexcellentfundamentalscomparedtoother

Europeancities.16

Decliningunemployment17alongwithpopulationgrowth18

and rising spending power19 are great conditions for

successful long-term investment in Berlin’s commercial

property market. Other positive factors include Berlin’s

buoyanteconomyandthegrowingnumberofvisitorswho

generateaquarterofretailsales.20Whilein2013–2014the

numberofovernight stays inBerlin increasedbyaround

6.5%,between2012and2014,itsoaredby15.2%.21

Comparedwithothertopcitybreakdestinations–suchas

MunichorHamburg–thesegrowthratesareremarkable:

Between 2012 and 2014 the number of overnight stay-

sincreased by nearly 13% in Munich and by 8.5% in

Hamburg.22 At the same time, it is not just the tourism

industry that is growing. According to the economic re-

portpublishedbytheChamberofIndustryandCommerce

in Berlin-Brandenburg, businesses are feeling optimis-

ticabout thecomingmonths. Industrialandconstruction

companies, retailers and service providers all expect

theeconomytocontinue togrow in thecomingmonths.

The weak euro is boosting Berlin’s exports and tourism.

16 ULI/pwc(2015):EmergingTrendsinRealEstateEurope2015,p.29/30/7417 BundesagenturfürArbeit[FederalEmploymentAgency](02/2015):numberofunemployed

andtheunemploymentrate18 AmtfürStatistikBerlin-Brandenburg(2015)[Berlin-BrandenburgStatisticsOffice]19 GfKGeomarketing(2015)

20 DGHYP(2015):RegionaleImmobilienzentrenDeutschland[Mainregionalrealestatemar-ketsinGermany],p.18

21 AmtfürStatistikBerlin-Brandenburg[Berlin-BrandenburgStatisticsOffice]22 StatistischesAmtfürHamburgundSchleswig-Holstein[StatisticalOfficeforHamburgand

Schleswig-Holstein]:pressreleases;BavarianStateOfficeforStatistics:datarequests

Berlin:Europeancitywiththebestinvestmentprospectsintherealestatemarket

10 |EconomicenvironmentinBerlin

Thisissupportedbythebusinessconfidenceindexofthe

capitalregion,whichmeasuresthelevelofoptimismabout

prospectsfeltbybusinesses.At128pointsatthestartof

2015, the index was just one point below the previous

year’slevel,but10pointsabovethe118pointsrecordedat

thebeginningof2013.23

Magnet as a workplace–Berlin’spopularityismanifesting

itselfnotonlyintheincreasingnumberofovernightstays,

butalsointermsofpopulationgrowth.Between2009and

2013,thenumberofresidentsintheGermancapitalrose

by roughly 160,000, equivalent to the entire population

oftheneighbouringcityofPotsdam.24BytheendofJune

2014,thepopulationhadgrownby47,000whencompared

withtheendofJune2013.25Theincreasingsupplyofjobs

inBerlinisanimportantfactordrivingthegrowthinthe

number of inhabitants. According to City Ranking 2014

publishedbytheCologneInstituteforEconomicResearch,

Wirtschaftswoche and Immobilienscout 24, the jobs sup-

plyincreasedby7.7percentagepointsbetween2008and

2013,comparedwiththeaveragegrowthof4.4%record-

edacrossall69citiesincludedinthecomparison.Inaddi-

tion,netbusinessregistrationsamountedto3.4per1,000

inhabitantsin2013.Berliniswellaheadofitspeersandis

rankedthirdoutof69urbandistrictsinGermany.26

Theoutlookfor2015suggeststheoptimisticsentimenton

Berlin’slabourmarketwillcontinue.AccordingtoUnterne-

hmensverbände Berlin-Brandenburg [Business Associa-

tionsofBerlinandBrandenburg](UVB)Berlinisexpected

toaddatleast25,000newjobsin2015.Thisisundepinned

bysolidgrowthinthenumberofstart-ups.27Furthermore,

Berlinhasmanagedtomaintainitsstrongpositioninthe

international labourmarket.A surveyonglobalmobility

conductedjointlybyTheBostonConsultingGroupandStep-

StoneconcludedthatGermanyisanattractivedestination

andthemostpopularnon-English-speakingcountry.More

than200,000workers from189countriesparticipated in

thesurvey,whichwascarriedoutbetweenAprilandJune

2014. Both Germany and Berlin are popular destinations

for foreign jobseekers due to the stable economic envi-

ronmentandattractivelivingconditions.Berlinisamong

the10mostsought-afterdestinationsforworkerslooking

for jobs abroad – next to London, New York and Paris.28

ThispositionamongGermanandinternationalcitiesisan

advantageforallrealestatesegments.

23 Konjunkturreport[EconomicReport]2015:DiekonjunkturelleLageinderRegionBerlin-Brandenburgzumjahresbeginn2015[TheeconomicsituationintheBerlin-Brandenburgregionatthestartof2015],p.5

24 IBB(2015):IBBHousingMarketReport2014,p.5.25 AmtfürStatistikBerlin-Brandenburg[Berlin-BrandenburgStatisticsOffice]

26 IWKöln[CologneInstituteforEconomicResearch]/Wirtschaftswoche/Immobilienscout24(2014):CityRanking2014

27 BerlinerWirtschaft(04/2015):DasMagazinderIndustrie-undHandelskammerzuBerlin[MagazineoftheChamberofIndustryandCommerceinBerlin],p.55

28 BCG/StepStone(10/2014):Pressreleaseonthestudy“Decodingglobaltalent”

Berlin:Europeancitywiththebestinvestmentprospectsintherealestatemarket

EconomicenvironmentinBerlin| 11

Some26yearsafter thefallof theBerlinwall, theecon-

omy in the country’s East is stronger than ever before.

In a city ranking published by the Cologne Institute for

Economic Research (IW Cologne) in cooperation with Im-

mobilienscout 24 and Wirtschaftswoche, Leipzig, Berlin

and Erfurt are among the 10 most dynamic locations in

Germany. While cities in the eastern states often rank

behind the cities in the south, they are among the top

10 cities inGermany in the city rankingpublishedevery

yearbytheCologneInstituteforEconomicResearch.Many

easternGerman locationssuchasPotsdam,Dresdenand

Jena make it into the upper half of the table of 69 ana-

lysedurbandistrictsinGermanywithmorethan100,000

inhabitants.Achievinganaveragescoreof52.7,themajor

citiesineasternstateshadthehighestdynamicsofallGer-

manregions.Theaveragescoreofallsurveyedcitieswas

50points.Therankingisbasedonindicatorsfromthela-

bourmarket,economicstructure,residentialpropertymar-

ketandqualityoflife.29

Potsdam – steady immigration and low unemployment

TheappealofPotsdamasanattractiveplaceto liveand

workisreflectedinthesteadygrowthinpopulationsince

2006. As at the end of the first half of 2014, Potsdam

addedaround2,400 inhabitants. In2013, thenumberof

inhabitants increased by 2,000 compared to 2012.30 This

rise is mainly due to migration, but also natural popula-

tiongrowth.Onereasonfortheinfluxisthebroadrange

of training, study and jobs available in the state capital.

The employment trends index, which has shown solid

growth since 2006, can be seen as an indicator of this

development.Thenumberofemployeesliabletopayso-

cialsecuritycontributions isgrowingfaster thanthepop-

ulation.31 Potsdam’s 6.7% unemployment rate was the

lowest recorded in June 2015 compared with the large

urbandistricts andBerlin.32 The lowunemployment rate

isareflectionoftheriseinbusinessregistrations,among

otherfactors.AccordingtotheCityRankingspublishedby

IW,netbusinessregistrationsroseby2.9per1,000inhab-

itants,whiletheaverageforall69citiesdroppedby0.4,

puttingPotsdaminfirstplace.33

Rostock – a business centre with high quality of life

In2014,theHanseaticcitywasabletoconsolidateitspo-

sitionasamajor centre for IT, servicesandwindenergy.

The economic dynamism of Rostock is reflected in busi-

nessesflocking to the city. Forexample, comdirectbank

opened a new testing and development centre, the car

hire company Sixt expanded its service centre here and

EnBW AG completed a new facility for its offshore wind

farm.34Moreover,Rostockportfacilitieshandled3million

tonnes of additional goods in 2014, an increase of 13%

compared to the previous year.35 The city’s economic

PROPERTY MARKET IN EASTERN GERMANY:

FASTEST GROWING CITIES NATIONWIDE

Rostock

29 IWKölnConsult/Wirtschaftswoche/Immobilienscout24(2014):Cityranking2014–MajorGermancitiescompared

30 AmtfürStatistikBerlin-Brandenburg[Berlin-BrandenburgStatisticsOffice],StateCapitalofPotsdam(2014):RegionalerWachstumskernLandeshauptstadtPotsdam,Statusbericht[StateCapitalofPotsdam–aregionalgrowthcore,statusreport]October2014

31 StateCapitalofPotsdam(2014):RegionalerWachstumskernLandeshauptstadtPotsdam,Statusbericht[StateCapitalofPotsdam–aregionalgrowthcore,statusreport]October2014

32 BundesagenturfürArbeit[FederalEmploymentAgency](2015):Datarequeston1.7.201533 IWKölnConsult/Wirtschaftswoche/Immobilienscout24(2014):Cityranking2014–Major

Germancitiescompared34 http://www,rostock-business,com/de/rostock-news/artikel/grosse-marken-solides-wachs-

tum-und-erstklassige-veranstaltungen.html,accessedon5.5.201535 RostockBusiness(2015):Newsletter01/2015ofGesellschaftfürWirtschafts-undTechnolo-

gieförderungRostockmbH

12 |EconomicenvironmentineasternGermany

success is reflected in its gross domestic product and

unemployment rate. Between 2008 and 2012, Rostock’s

GDProseby11.2%–wellabovethe8.1%averageascal-

culated by the Cologne Institute for Economic Research

as part of City Ranking 2014, which analysed 69 urban

districts in Germany.36 Within four years, the unemploy-

ment ratedropped from12.5% in June2011 to9.6% in

June2015.37Inadditiontoeconomicfactors,theHanseatic

Cityalsoboastshighqualityoflife.AccordingtoDekaBank,

the high proportion of green space and low crime rates

areamajorfactorinRostockbeingranked14thintermsof

qualityoflifeamongthe39analysedGermancitieswith

atleast200,000inhabitants.38

Dresden – growth in population and overnight stays The

StateCapitalofSaxonyislovedbyitsinhabitants.Inana-

tionwidecomparisonofqualityoflifein27majorGerman

cities,theinhabitantsofDresdenarethemostsatisfied.39

Dresden’s appeal is mainly due to the supply of attrac-

tive jobs. Inadditiontohigh-techandservicecompanies,

the city is home to numerous medium-sized companies,

research institutes and a microelectronics cluster.40 As a

result,thenumberofemployeessubjecttosocialsecurity

contributions grew by more than 13% between 2008

and2014.Youngpeople,inparticular,benefitedfromthis

developmentwithyouthunemployment fallingby6per-

centagepointsbetween2008and2013,morethaninany

otherGermancity.41

WithitslocationontheRiverElbe,andnumerouscultural

facilitiessuchastheSemperOperaHouseandtheDresden

Zwingerpalace,thestatecapitaloffershighqualityoflife

withabundantleisureandrecreationalopportunities.The

relatively high level of overall life satisfaction of the in-

habitantsofDresdenhasbeenthemaindriverbehindthe

ever-growingpopulation.In2014,thecityregistered5,500

newinhabitantscomparedto2013,whichalsoresultedin

a higher growth rate. This increase is due largely to the

inmigrationofyoungpeople,for instance,attendingone

of Dresden’s 11 higher-education institutes.42 Lastly, the

appealofDresdenisalsoclearlyreflectedinthegrowing

touristnumbers:Bytheendof2014thenumberofover-

nightstaysrosetoabout4.5million,representinga7.6%

risecomparedtothepreviousyear.43

36 IWKölnConsult/Wirtschaftswoche/Immobilienscout24(2014):Cityranking2014–MajorGermancitiescompared

37 BundesagenturfürArbeit[FederalEmploymentAgency](2015):Datarequeston1.7.201538 DekaBank(2014):DekaBankStädteranking[DekaBankCityRanking]2014,p.2339 StateCapitalofDresden(2014)at:http://www,dresden.de/de/02/06/09/Lebensgualitaet.

php,accessedon13.5.2015

40 Richert&OertelImmobilien:MarktberichtDresden[MarketReportDresden]2014/201541 IWKölnConsult/Wirtschaftswoche/Immobilienscout24(2014):Cityranking2014–Major

Germancitiescompared42 StateCapitalofDresden(2015):Pressreleasedated21.1.2015“DresdensBevölkerung

wächstweiter”[Dresden’spopulationcontinuestogrow]43 Focus(2015):“DresdenlegtbeiÜbernachtungszahlenzu”[Dresdenseesgrowthinover-

nightstays]of2.3.2015

Dresden

EconomicenvironmentineasternGermany| 13

Leipzig – Germany’s fastest-growing city Leipzig as a

majorbusinesscentreisbecomingincreasinglyattractive

asaplacetoworkandlive.Thishasbeenreiteratedbythe

latest city rankingpublishedby theCologne Institute for

EconomicResearchbasedonpopulationgrowthand the

numberofemployeesliabletopaysocialsecuritycontribu-

tions.Between2011and2013,thenumberofinhabitants

in Leipzig increasedby5.7%due tohighnet inwardmi-

gration,makingitGermany’sfastestgrowingcity.Accord-

ingtotheanalysisof69majorGermancitieswithdistrict

status carried out by the Cologne Institute for Economic

Research, theaveragepopulationgrowthover the same

period was 1.8%.44 According to census data,45 Leipzig

overtookevenDresdenbetween2013and2014andisnow

thelargestcityinSaxonywithcloseto536,000inhabitants.

PopulationgrowthinLeipzigisaccompaniedbygrowthin

economicoutput–withGDPgrowingby17.2%between

2008and2012,thecityrankedsixthinthecomparisonof

69majorGermancities. Thegrowingeconomicpower is

alsoreflectedinrisingemployment.Here,thecityknown

foritstradefairsranksfirstineconomicdynamismamong

the 69 cities – between 2008 and 2014, the number of

employeesincreasedby19.5%.46Despitedecliningsharp-

ly, theunemployment rate inLeipzig remainswith9.4%

(asatJune2015)slightlyabovetheeasternGermanaver-

ageof8.8%.47

Magdeburg – steady economic growth and productiv-

ity gains With over 230,000 inhabitants, the state capi-

tal is thepoliticalandeconomiccentreofSaxony-Anhalt.

According to analyses carried out by DekaBank and the

Cologne Institute for EconomicResearch, this cityon the

ElbeRiverscoreshighly,inparticularduetoitseconomic

stabilityandproductivitygrowth.Between2008and2012,

gross domestic product per employed person increased

by 9.4%, placing Magdeburg 11th among the 69 major

GermancitiesanalysedinthecityrankingoftheCologne

InstituteforEconomicResearch.48

According to DekaBank, Magdeburg offers second-best

value behind Berlin based on the relation between the

rateandvolatilityofeconomicgrowthbetween2003and

2012.Asaresult,economicgrowthinMagdeburgisdistrib-

utedveryevenly.49Theengineeringindustry,inparticular,

which can lookbackon150yearsof tradition inMagde-

burg,contributestothestrongdynamismofthecity50with

around60companiesandsome11,000employees.Thisis

alsoreflectedinthefallinyouthunemployment.Between

2008 and 2013, Magdeburg’s youth unemployment rate

fell by3.2percentagepoints.According to the2014 city

rankingspublishedbytheCologne InstituteforEconomic

Research, this puts the city in fifth place among the 69

majorGermancities.51

Leipzig

44 IWKölnConsult/Wirtschaftswoche/Immobilienscout24(2014):Cityranking2014–MajorGermancitiescompared

45 StatistischesLandesamtSachsen[StatisticalOfficeoftheFreeStateofSaxony],populationgrowthestimatesbasedoncensusdataof9.5.2011

46 IWKölnConsult/Wirtschaftswoche/Immobilienscout24(2014):Cityranking2014–MajorGermancitiescompared

47 BundesagenturfürArbeit[FederalEmploymentAgency](2015):Datarequeston1.7.2015

48 IWKölnConsult/Wirtschaftswoche/Immobilienscout24(2014):Städteranking2014–DeutscheGroßstädteimVergleich

49 DekaBank(2014):DekaBankStädteranking2014,S.1250 GesellschaftfürWirtschaftsserviceMagdeburgmbH:BrancheninformationMaschinenbau

undhttp://www.magdeburg.de/Start/Wirtschaft-Arbeit/Wirtschaftsstandort/Schwerpunktbranchen/index.php?NavID=37.808.1&La=1,Abrufam6.5.2015

51 IWKölnConsult/Wirtschaftswoche/Immobilienscout24(2014):Städteranking2014–DeutscheGroßstädteimVergleich

14 |EconomicenvironmentineasternGermany

Erfurt – among the top 10 most dynamic cities in Germany

BesidesBerlinandLeipzig, theStateCapitalof Thuringia

hasrecordedparticularlystronggrowthineasternGerma-

ny.Inthecityrankingfor2014carriedoutbytheCologne

InstituteforEconomicResearch,Erfurtranksninthinterms

ofeconomicdynamismamongthe69Germancitieswith

districtstatus,whichisamajorimprovementoverthe30th

placeitheldlastyear.Duetothepositiveeconomictrend,

thenumberofoverindebtedadultsandrecipientsofunem-

ploymentbenefitdeclinedsharplybetween2008and2013,

securingErfurtatopspotinthesecategories.52Erfurt’seco-

nomic success is based on a broad range of sectors, in-

cludingtheengineering,photovoltaic,logisticsandmicro

technologyindustries,whicharenowfirmlyestablishedas

Erfurt’sareasofexpertise.53UsablespaceinErfurt’sindus-

trialzones,suchasthefreightvillageandtheinternational

logisticscentre,isquicklybecomingscarce.54Erfurt’secon-

omy,includingthetourismindustry,willreceiveafurther

boost from the expansion of its main railway station to

becomeanICE(highspeedinter-city)junction,whichwill

cuttraveltimestoBerlin,Munich,FrankfurtandDresden.55

Thismeansthatprospectsforfurthereconomicgrowthare

encouraging–between2010and2012,Erfurt’sgrossdo-

mesticproductgrewby4.3%(Germany:+4.2%).56

Jena – a research centre with excellent future prospects

The Thuringian university town is known for its optical

products companies Carl Zeiss and Jenoptik. Many re-

search institutions, such as the Max Planck Society for

the Advancement of Science or the Leibniz Association

and other high-tech companies, take advantage of the

clusterof scienceand researchexpertise in the city. The

two universities now boast some 24,000 students57 and

some 4,500 scientists conducting research in the city.58

In the ranking of 69 major German cities carried out by

theCologneInstituteforEconomicResearch,Jenaisranked

amongthetop10Germanresearchcentres,nexttocities

likeBerlin,Munich,StuttgartandDresden.59However,Jena

is farmore than justacentre foreducation, scienceand

research. The city is home to international organisations

aswellas smallandmedium-sizedenterprises,notonly

fromtheresearchsector,butalsoincontemporarycrafts

and catering.According to thePrognos FutureMap, Jena

hasexcellentprospectsforthefuture,withthecityranking

26thamong402Germancities,whileevenachieving6th

place with regard to demographics.60 According to popu-

lation forecastspreparedbyAnalyse&Konzepte, Jena is

expectedtocontinuetogrowuntilatleast2030.Compared

to2013,thenumberofinhabitantsisexpectedtoincrease

by3.6%toaround109,000asa resultofahighnatural

growthrateandnetinwardmigration,especiallyfromthe

newfederalstatesandabroad.61

Erfurt

52 IWKölnConsult/Wirtschaftswoche/Immobilienscout24(2014):Cityranking2014–MajorGermancitiescompared

53 StadtverwaltungErfurt[ErfurtCityCouncil]-Wirtschaftsatlas[economicmap]2011,p.10ff54 ThüringerAllgemeinefrom21.1.2015:“ErfurtbegibtsichaufdieSuchenachneuenGewer-

begebieten”[Erfurtonasearchfornewindustriallocations]55 http://www.ice-knoten.de/ueberblick/,Abrufam7.5.2015

56 NationalaccountsoftheLänder57 WirtschaftsförderungsgesellschaftJenambH:Jena–factsandfigures,March201558 WirtschaftsförderungsgesellschaftJenambH:LocationprofileJena59 IWKölnConsult/Wirtschaftswoche/Immobilienscout24(2014):Cityranking2014–Major

Germancitiescompared60 http://www.prognos.com/publikationen/zukunftsatlas-regionen/–accessedon7.5.201561 Jena:2014populationforecast–summaryreport

EconomicenvironmentineasternGermany| 15

wachsenwird. ImVergleichzu2013solldieZahlderEin-

wohnerum3,6Prozentaufetwa109.000zunehmen,durch

einenpositivenGeburtensaldoundZuzuginsbesondereaus

denneuenBundesländernunddemAusland.

DEMOGRAPHICS AND ECONOMY IN BERLIN

AND MAJOR EASTERN GERMAN CITIES

City

Population

(30.06.2014)

Population growth

in absolute terms

(1. Hj. 2013/1. Hj. 2014)

GDP per

employed person

in EUR (2012)

Change in GDP

per employed person

in % (2010/2012)

Berlin 3,440,991 46,861 59,944 2.2

Potsdam 162,425 2,374 49,131 2.9

Rostock 203,421 893 56,761 2.6

Dresden 531,982 6,053 48,919 -1.9

Leipzig 535,732 12,013 50,155 8.5

Magdeburg 230,815 1,057 49,537 3.7

Erfurt 205,276 1,520 44,162 4.3

Jena 107,422 797 54,525 10.4

Germany 80,925,000 339,300 64,084 4.2

BB

MV

SNST

TH

Source:Populationfigures–statisticalofficesoftheGermanstates,databasedon2011censusGDPperemployedperson–statisticalofficesoftheLänder:NationalaccountsoftheLänder

16 |Demographicandeconomicindicators

Unemploymentfigures2011–2015inpercent(basedonthecivilianworkforce)

Source:BundesagenturfürArbeit/FederalEmploymentAgency(2015)

6.9

Magdeburg

Berlin

Rostock

Leipzig

Erfurt

Dresden

Potsdam

Jena

June20116,0

10,5

15

June2015June2014June2013June2012

10.710.59.69.4

7.87.6

6.7

13.313.112.5

11.5

9.99.6

7.5

6.8

In the city ranking published by DekaBank in Decem-

ber 2014, Berlin and Leipzig come out best in terms

of economic stability among the 39 analysed German

cities. Overall, both cities rank middle of the pack.

Besides Berlin and Leipzig, Magdeburg also recorded

consistently high levels of economic growth.

What are the main characteristics of the economic

structure of Berlin and Leipzig, and how would you

explain the particularly stable economic growth here,

including in Magdeburg?

Dr. Kater:BerlinandLeipzighavedifferenteconomicpri-

orities.Whileclassicmanufacturingnowplaysonlyaminor

roleintheeconomyofthecapital,theimportanceofthe

creative industries, biotechnology, information and com-

munication technologieshasbeengrowingprogressively.

Theyarealsostrongly intertwinedwith localuniversities,

scienceandresearch.Oneofthelargestscienceandtech-

nologyclustersinGermanyislocatedinAdlershof.

The aim of DekaBank’s ranking of German cities with a population

of 200,000 inhabitants or more is to rate major German cities

according to their attractiveness as property locations.

The overall ranking of cities is the result of scoring individual

criteria, including prosperity, labour market, quality of life,

accessibility, economic stability, demographics and education.

In addition, DekaBank regularly publishes research on the

individual federal states, which analyses the macroeconomic

environment, the situation in the capital markets and

the commercial property markets, and highlights

investment opportunities.

WITHDR.ULRICHKATER

“Polarisation between the most

desirable cities and areas with

declining population”

Interview:DekaBank“Polarisationbetweenthemostdesirablecitiesandareaswithdecliningpopulation”| 17

INTERVIEW

Leading export-oriented automotive companies have

settledinLeipzigwithavarietyofdownstreamsuppliers,

andthestructureoftheservicesectorhereisequallydiver-

sified.InMagdeburg,thankstoitsstatusasastatecapital,

there isastrongconcentrationofpublicandotherservic-

es,whichprobablycontributedtothestabilityofeconomic

growth.

Together with Munich, Dresden recorded the high-

est population growth among major German cities

between 2002 and 2012. Leipzig also performed well

in this respect.

What are the reasons for the significant growth in

population in the two Saxon cities? After all, Dresden

and Leipzig only achieve medium rankings in terms of

prosperity, life quality and education.

Dr. Kater: Dresden and Leipzig are among the most

desirablecities,benefitingfromhighinwardmigrationof

peopleinthe20to35agegroup.Theyappreciatethewell-

established universities and numerous other higher edu-

cation facilities as well as the job opportunities in high-

techindustries,whichhaveastrongpresenceespeciallyin

Dresden(“SiliconSaxony”).Inaddition,bothcitiesoffera

broadrangeofculturalattractionsandlargelyintacthous-

ingmarketswithoutanysignsofoverheating.Qualityof

life is a very subjective factor, which can be difficult to

quantify,andthiscriterionshouldthereforenotbeoverrat-

edinthecityranking.

Against the background of encouraging rankings for

the eastern German cities and Berlin in the individual

categories, what developments do you see with re-

gard to the office, retail and hotel property markets?

Given the already high price levels in the “big 7”, will

it make more sense to invest in B-rated locations such

as Dresden and Magdeburg in future?

Dr. Kater: Berlinhastobelookedatseparately,because

itbelongstothe“big7”leagueinGermany,andishighly

soughtafterbybothdomesticandinternationalinvestors.

Theofficemarket, inparticular,hasdevelopedveryposi-

tivelyafteroverheatinginthe1990s;vacancyratesareat

theirlowestlevelin20years.Theretailmarketisbenefit-

ingfromthediversityofprimelocations;theverydynamic

developmentaroundHackescherMarkt isacase inpoint

here.Asalocation,thecapitalexperiencedaboomwhich

has lostmomentumsomewhat, but is still supportedby

the large increases in overnight stays.Dresdenand Leip-

zig,asB-ratedcities,arecertainlyworthwhilealternatives,

eveniftheyweren’tabletoescapethepressureonyields.

While the retail andhotelmarkets have performedwell,

theofficesegmentissomewhatlaggingbehind.Giventhe

smallsizeofthemarket,Magdeburgisunlikelytobenefit

muchfromthistrend.

Where do you see the eastern German cities in 10

years in terms of economic and demographic growth?

Is growth concentrated in individual cities such as

Dresden and Leipzig or do the positive effects extend

to surrounding districts and smaller cities?

Dr. Kater: It is true that,overa10-yearperiod,Dresden

and Leipzig, as well as some of the smaller cities like

Erfurt and Jena, are expected to outperform other cities

likeCottbus,GeraandSchwerin,whichsufferfromongoing

outwardmigrationandstructuraleconomicweaknesses.

18 |Interview:DekaBank“Polarisationbetweenthemostdesirablecitiesandareaswithdecliningpopulation”

Polarisationbetweenthemostdesirablecitiesandareas

with declining population is likely to become more pro-

nouncedovertime.SimilartotheareasurroundingBerlin,

thedistrictsadjacenttoDresdenandLeipzigbenefitfrom

theeconomicstrengthofthecorecities,withdistricts in

theimmediatevicinitysettobenefitthemost.

This spring, the German Federal Government adjusted

its real GDP growth forecast for 2015 from 1.5 % to

1.8 % – mainly due to extraordinary factors, such as

the low price of oil, rising consumer confidence and

the weak euro.

Will this be advantageous for some property markets

(e.g. retail) or will all the property markets benefit

from the upswing in equal measure?

Dr. Kater: A stable labour market, rising wages, low

inflationandextremelylowinterestratescontinuetosup-

portprivateconsumption.Whiletheretailsector is likely

to benefit more, particular attention should be given to

thegrowthinonlineretailing,whichwillleadtostructural

changesonthehighstreetwithimplicationsfortheretail

propertymarket.Foodretailpropertiesplayaspecialrole

in thiscontext,as the impactofonline retailing remains

limited.

Ontheotherhand,thelogisticspropertymarketbenefits

from the boom in online retailing. We also believe that

thehotelpropertymarkethasgoodprospectsforgrowth,

becausecitybreaks–unlikebusinesstravel-stillofferplen-

tyofupsidepotential.Growthintheofficepropertymarket

hasbeenmoresluggish,astheeconomicrecoveryhasso

farnotbeenreflectedinasignificantincreaseindemand.

DekaBank–Companyprofile

DekaBank provides asset management and capital mar-

ketsolutionsforGermansavingsbanks.Togetherwithits

subsidiaries,itformstheDekagroup.Withtotalassetsof

aroundEUR220billion(asat31.12.2014)andaround4mil-

lionmanagedportfolios,itisoneofthelargestinvestment

serviceprovidersinGermany.Itoffersawiderangeofin-

vestmentproductsandservicestoprivateandinstitutional

investors.TheDekaGroup’sglobalrealestateexpertiseis

pooledintothePropertyBusinessDivision.

www.dekabank.de

Professionalbackground

Dr. Ulrich Kater has been Chief Economist at DekaBank

since2004,andChairmanof theEconomicandFinancial

CommitteeoftheAssociationofPublicBanks(VÖB)since

2006.Dr.Katerwasresponsibleformonetarypolicyand

capitalmarketsattheGermanCouncilofEconomicExperts

from1995to1999,andsince1999hasbeeninvolvedin

theestablishmentoftheEconomicResearchDepartment

atDekaBank.

Interview:DekaBank“Polarisationbetweenthemostdesirablecitiesandareaswithdecliningpopulation”| 19

TRANSACTION MARKET IN BERLIN:

INVESTMENT VOLUME SURGES TO RECORD LEVELS

Berlin attracts ever-stronger capital in-flows – compared

withthepreviousyear,Berlin’sproperty investmentmar-

ketgrewbyaround19%in2014andreachedatransaction

volumeofnearlyEUR4.28billion.Thisexceedsthe10-year

averageby27%andisthebestresultsince2007,theyear

beforetheglobaleconomicandfinancialcrisisculminated,

whenEUR6.88billionwereinvestedinBerlin’smarket.

Withregardto investedcapital, thecontinuinggrowthin

2013–2014 was primarily attributable to investment in

hotel properties and the category “other properties”,

whichmainly includes undeveloped land andmixed-use

properties.Theboominthecapital’stourismindustrywas

alsoreflectedinthetransactionvolume–theinvestment

inBerlin’shotelsgrewby75%comparedto2013.Onthe

otherhand,projectdevelopersrelyonBerlin’scontinuing

economic and demgraphic growth and are increasingly

interestedinundevelopedland.62

Office properties still with lion’s share

of investment turnover

Although hotel properties, undeveloped land and mixed-

usepropertiesincreasedtheirshareofBerlin’stransaction

volumesignificantly,thebiggestslicewasonceagaincom-

mandedbyofficeproperties,accountingforaround40%

of total investment volume in 2014. Rising demand and

limited supply increased competition among investors,

particularlyinthecorearea.63Thenetinitialyieldforoffice

properties incentral locations fellaccordingly from5.3%

to4.6%between2010and2014,andtherateofreturnfor

office properties in Berlin’s peripheral locations declined

from7.5%to6.8%.64Whilein2014,investmentinoffice

propertiesinBerlinincreasedby6.1%yearonyear,invest-

mentinretailpropertiesfellsharplybymorethan30%.65

This ismainlyduetothefactthat longtermbuyerswant

toholdontopropertiespurchasedinrecentyears66,thus

creatingasupplyconstraintinthemarket.

62 BNPParibasRealEstate(2015):InvestmentMarketGermany–PropertyReport201563BNPParibasRealEstate(2015):InvestmentMarketGermany–PropertyReport201564Bulwiengesa,2015

65BNPParibasRealEstate66CBRE(2015):InvestmentmarktBerlin[InvestmentmarketBerlin],Q42014

Year Office Retail Logistics/

Light industrial

Hotels Other Total

2010 1,487 1,376 71 72 167 3,173

2011 794 940 59 147 396 2,335

2012 1,881 1,153 83 432 300 3,848

2013 1,621 1,297 166 200 305 3,589

2014 1,720 888 187 351 1,131 4,276

InvestmentturnoverbytypeofuseinBerlininmillionEUR

Source:BNPParibasRealEstate

20 |TransactionmarketinBerlin

Even distribution of invested capital

Notaone-offphenomenon–thehighinvestmentvolume

in2014wasmuch lessattributable to large transactions

inthehundredsofmillionsofeurothanisthecaseinoth-

ercities.InBerlin,investedcapitalisdistributedrelatively

evenlybetweenvariouscategories,withthehighestshare

ofturnover(28%)beingattributabletotheEUR50to100

millioncategory.DealsworthmorethanEUR100million

cameinsecond(around24%).Thislowdependenceonbig

transactionsischaracteristicofBerlinandcanbeviewedas

amarketstrength.67Nevertheless,themarketsawseveral

key transactions in2014both in CityWest andCity East.

The “Upper West” project, which is currently being con-

structednearBerlin’sGedächtniskirche[MemorialChurch],

was sold to theassetmanagerRFRHolding for EUR250

millioninoneofthelargesttransactionsinBerlinin2014.

InCityEast, thesaleof“HackeschesQuartier” [shopping

and entertainment centre] for over EUR 150 million was

oneofthemostimportanttransactionsoftheyear.68Both

properties exemplify the importance of mixed-use prop-

ertiessoldinBerlinin2014.Thesesitesblendcommercial,

officeandhoteluse.

Based on a stable labour market and low interest rates

in the longer term,the internationalconsultingfirmBNP

ParibasRealEstateanticipatestransactionvolumefor2015

toagainbeveryhigh,farabovethelong-termaverage.69

Witha transactionvolumeofaroundEUR1.3billion,Ber-

lin’s commercial property market recorded its best-ever

firstquarter.Itevenexceededthe2007boomyearresult

by6%.70

Service industry metropolis Berlin:

Commercial land prices higher

TheservicessectorisBerlin’spowerengineandanimpor-

tant source of value creation. Last year, real gross value

addedinBerlin’sservicessectorgrewby2%,whichwas

abovethefederalaverageof1.4%.Landpricesreflectthe

strong demand for building land for service sector com-

mercialspaceinthecapital.Whilelandpricesforindustrial

centresandproduction-relatedbusinessesremainedlarge-

lyflatbetween2013and2014,toppricesforservicesector

spacerosebyathirdfromEUR750to1,000/sqm.Atthe

otherendofthescale,lowestpricespaidforservicesector

buildinglandremainedlargelyunchangedatEUR220/sqm

comparedto2012and2013levels.

67BNPParibasRealEstate(2015):InvestmentMarketGermany–PropertyReport201568Transactionlistfrombulwiengesa,2015

69BNPParibasRealEstate(2015):InvestmentMarketGermany–PropertyReport201570 BNPParibasRealEstate(2015):Ataglance–investmentmarketinBerlinQ12015

CommerciallandpricesinBerlin

Sources:compiledfromtheBerlinLandMarketReport2014/15;IVDcommercialpricereport2014/2015;DIPmarketandfacts2015;AengeveltCityReport2015;RDMpricemonitor2014;ownresearch

Evolution of land prices in EUR/sqm

ærisinglandpricesâflatlandpricesèfallinglandprices

City Industrial sites

Space

for production-related businesses

Commercial space

for service-related businesses

Berlin 30–90 120–180 220–1,000

Trend â â æ

TransactionmarketinBerlin| 21

Fromthe investorperspective, theappealof commercial

real estate markets outside the top German cities is in-

creasing. According to a survey of 250 investors carried

outbytheaccountancyandconsultingfirmPwC,thefocus

is now shifting towards B-rated cities, which is mainly

duetothestrongcompetitionamonginvestorsforoffice

andretailspaceinthemajorGermancities.Incontrastto

bigcities,regionalplayers–includingDresden,Erfurtand

Magdeburg–havelowertransactionvolumesandhigher

risks but also deliver the highest rent yields, according

tothePwCsurvey.71AlookattheeasternGermanstates

(excluding Berlin) shows the growing interest in smaller

markets. Investmentturnoverdoubledhere in2014com-

paredto2013fromEUR1.36to2.7billion.72In2014,Ber-

lin’s commercial land market recorded 477 transactions

withturnoverofEUR2,606millionandatake-upvolumeof

268ha.Comparedtothepreviousyear,turnoverincreased

by 15%, with Leipzig and Rostock seeing the largest

increase in turnoverbymorethan25%.Withaturnover

of EUR 371 and EUR 243 respectively, the two markets

rankedsecondandthirdamongtheeasternGermancities.

Magdeburgrecordedthelowestturnoverin2014withEUR

8 million, representing a sharp decline compared to the

previousyear.

Transaction market in Leipzig:

More transactions and higher investment

volume across all market segments

Leipzig remains one of the most dynamic cities in Ger-

many thanks to its above-average GDP and population

growth, and is increasingly sought after by investors.73

AccordingtoBNPParibasRealEstate,investmentvolume

inthiscityfamousforitstradefairsdoubledin2014com-

paredto2013.Lastyear,EUR516millionwasinvestedin

commercialrealestateinLeipzig,thebulkofwhichwent

into retail (36.6%)andofficeproperties(26.9%).74Aside

fromthesurgeindealsandthedominanceofsmalland

medium-sizedinvestmentsunderEUR25million,thehigh

investmentvolumein2014wasalsoduetosomelarger

transactions. This includes the sale of the Petersbogen

arcadeaswellas theacquisitionof theForumamBrühl

by TLG IMMOBILIEN AG in the third quarter of 2014. The

saleof thePetersbogenarcade in2014helpedtheretail

segmenttoclaimthe2014topspot intermsof turnover

share–onlytoovertakenagainbyofficepropertiesinthe

firstquarterof2015.75Growing investor interest inoffice

propertiesinLeipzigisreflectedinfurtherdeclinesinthe

netinitialyield.Theyieldforofficesinprimelocationsfell

from5.5%to5.3%betweenthethirdquarterof2014and

thefirstquarterof2015.76

TRANSACTION MARKET IN EASTERN GERMANY:

INVESTMENT TURNOVER DOUBLES

71 PwC(2015):RealestateinvestorsurveyGermany72 Savills(2015):AnalysisforTLGIMMOBILIENAG73 Aengevelt(2015):Pressreleasedated17.4.2015,Leipzig–DeutlicherUmsatzanstieg[Leipzig–

sharpincreaseinsales]

74 BNPParibasRealEstate(2015)75 BNPParibasRealEstate(2015):Ataglance–investmentmarketLeipzigQ32014andQ1201576 BNPParibasRealEstate(2015):Ataglance–investmentmarketLeipzigQ32014andQ12015

City Commercial zone Trend

Potsdam 30–220 æ

Rostock 20–60 æ

Dresden 25–125 â

Leipzig 15–90 æ

Magdeburg 20–55 â

Erfurt 18–40 è

Jena 60–190 â

BB

MV

SNST

TH

Sources:compiledfromlocallandmarketreports;IVD-Gewerbe-Preisspiegel[IVDcommercialpricereport]2014/2015;PlötzImmobilienführer[PlötzReal]DIPMarktundFakten[Marketandfacts]2015;Aengeveltcityreport2015;ownresearch

Land prices in EUR/sqm

ærisinglandpricesâflatlandpricesèfallinglandprices

Landpricesforcommercialspace

22 |TransactionmarketeasternGermany

74 BNPParibasRealEstate(2015)75 BNPParibasRealEstate(2015):Ataglance–investmentmarketLeipzigQ32014andQ1201576 BNPParibasRealEstate(2015):Ataglance–investmentmarketLeipzigQ32014andQ12015

77 Aengevelt(2015):PressReleasedated07.05.2015,Magdeburg–BestesErgebnisseit2007[Bestresultssince2007]78 Transactionlistfrombulwiengesa,201579 Aengevelt(2015):Pressreleasedated21.4.2015,Dresden–highgrowthcomparedto201380 Transactionlistfrombulwiengesa,201581 Aengevelt(2015):Pressreleasedated21.4.2015,Dresden–highgrowthcomparedto2013

Source:localcommitteesforlandpricevaluationChange in turnover

ægrowingbyupto15%ãgrowingbyupto25%ããgrowingbymorethan25%

âflat

èfallingbyupto15%äfallingbyupto25%ääfallingbymorethan25%

City Number of transactions Take-up volume Turnover Change in turnover

Berlin 477 268ha EUR2,606million æ

Potsdam 80 40ha EUR235million ã

Rostock 390 67ha EUR243million ãã

Dresden 118 71ha EUR238million æ

Leipzig 284 142ha EUR371million ãã

Magdeburg 308 277ha EUR8million ää

Erfurt 65 23ha EUR67million ää

Jena 25 10ha EUR38million ä

BB

MV

SNST

TH

Increasing transaction volume in Dresden and

Magdeburg

Bothstatecapitalsrecordedgrowingtransactionvolumes

between2013and2014.Theincreaseincommercialinvest-

mentvolumewasmostnoticeableinMagdeburg.Compared

to2013,transactionvolumesincreasedby81%toEUR156

millionin2014andexceededtheaveragelevelsofthelast

decadebyaboutonethird(avg.2004–2013:aroundEUR116

millionperyear).Theincreaseinturnoverwasparticularly

evident intheofficeandcommercialbuildingsegments.

AccordingtoAengevelt,MagdeburgrecordedaEUR119

millionriseinthissegment,upby143%comparedto2013.77

AmongthekeytransactionsinMagdeburgwas,forexample,

theacquisitionofUlrichshausbyaninstitutionalfundfrom

F&CREIT–anofficeandcommercialbuildinglocatedcen-

trallybetweenthemaintrainstationandtheRiverElbe.78

At justunder9%,growthinturnoveronthecommercial

investmentmarketinDresdenwasmoremoderate–trans-

actionvolumereachedEUR336million,whichisinlinewith

theaverageforthelastdecade(avg.2004–2013:EUR337

millionperyear).79Inaddition,theElbemetropolisrecorded

oneofthebiggestdealsacrossalltheeasternGermancities

in2014:ThePragueCarréprojectonPragerStrassewassold

forEUR70million.80Theincreasingshortageofcoreproper-

tiesinDresdenisreflectedinfallinginitialyieldswhichare,

nevertheless,stillhigherthantheaverage.Marketyields

forcommercialbuildingsinprimelocationscurrentlyrange

between6%and7.5%–inthepreviousyeartheyranged

between6.5%and8.5%.InitialyieldsforofficesinDresden

rangebetween6.6%and7.5%–atthestartof2014the

lowerthresholdwas7%.81

Commerciallandmarket2014

TransactionmarketineasternGermany| 23

BERLIN’S OFFICE MARKET CONTINUES TO GROW-

AND RENTS FOLLOW SUIT

Berlin’seconomyhasbeenboomingforyears.In2014,real

GDP in the capitalgrewby2.2%compared to theprevi-

ous year, which is significantly higher than the German

average(+1.6%).82Onthisbasis,Berlinwasrankedamong

thetopstates,justoneplacebehindBadenWürttemberg

(+2.4%).83 The service sector, which is the powerhouse

of Berlin’s economy, outperformed Germany as a whole.

Last year, the realgross valueadded inBerlin’s services

sector roseby2%,0.6percentagepointsabove the fed-

eralaverageof1.4%.84Thecapitalalsorecordedthemost

businessstart-upsinGermany.With121businessstart-ups

per 10,000 inhabitants, Berlin was clearly ahead of sec-

ond-placedHamburg(101start-upsper10,000inhabitants)

aswellasGermanyasawhole(73start-upsper10,000

inhabitants).85WhileunemploymentinBerlinremainshigh-

er than the German average (10.5% compared to 6.2%

forGermanyasawhole,asatJune2015)86,employment

hasbeenrisingatasteadypacesince2003.In2014,the

labourforcegrewby1.8%,whichis0.9percentagepoints

higherthanthefederalaveragegrowthrateof0.9%.87The

servicesectoristhemajordriverofBerlin’seconomyand

thelocallabourmarket.In2014,around88%ofthosein

employment worked in the service sector. Compared to

theprevious year, overall employment increasedby2%.

Retail,tourismandthehospitalityindustry,aswellasthe

ITandcommunicationssectors,recordedthefastestgrowth

of3%respectively.88TheBerlinofficemarketisbenefiting

fromthepositiveeconomicdevelopmentsinthecapital.

Berlin claims the top spot among the five largest

office market locations in Germany

In2014,Berlin’sofficemarkethadapproximately18.7mil-

lionsquaremetresofofficespaceonoffer89,andreached

a take-up volume of 609,000 square metres, which rep-

resents an increase of just under 34% compared to the

previousyear.90TheseresultsplaceBerlinfirstamongthe

fivelargestofficemarketlocationsinGermany.Thelargest

share of take-up volume is attributable to city locations,

which include, among others, office market locations in

Charlottenburg, Schöneberg and Wilmersdorf, as well as

themainrailwaystation,CheckpointCharlie/Spittelmarkt

and at Hackescher Markt.91 This positive development is

mainly due to the dynamism of financial services sector,

industry/construction,researchandbiotechnology,aswell

astechnology,mediaandtelecommunications.92

The positive economic developments, particularly in the

service sector, in recent years is reflected in the increas-

ing number of office workers in Berlin. In 2014, there

wereabout695,400officeworkersinthecapital,placing

Berlin in top position among major German cities. This

isdue to thesharp riseof2.7% in thenumberofoffice

workerswhencomparedtothepreviousyear.Amongthe

majoreasternGermancities,onlyLeipzigrecordedahigh-

ergrowthrateoverthesameperiod,with3.9%.93

82 FederalStatisticalOffice83 Arbeitskreis“VolkswirtschaftlicheGesamtrechnungenderLänder”[WorkingGrouponNational

AccountsoftheGermanLänder]:Informationpriortorevisionofnationalaccountsin201484 FederalStatisticalOffice85 FederalStatisticalOffice86 FederalEmploymentAgency(BundesagenturfürArbeit)87 AmtfürStatistikBerlin-Brandenburg[Berlin-BrandenburgStatisticsOffice]88 AmtfürStatistikBerlin-Brandenburg[Berlin-BrandenburgStatisticsOffice]

89 bulwiengesa(purchaseddata)90 BNPParibasRE,“BüromarktDeutschland[officemarketGermany],PropertyReport2015”91 BNPParibasRE,“BüromarktDeutschland[officemarketGermany],PropertyReport2015”92 CBRE,“VermietungsumsatzindenfünfgroßenBüromärktenfünfProzentüberVorjahr”[Take-up

volumeinthefivemajorofficemarketsgrowsfivepercentyearonyeardated8.1.201593 bulwiengesa(purchaseddata)

24 |OfficepropertymarketinBerlin

Drop in supply of available space

The average office vacancy rate in Berlin fell over three

yearsby2percentagepoints,andin2014itstoodat5%.94

DespitefallingvacancyratesinBerlin,in2014thevolume

of new construction remained at a relatively low level

compared todemand.Whilespaceunderconstruction in-

creasedby6%yearonyearto286,000squaremetres,the

availablesupplyofspacedecreasedby11%duetomarked

fallsinvacancyrates.95

Average rents increase, prime rents stable

AccordingtoSavills,highdemandwasreflectedinaverage

rentsforofficespaceinBerlin,whichincreasedby7.3%in

2014compared to2013. In theprimesegment,however,

therentsremainedlargelyflat(+2.3%).96Accordingtofore-

castsbyBNPParibasRealEstate,primerentsareexpected

to increase in 2015, which ismainly due to the positive

outlookfortheBerlineconomy,thegrowingdemandand

thelowvolumeofavailablespace.97

Rents for office space in Berlin in prime office locations

remainedstableandrangedbetweenEUR20and23/sqm.

The largest price increases were recorded in the prime

locations of Potsdamer Platz and Leipziger Platz, where

rents increasedby5%yearonyeartoEUR23/sqm,and

prime locations in City West and City East, where rents

increased by 12% to EUR 22 and 21.50/sqm. The area

surrounding the main railway station was among the

mostexpensivelocationsinthecapitalwithrentsofEUR

20.50/sqm.98 Due to stable or rising rents, investors con-

tinuetoviewofficepropertiesinBerlinasveryattractive

–initialyieldsincentrallocationsfellfrom4.8%in2013to

4.6%in2014.99

In city centre locations, rents were relatively high and

rangedbetweenEUR12and22/sqm.Rentsvarydepend-

ingonthebuildquality.Priceincreaseswereparticularly

dramaticinthissegment.Asaresult,rentsinHackescher

Markt and Charlottenburg recorded double-digit growth

andreachedEUR19.50and14.50/sqm,respectively.100At

the same time, rent levels in city fringe and peripheral

locations remained stable at EUR 7.50–13/sqm and EUR

6–12/sqm, respectively. As the demand for office space

in Berlin now also extends to B-rated locations, falling

yieldshavealsobeenrecordedinperipheralofficemarket

locations–havingfallento7.1%in2013,theinitialyield

decreasedfurtherin2014to6.8%.101

94 bulwiengesa(purchasedata)95 BNPParibasRE,“BüromarktDeutschland[officemarketGermany],PropertyReport2015”96 SavillsResearch97 BNPParibasRE,“BüromarktDeutschland[officemarketGermany],PropertyReport2015”98 BNPParibasRE,“BüromarktDeutschland[officemarketGermany],PropertyReport2015”99 bulwiengesa(purchaseddata)

100BNPParibasRE,“BüromarktDeutschland[officemarketGermany],PropertyReport2015”101bulwiengesa(purchasedata)

Locations Berlin

Prime office locations 20.00–23.00

City centre locations 12.00–22.00

City fringe locations 7.50–13.00

Peripheral locations 6.00–12.00

RentrangesforofficespaceinBerlin

Sources:compiledfromIVDcommercialpricereport2014/2015;PlötzRealEstateGuide2015;DIPMarketandFacts2015;BNPParibasRealEstatePropertyReport2012/2015;CBRichardEllisBerlinOfficeMarket2014;SavillsOfficeMarketReport2014;JonesLangLaSalleRetailandOfficeProfiles2014;Engel&Volkers2014–15;Colliers2014/15;AengeveltCityReport2015;guidelinespublishedbyIHKBerlin2014;ownresearch.

OfficepropertymarketinBerlin| 25

OFFICE PROPERTY MARKET IN EASTERN GERMANY:

GROWTH IN WHITE-COLLAR EMPLOYMENT

REFLECTED IN DECREASING VACANCY RATES

The office property markets in eastern Germany have

comea longwaysince the1990s,whichwerecharacter-

isedbyanenormousoversupplythatledtovacancyrates

of20–25%.Thesupplysurplushasdeclinedsignificantly

overthepasttenyears.Thepropertymarkets ineastern

Germany have benefited from the favourable conditions

andgrowthintheGermaneconomy.Theunemployment

ratefellagainsignificantlyinallsevenmajorcitiesunder

review.ThesteepestfallswererecordedinRostock,where

the unemployment rate fell by 0.9 percentage points to

9.6%inJune2015.Asaresult,unemploymentisnowun-

der10% in sixof the seven citiesunder review.Magde-

burgistheexceptionwitharateof10.7%,butevenhere

thenumber of unemployedwasdroppedmarkedly over

thepastyearby0.7percentagepoints.Withtheexception

ofPotsdam,whitecollaremployment rose in theeastern

Germancities,withLeipzigand Jenashowing thestrong-

est growth rates, at close to 4% and 2.6% respectively.

EmploymenthasalsoincreasedintheDresdenandRostock

officemarkets,whichgrewby1.6%and1.2%respectively.

Vacancy rates fall in six of the seven major eastern

German cities

As the construction of new offices does not quite keep

up with growth in the number of employees, vacancy

ratescontinuedto fall lastyear insixof thesevencities.

Leipzig was able to reduce the vacancy rate by 2.3 per-

centagepointsto13.5%asaresultofitshighgrowthin

employment. This is the second-highest office vacancy

ratebycomparison(behindErfurtwith15.8%).Theover-

all trend is still positive.At 4.9%,Potsdam recorded the

lowest supply surplus is in, benefiting as it does from

its proximity to Berlin and its status as a state capital.

NextcameRostock,withanofficevacancy rateof7.6%.

WhileRostockisnotastatecapitalanddoesnothavethe

sameneedswithregardtoofficespace,itisstillthemost

importanteconomiccentreinMecklenburg-Vorpommern.

Office vacancy rates in Magdeburg and Dresden were

under the 10-percent mark with 9.4% and 9.6% respec-

tively,whileJenastillhasroomforimprovementat10.6%.

However, thisThuringianuniversitycity isalso thesmall-

esteasternGermanofficemarketwithofficespacebelow

490,000squaremetres.

ThemaineasternGermanyofficelocationsarestillDresden

andLeipzigwithroughly110,000white-collarworkersand

around2.7millionsquaremetresofofficespace.Whilethe

demand for office space in Dresden as a state capital is

basedonpublicservices,administration,universitiesand

researchinstitutes,thedemandinLeipzigisdrivenbythe

categories “other services”, “consulting firms” and “man-

agementofindustrialcompanies”.102

Stable rents across the board, sharp rises in Potsdam

Despitethepositivedynamicsintheemploymentmarket,

the property markets in easternGerman citieswere not

affected as positively. In Dresden and Magdeburg, rent

levelsacrossallofficesegmentsremainedflatcompared

to the previous year. In Dresden, rents for offices with

good utility value remained stable at EUR 8.50–12/sqm,

while in Magdeburg they fell to EUR 7.50 to 10.50/sqm.

Incontrast, toprents inLeipzig forofficeswithgoodutil-

ity value increased by around 4% compared with 2013.

AttractivespacecancommandrentsofbetweenEUR8.50

and12.50/sqm,puttingLeipzig in2ndplacebehindPots-

dam.Rostockcommandsverysimilar rents,which range

betweenEUR8.50and12/sqm.TheErfurtmarket forof-

fice space recorded a significant increase in rents for of-

102BNPParibasRealEstate:OfficemarketLeipzig,Q12015

26 |OfficepropertymarketineasternGermany

ficeswithfairtoaverageutilityvalue.Theseincreasedby

25% from EUR 6 to 7.50/sqm. In Erfurt, administration/

managementandtheservicesectorareamongthemost

important employers, the evolution of which will have

a significant impact on developments in the local office

propertymarketsgoingforward.

The most significant changes were once again reported

inPotsdamwhere,despitetheslightriseinexcesssupply,

rentsforofficeswithfairtoaverageutilityvalueaswellas

thosewithgoodutilityvaluewereontherise.Whiletop

rentsforofficeswithfairtoaverageutilityvalueincreased

byaround6%uptoEUR9.50/sqm,rentsforofficeswith

goodutilityvaluerosebyasmuchas12.5%.In2014,these

properties were rented out for EUR 9.50 to 13.50/sqm.

The Brandenburg state capital is therefore bucking the

new trend of declining office employment. Traditionally,

public administration and TMT (technology, media and

telecommunications)sectorcompaniesarewellrepresent-

ed in Potsdam. As several major projects are due to be

completedinPotsdaminthecomingyears–e.g.thecon-

structionofthenewInvestitionsbankdesLandesBranden-

burg[InvestmentBankoftheLandofBrandenburg]build-

ing, this is likely to have a positive impact on the local

economy.

Dresden:Margonhaus

OfficepropertymarketineasternGermany| 27

No. of

office workers

(2014)

Office workers

Change in %

(2013/2014)

Vacancy rate

in %

(2014)

Vacancy rate

Change in %

(2011/2014)

Total office

space in sqm

(2014)

Total office space

Change in %

(2011/2014)

Berlin 695,427 2.7 5.0 -2.0 18,736,911 1.5

Potsdam 40,078 -1.1 4.9 0.5 1,321,305 1.1

Rostock 38,888 1.2 7.6 -0.6 992,702 1.7

Dresden 110,962 1.6 9.6 -1.0 2,683,958 -0.3

Leipzig 110,034 3.9 13.5 -5.2 2,742,347 -1.1

Magdeburg 45,910 0.4 9.4 -1.5 1,428,830 0.5

Erfurt 52,176 0.7 15.8 -1.4 1,617,575 1.3

Jena 24,747 2.6 10.6 -0.9 488,408 4.0

KEY OFFICE MARKET INDICATORS

BB

MV

SNST

TH

Source:bulwiengesa,2015(reviseddataforofficeworkersin2013)

28 |Keyofficemarketindicators

RENT RANGES FOR OFFICE SPACE

IN EASTERN GERMANY

City Fair to average

utility value

Trend Good utility value2 Trend

Potsdam 5.00–9.50 æ 9.50–13.50 æ

Rostock 6.00–8.50 â 8.50–12.00 â

Dresden 4.50–9.00 â 8.50–12.00 â

Leipzig 5.00–8.50 â 8.50–12.50 æ

Magdeburg 4.00–7.50 â 7.50–10.50 â

Erfurt 4.50–7.50 æ 8.00–10.50 æ

Jena 5.00–8.00 â 8.50–11.00 â

BB

MV

SNST

TH

Themostimportantfactorsincalculatinglocalofficeandretailcommercialrentsarelocationcriteriafollowedbypropertysizeandtype/qualityoffacilities.Pricerangesarealsoprovidedinordertotakeintoaccountvariationsincomparisoncriteria.

Sources:compiledfromlocallandmarketreports;localIHKpricereports;IVDcommercialpricereport2014/2015;PlötzRealEstateGuide2015;DIPMarketsandfactsandcityreports2015;BNPParibasrealestatepropertyreport2015;AengeveltCityreports2015;Engel&Völkers2014/15;ownresearch

1Spaceonfringeofcentralbusinessdistrictswithcontemporaryfacilities,notsuitableforrepre-sentativepurposes

²Spaceincitycentresandprimelocations,mostlyinnewlybuiltpropertieswithstate-of-the-artfacilities

Rents in EUR/sqm

ærisingrentsâflatrentsèfallingrents

OfficepropertymarketineasternGermany|29

RETAIL PROPERTY MARKET IN BERLIN:

RISING PRIME RENTS AND HIGH APPEAL

TO INTERNATIONAL RETAILERS

Berlin’sevolution intooneof theworld’smostdesirable

cities – for tourists, students, migrants, businesses and

realestate investors–continued in2014.Thepopulation

increasedagainbymorethan40,000, thehotelandhos-

pitality industry achieved new records in the number of

overnight stays, and the number of students in the

2014/2015 winter semester grew by 3.2% compared to

thefirst semesterof thepreviousyear.103 Thenumberof

unemployeddroppedagain–theunemploymentratefell

betweenJune2014andJune2015from11%to10.5%.104

DuetotheimprovedemploymentsituationinBerlin,retail

spending per capita rose by 3.4% in 2014 to EUR 5,493.

Thanks to these factors, Berlin’s retail sector with its

numerous well-frequented shopping locations increased

itssalesby1.3%.105

Higher rents in prime locations and central

business districts

These positive developments were clearly noticeable on

Berlin’s market for retail properties. Retail rents in prime

locations once again recorded the fastest growth in 2014.

Whilein2013rentsforlargerprimespacesover150square

metresrosefromEUR180to250/sqmyearonyear,in2014,

they climbed up to EUR 300/sqm. In central business dis-

tricts outside Berlin’s prime locations of Kurfürstendamm,

FriedrichstrasseandHackescherMarkt,toprentsincreased

by4%fromEUR120to125/sqm.Atthesametime,retail

rentsforsmallerspacesupto100squaremetresinBerlin

alsoshowedsignificantgrowth.InBerlin’scentralbusiness

districts,primerents insomecasesreachedEUR180/sqm

in 2014 – representing a year-on-year increase of 12.5%.

Inkeyprimelocations,rentsforsmallerspacesroseby3.3%

andreacheduptoEUR310persquaremetreofretailspace.

Berlin attracts international retailers

and luxury brands

The rise in retail rents – particularly in the city’s prime

locationswithhigh footfall – ismainlydue to theendur-

ingappealofBerlinforretailers.AccordingtoJonesLang

LaSalle (JLL), Berlin andMunich are among the10most

attractive retail locations in Europe. While London tops

the rankings and is widely considered the best “spring-

board”forexpansionintoEuropethankstoitsmarketsize,

high market transparency and retailer-friendly attitude,

Berlinisalsoconsideredtobeanimportantgatewaycity

inthisregard.106Inparticular,thisappliestointernational

luxurybrandssuchasDolce&Gabbana,LouisVuittonand

Prada,whichbesidesFriedrichstrassearealsoattractedto

Kurfürstendamm. According to JLL, Kurfürstendamm has

beengaininginimportanceoverthepastfiveto10years

andisconstantlyevolving.Berlinhasnowclosedthegap

itpreviouslyhadwithDüsseldorf,Frankfurt,Hamburgand

Munichwithregardtoluxuryhighstreetshopping.Ofthe

20luxurybrandswiththehighestconcentrationofshops

in Europe, 15 are now present in Berlin. The reason for

thisdevelopmentisthatinternationalbrandschoosetheir

locationsbasednotonlyonspendingpower,butalsoon

thenumberoftourists,sophisticatedcommercialstructures,

as well as a successful blend of tradition and suitable

architecture. In particular, the city’s appeal for tourists

has had a positive effect on the expansion decisions of

internationalretailers,andthisisoneofBerlin’sstrengths.

In2014,thecapitalrecordedcloseto28.7millionovernight

stays, representing almost 7% of all overnight stays in

Germany and thus securing the pole position for Berlin

among German cities. By comparison, in 1992, Berlin’s

sharewasjust2.5%.107

103AmtfürStatistikBerlin-Brandenburg(2015)[Berlin-BrandenburgStatisticsOffice]:pressreleases104BundesagenturfürArbeit[FederalEmploymentAgency],July2015105GfKGeoMarketing,2015and2014

106JLL(2014):Pressreleaseof27.11.2014,MünchenundBerlinzählenzudenzehnattraktivstenHandels-standortenEuropas[MunichandBerlinamongthe10mostattractiveretaillocationsinEurope]

107JLL(2015):Pressreleaseof10.3.2015,BerlinerKu’dammlocktinternationaleLuxuslabels[Berlin’sKurfürstendammattractsinternationalluxurylabels]

30 |RetailpropertymarketinBerlin

KEY RETAIL MARKET INDICATORS

Retail spending

in EUR

per inhabitant

(2014)

Change in retail

spending in EUR

per inhabitant in %

(2011/2014)

Retail turnover

in EUR

per inhabitant in %

(2014)

Change in retail

turnover in EUR

per inhabitant in %

(2011/2014)

Retail centrality

(2014)

Berlin 5,493 8.8 5,182 2.1 105.2

Potsdam 5,672 6.7 3,951 1.3 77.0

Rostock 5,194 5.9 4,698 0.6 101.5

Dresden 5,372 6.2 5,212 1.1 108.9

Leipzig 5,161 8.3 4,728 0.1 104.4

Magdeburg 5,150 4.6 5,513 -1.0 119.8

Erfurt 5,233 3.0 5,466 2.4 116.2

Jena 5,268 4.0 5,191 -1.1 110.0

BB

MV

SNST

TH

Source:GfKGeoMarketing,2015

Keyretailmarketindicators| 31

RETAIL SPACE RENT

RANGES IN BERLIN

Rentsforretailspaceuptoapprox.100sqm

Sources:compiledfromIVDcommercialpropertypricereport2014/2013;Brockhoffrentindex2015;PlötzRealEstateGuide,2015;DIPMarketandFacts,2015;BNPParibasRealEstatePropertyRetailReport2015;guidelinespublishedbyIHKBerlin2014;ownresearch.CBRE2014;Aengeveltcityreport2015;ownresearch

Rents in EUR/sqm for retail space

ærisingrentsâflatrentsèfallingrents

Sub-centre Central business district Prime locations

Berlin East 10–40 40–140 140–230

Trend æ æ â

Berlin West 15–40 40–150 170–310

Trend æ è æ

Prime 75 180 330

Sources:compiledfromIVDcommercialpropertypricereport2014/2015;guidelinespublishedbyIHKBerlin2014;Brockhoffrentindex2015;JonesLangLaSalle2014;ownresearch

Rents in EUR/sqm for retail space

ærisingrentsâflatrentsèfallingrents

Sub-centre Central business district Prime locations

Berlin 7–25 20–125 140–300

Trend â æ æ

Rentsforretailspacefrom150sqm

32 |RetailpropertymarketinBerlin

TheretailsectorintheeasternGermancitieswasableto

benefit from the positive market conditions in Germany.

Theboomincitytourismledtoariseintouristnumbers

acrossallsevencities,withDresdenseeingovernightstays

increase by 7.6% year on year, followed by Magdeburg

with6.3%andRostockwith4.4%respectively.108Whatis

more, thecitiesalso reportedgrowth in theirnumberof

inhabitants–especiallyLeipzigwithan increaseof2.3%

–andasatJune2015,thenumberofunemployedhadfall-

enyearonyearinallsevenmajoreasternGermancities.

As a result, retailers were able to benefit from rising

incomesinadditiontotourism-relatedconsumption.Retail

sector sales are also affected by growth in online retail-

ing.However, food retailing remainsvirtuallyunaffected

bythisas itsshareofonlineretailing isonlyaround1%

of total sales.According to forecastsby theGfK, it isnot

expectedtopassthe5%markwithinthenext10years.109

While retail spending power remains below theGerman

average in most growth regions of eastern Germany,

theannualpercapitaspendingpoweroftheirinhabitants

hasnowreachedoverEUR5,150.AtEUR5,672perhead,

PotsdamhasnowsurpassedtheGermanaverageofEUR

5,657 for the first time. With product range restrictions

for shops in Potsdam’s “Bahnhofspassagen” shopping

arcade being relaxed last year, the Gesellschaft für Kon-

sumforschung (GfK) [Society for Consumer Research]

anticipatesthatsaleswillrisemarkedlyinPotsdamin2015,

handinhandwithincreasedretailcentrality.110Fifteennew

shops opened there on 4,500square metres of hitherto

vacant retail space and now complement the range of

productsonoffer.111

Stable rents for small spaces, rent growth for large

spaces in Potsdam, Leipzig and Dresden

Thetrendinretailrentsacrossthesevenanalysedeastern

Germancitieswaslargelystabletorising.Asbefore,the

highest rentsarepaid for city centre locations in Leipzig,

Dresden and Erfurt. Noticeable is the lack of momen-

tumwithregardtosmallerretailspacesupto100square

metresdespitethefavourableconditions.Inthissegment,

rentshaveonly increased insub-centre locations inDres-

den and Rostock, and in the central business district of

Erfurt.ToprentsreachedEUR120/sqminDresden,EUR140/

sqminLeipzigandremainedunchangedatEUR150/sqm

inErfurt.Itshouldbetakenintoaccount,however,thatthe

rentrangesintraditionalfoodretailspacesarelower.

Retail rents for larger spaces above 150square metres

evolvedmoredynamically.Toprentscouldbeincreasedby

around14%uptoEUR40/sqminPotsdam’scentralbusi-

nessdistrict.Insomeisolatedcases,rentsevenclimbedto

EUR55/sqm.Onlyayearago,toprentsrangedbetween

EUR35and50/sqm.However,therangeofrentscharged

for sub-centre locations in Potsdam has fallen from EUR

6–12/sqmin2013toEUR6–10.50/sqmin2014.Theoutlook

forthecentralshoppinglocationsinPotsdamremainsposi-

tiveforthecurrentyear.112

ThehighestrentsforlargeretailspacesarepaidinLeipzig,

withtoprentsreachingEUR85/sqm.Lastyear,theyrose

onceagainbyaround6%.Thehighestrentsarecharged

in central locations e.g. Petersstraße and Grimmaischen

Straßewhicharesettobenefitfromtheopeningofthecity

tunnelandthecompletionofseveralprojects,suchasthe

“Handelshof”andthenewuniversitybuildingatAugustus-

platz.113Takingintoaccountthe3%year-on-yearriseinthe

per capita retail spending power of Leipzig’s inhabitants,

108StatistischeLandesämter109GfKPrognose2025Online-AnteilamGesamtumsatz110GfKGeoMarketing111Comfort:ComfortStädteReportPotsdam,2014

112Comfort:ComfortStädteReportPotsdam,2014113BNPParibasRealEstate:FrequenzreportLeipzig,Q22014UNDAengeveltResearch,

Pressemitteilungvom17.4.2015

RETAIL PROPERTY MARKET IN EASTERN GERMANY:

RISING PURCHASING POWER AND GROWTH

IN TOURISM

RetailpropertymarketineasternGermany| 33

114Aengeveltresearch,pressreleasedated17.4.2015115Comfort:ComfortCityReportDresden,2014116Comfort:ComfortCityReportRostock,2014

thegrowingappealoftheSaxoncapitalfordomesticand

foreign tourists and the various projects currently under

development114,itcanbeassumedthatthehighdemand

forretailspaceandthepositiveoutlookfortheretailprop-

ertymarketinLeipzigwillcontinue.

InDresden,rentsofuptoEUR65/sqminexpensivecentral

businessdistrictlocationsremainedcomparablystablein

2014.Thecomparisonofsevenmajorcitieshas revealed

that rents for large retail spaces in sub-centre locations

in Dresden increased by more than 40%. While in 2013

therentrangespanwasEUR11/sqm,ayear later ithad

climbed to EUR16/sqm.As rents in the central business

districtremainedlargelyflat,thisisanindicationthatthe

retailers’focusinDresdenhasshiftedtowardssub-centre

locations. However, projects such as “Prager Carée” and

“Jüdenhof”,whichputtheDresdencitycentreonthemap

asanattractiveshoppingdestinationfordomesticandin-

ternationalretailers,rentsinthecentralshoppinglocations

ofDresdenarelikelytoriseinthemediumterm.115Other

positivefactorsincludethecity’srisingappealfortourists

and its pull effect with regard to the surrounding areas.

This is because, with Dresden’s good retail centrality of

around109,storesandshopsinDresdenhaveagreatpull

powerforsurroundingcommunities.

Rents for smaller retail spaces in the Hanseatic City of

Rostockarealsostableorontherise.Interestingly,rents

havemainlybeenrisinginsub-centrelocations.Toprents

forlargerareasover150squaremetresreachedEUR11.50/

sqm, representinga4.5% increase compared to thepre-

vious year. Rents for smaller spaces of up to 100square

metres in sub-centre locationshave increasedbyaround

one-thirdfromamaximumofEUR30to40/sqm.Thismay

beattributable,amongotherfactors,totheexpansionof

theOstseeParkinRostock-SievershagenandtheWarnow

ParkintheLüttenKleindistrict,whicharelocatedinakey

locationonthecityfringeofRostock.116

34 |RetailpropertymarketineasternGermany

RENT RANGES FOR RETAIL SPACE

IN EASTERN GERMANY

Rentsforsmallerretailspaces–uptoapprox.100sqm

Rentsforlargerretailspaces–fromapprox.150sqm

Themostimportantfactorsincalculatinglocalofficeandretailcommercialrentsarelocationcriteria,followedbypropertysizeandthetype/qualityoffacilities.Pricerangeisalsoprovidedinordertotakeintoaccountvariationsincomparisoncriteria.

Sources:compiledfromlocalpropertymarketreports,localchamberofcommercepricereports;IVDcommercialpricereport2014/2015;Plötzrealestateguide2015;Brockhoffrentindex2015.DIPMarketsandFactsandDIPCityReports2015;BNPParibasRealEstatePropertyReport2014;AengeveltCityReports2015;JonesLangLaSalle2014;Engel&VölkersRetailOpportunities2014;CBRE2014;Cushmann&Wakefield2014;ownresearch.

1 Spaceinagoodlocationwithinclosedresidentialquartersorindistrictcentres2Areainacentralinner-citylocationwithhighfootfallandabroadrangeofsectors

Rents in EUR/sqm

ærisingrentsâflatrentsèfallingrents

City Sub-centre1 Trend Central business district2 Trend Top prices

Potsdam 9.00–15.00 â 18.00–80.00 â 80

Rostock 10.00–40.00 æ 40.00–80.00 æ 90

Dresden 10.00–40.00 æ 50.00–110.00 â 120

Leipzig 15.00–40.00 â 45.00–130.00 â 140

Magdeburg 7.00–20.00 â 15.00–55.00 â 60

Erfurt 5.00–12.00 â 35.00–120.00 æ 150

Jena 8.00–12.00 â 25.00–60.00 â 60

City Sub-centre1 Trend Central business district2 Trend Top prices

Potsdam 6.00–10.50 è 10.00–40.00 æ 55

Rostock 8.00–11.50 â 11.00–50.00 â 60

Dresden 7.00–16.00 æ 40.00–65.00 â 70

Leipzig 8.00–16.00 è 40.00–85.00 â 110

Magdeburg 4.50–6.50 â 11.00–20.00 â 25

Erfurt 5.00–8.00 è 40.00–60.00 è 100

Jena 6.00–10.00 â 15.00–35.00 æ 38

BB

MV

SNST

THB

BM

VSN

STTH

RetailpropertymarketineasternGermany| 35

BERLIN: DESPITE COMPETITIVE PRESSURES

HIGHER ROOM REVENUES AND OCCUPANCY

Berlin is Germany’s top travel destination, registering

another record in thenumberofovernightstays in2014.

Over this period, some 12 million tourists checked into

Berlin’shotels,translatinginto28.7millionovernightstays.

Thismeansthat inBerlin, thenumberofovernightstays

hasmore thandoubledsince2004– comparedwith the

previous year this figure increasedby6.5%.117According

toaccountingandconsultingfirmPwC,overnightstaysin

Berlinareforecasttoexceedthe30millionmarkby2016.118

ThismeansthatBerlinhasagoodchancetomovecloserto

Parisintherankings.Measuredbythevolumeofovernight

stays,Pariscameinsecondwith36millionovernightstays

in2014,whileLondonclaimedthetopspotwith53million

overnightstays.119

Berlin’s tourism has a broad, diversified base

Berlin’smaincharacteristicandadvantageasatourist

destinationisitsmoreorlessequalappealtobusinessand

leisuretravellers.Businesstraveldemandismainlybased

on Berlin’s growing economy, trade shows as well as it

being the home of various political institutions and

researchfacilities.Demandintheleisuresegmentisbased

on Berlin’s historical significance as well as the numer-

ous cultural events and sights.120 According to a survey

conducted by the German National Tourist Board (GNTB)

in 2014, which asked 11,000 visitors to Germany about

theirfavouritesights inthecapital, thetop10highlights

included the Brandenburg Gate (4th place), the Berlin

Wall/East Side Gallery (5th place), and the World Her-

itageMuseum Island (10thplace).Berlin also claims the

top spot among conference and congress destinations:

117VisitBerlin(2015):Berlinintherankings–theGermancapitalinnationalandinternationalcomparison,AmtfürStatistikBerlin-Brandenburg[Berlin-BrandenburgStatisticsOffice]

118PwC(2015):Roomforgrowth–Europeancitieshotelforecastfor2015and2016for20gatewaycitiesfromAmsterdamtoZurich,p.32

119Tagesspiegelof19.02.2015:“RekordzahleninderHauptstadt–TouristenliebenBerlin”[Thecapitalattractsarecordnumberoftourists] 120ColliersInternational(2014):HotelmarktBerlin[HotelpropertymarketinBerlin]2014/2015

Berlin:RamadaHotel

36 |HotelpropertymarketinBerlin

In2014,11millionparticipantsvisitedsome131,000events

(+4%)intheGermancapital,representinganincreaseof

3%yearonyear.Theconferenceandconventionmarket

generated7millionovernightstaysforthefirsttime,rep-

resentinga4.5%increasecomparedto2013.121

Rise in key hotel market indicators

underlines positive business outlook

BecauseofBerlin’senduringappealtobothbusinessand

leisure travellers, it tends to have higher and more sta-

ble occupancy rates than, for example, Frankfurt, which

is mainly frequented by business travellers, who pre-

dominantly occupy hotel rooms on weekdays.122 Average

occupancy rates in Berlin’s hotels reached a record lev-

elof74.2% in2014,which translated intoa7thplace in

thecomparisonof20hotel locationsinEurope(1stplace:

London,83%occupancy).Compared to thepreviousyear,

room occupancy in Berlin rose by 1.5 percentage points

in2014.Despiteincreasingcompetition–accordingtothe

tourism data provider STR Globa, Berlin added a total of

1,700 new hotel rooms in 2014 – room revenues and av-

eragedaily rates inBerlinhave inpart increased sharply

in areas with high demand. While revenue per available

room(RevPAR)climbedinBerlinbetween2013and2014

by approximately 4.2% to EUR 66.35, the average daily

rate (ADR) over the same period reached EUR 89 (+2%).

While room rates across other German top destinations

increased(withtheexceptionofCologneatEUR88)with

MunichatthetopendofthescaleatEUR110,insomecases

rateshaveactuallyfallen.AveragedailyratesinFrankfurt

amMainfellby2.6%andinCologneby1%,butremained

largelyflatinMunich.AtEUR89,averagedailyratesinBer-

linareEUR2abovetheADRforGermanyasawhole.123

Largest market for hotel investments – 2,800 rooms

under construction or in planning124

Berlin is the largest market for hotel investments in

Germany,withavarietyofnew,trendyhotelprojectssuch

as thenewMoxyhotelsby theMarriottGroupand IKEA.

Duetostableorveryhighvisitornumbersandovernight

stays, as well as the long-anticipated BER Airport which

isnowdue toopen in2017,Berlin isaparticularly inter-

estinginvestmentdestinationforhotelchains.125TheStei-

genbergerandMoxyhotelchainsplantoopennewhotels

nearthenewairportin2015.126However,newhotelsare

alsobeingbuiltinBerlin’sCityEastandWestcentralloca-

tions.ARiuHotelandaHiltonHotelwithacapacityof350

roomswillopenclosetoWittenbergPlatzandAlexander-

platz in2015and2018respectively.127Byfar thebiggest

hotelproject inBerlin is theMotelOneUpperWestnear

theGedächtniskirche[MemorialChurch]withacapacityof

around580roomson18floors.Itisexpectedtoopenits

doorsin2016.128

121VisitBerlin(2015):Berlinintherankings–theGermancapitalinnationalandinternationalcomparison,AmtfürStatistikBerlin-Brandenburg[Berlin-BrandenburgStatisticsOffice]

122Haufe(2015):BerlinerHotelsverzeichnenBesucherrekorde[HotelsinBerlinwelcomerecordnumberofvisitors]from3.3.2015,availableat:http://www,häufe,de/immobilien/entwicklung-vermarktung/marktanalysen/pwc-berliner-hotels-verzeichnen-besucher-rekorde_84324_295310.html,accessedon5.6.2015

123ColliersInternational(2014):HotelmarktBerlin[HotelmarketinBerlin]2014/2015,PwC(2015):Roomforgrowth–Europeancitieshotelforecastfor2015and2016for20gatewaycitiesfromAmsterdamtoZurich,STRGlobal2015

124PwC(2015):Roomforgrowth–Europeancitieshotelforecastfor2015and2016for20gatewaycitiesfromAmsterdamtoZürich,S.32

125ColliersInternational(2014):HotelmarktBerlin[HotelpropertymarketinBerlin]2014/2015126http://www,ahgz,de/neueroeffnungen/moxy-soll-im-fruehjahr-2015-in-deutschland-starten,

200012210155.html,accessedon5.6.2015;http://www,steigenbergerhotelgroup.com/documents/10516/15303/Region+Berlin,pdf,accessedon5.6.2015

127http://www.riu.com/de/Paises/deutschland/berlin/hotel-riu-plaza-berlin/,accessedon5.6.2015,http://www.haufe.de/immobilien/entwicklung-vermarktung/in-berlin-entsteht-weltweit-groessteshampton-by-hilton_262_295336.html/andhttp://www.superior-hotel.net/home/groesstes-hampton-by-hilton-soll-in-berlin-entstehen/,accessedon5.6.2015147CBRE:HotelmarktDeutschland[HotelpropertymarketGermany]MarketView2013,figurerelatingtoFrankfurtonp.4,figurerelatingtoDüsseldorfonp.3.

128http://www.upper-west.de/andhttp://press.visitberlin.de/de/pressemeldung/neues-aus-der-city-west,accessedon5.6.2015,booking.comandhotelreservierung.de

HotelpropertymarketinBerlin|37

HOTEL MARKET IN EASTERN GERMANY:

DRESDEN, LEIPZIG AND ROSTOCK SETTING THE PACE

TheGermanhotelpropertymarketisstilloneofthemost

attractivemarketsinEurope,contributingtotheappealof

theeasternGermanmarketsasawhole.Amongthetop

10citieswiththemosthotelprojectdevelopmentsisLeip-

zig,withalmost1,000newroomsandDresdenwith400,

which puts them in the 7th and 9th place respectively –

betweenDüsseldorfandCologne.129Nextyear,166rooms

will be opened at the Adina Apartment Hotel in Leipzig

and around100 rooms at the AmediaHotel Jüdenhof in

Dresden.130

DresdenandLeipzigareincreasinglyevolvingintotourist

magnets,andin2014theyrecordedthehighestnumberof

overnightstaysofalltheeasternGermancities(excluding

Berlin)withacombinedtotalof7.2million.LastyearDres-

den, in particular, attracted significantly higher numbers

ofvisitorsthanin2013.Overnightstaysincreasedby7.6%,

whichwasthesharpestriserecordedinanymajoreastern

Germancity,includingBerlin.

Dresden, Leipzig and Rostock profitable,

Magdeburg’s growing appeal

All other eastern German cities analysed here saw the

number of overnight stays increase last year. Somewhat

surprisingly,Magdeburgrankssecondwithariseof6.3%

comparedto2013.Rostockrecorded1.9millionovernight

stays,representinganincreaseof4.4%.Thegrowingtour-

istappealofMagdeburgisalsoreflectedintheevolution

ofkeyhotelmarketindicators:Hotelsinthestatecapitalof

Saxony-Anhaltwereabletoincreasetheiraveragerevenue

peravailableroom(RevPAR)by10%lastyear.AtEUR29.45

perroom,pricesareatthebottomofthescalecompared

withothereasternGermancities.Asinthepreviousyear,

hotelsinRostockandLeipzigrecordedthehighestrevenue

withEUR63.78andEUR52.25respectively.Itistherefore

hardlysurprisingthathotels inthesetwocitiesachieved

thehighestroomoccupancyratesandaveragedailyrates

close to 69% and EUR 92.91 (Rostock) and EUR 75.82

(Leipzig)respectively.Havingincreaseditsoccupancyrate

substantially to just under 67% in 2014, Dresden com-

mandedthethirdhighestaveragedailyrateofEUR72.20.

This would suggest that Dresden, Leipzig and Rostock

remain the most successful hotel markets in eastern

Germany. This is due to their appeal as tourist destina-

tions featuringnumeroushistorical and cultural sightsor

anattractiveseasidelocation.Nevertheless,Magdeburgis

catchingupfast.

While Potsdam’s hotel market ranks in the middle

of the pack, Erfurt again trails the other markets

Potsdam ranks in themiddleof the table.However, the

occupancy rate has risen noticeably in the state capital

ofBrandenburg.Afterasharpincreaseby3.6percentage

points,itreached64.4%in2014.Overthepastyear,hotels

in Potsdammarkedly increased their revenueper availa-

bleroom.TheRevPARincreasedby4.4%fromEUR43.26

perroomtoEUR45.15.ComparedtoothereasternGerman

cities, hotel rooms in Magdeburg and Erfurt continued

togenerate lower revenues.Witha slightdecline inkey

hotelmarketindicators,Erfurtisamongtheworstperform-

ingeasternGermancities.Average revenueper room in

Erfurt’s hotels decreased by 1.3% to EUR 38.07. The oc-

cupancyratealsofellslightlyby0.6percentagepointsto

62.8%inlinewithroomrates,whichdeclinedby0.4%to

anaverageofEUR60.66.131

129www.tophotelprojects.com/de/wieviele-hotels-werden-noch-deutschland-gebaut;accessed29.5.2015

130www.hotelier.de/hotellerie/hotelgewerbe/38086-neue-hotels-geplante-hotels-hotelneubau-hotelprojekte-und-hoteleroeffnungen#Deutschland;accessedon29.5.2015 131AllfiguresfromSTRGlobal,2015

38 |HotelpropertymarketinBerlin

KEY HOTEL MARKET INDICATORS

Number of

overnight stays

(2014)

Overnight stays.

change in %

(2011–2014)

Average occupancy

rate in %

(2014)

Revenue per room

in EUR. (RevPAR)

(2014)

Average room price

in EUR. ADR

(2014)

Berlin 28,688,700 28.3 74.2 66.35 89.39

Potsdam 1,035,800 13.8 64.4 45.15 70.15

Rostock 1,898,000 25.5 68.6 63.78 92.91

Dresden 4,441,896 16.9 66.9 48.30 72.20

Leipzig 2,764,851 29.5 68.9 52.25 75.82

Magdeburg 569,791 7.0 48.0 29.45 61.35

Erfurt 772,487 6.4 62.8 38.07 60.66

Jena 313,100 2.6 n/a n/a n/a

Sources:StatistischeLandesämter[StatisticalOfficesoftheGermanLänder],STRGlobal

*includingWarnemünde

Doubleortwinroombasedontwopersonssharing,bathorshowerandWC,includingtradefairprices,updatedregularly.Observationdays:15.3/28.3/12.4/26.4/10.5/24.5,15.3LeipzigBookFair

Hotel prices in EUR ærisinghotelpricesâflathotelpricesèfallinghotelprices

Source:HolidayCheck,hotel.de,hrs.de,booking.com,hotelreservierung.deowncalculations.

BB

MV

SNST

TH

✶ ❘ ✶ ✶ Trend ✶ ✶ ✶ Trend ✶ ✶ ✶ ✶ ❘ ✶ ✶ ✶ ✶ ✶

Trend

Berlin 32–160 â 35–300 æ 50–615 æ

Potsdam 55–100 â 55–155 æ 60–180 æ

Rostock* 30–90 â 45–125 è 60–320 æ

Dresden 35–85 â 35–125 â 45–220 â

Leipzig 30–100 æ 38–150 æ 40–190 â

Magdeburg 40–66 â 50–108 è 55–135 è

Erfurt 44–84 æ 64–150 æ 75–175 æ

Jena 45–79 æ 55–80 è 65–130 æ

BB

MV

SNST

TH

Hotelpricerangesbystarrating(1/2,3,4/5)inBerlinandeasternGermanyin2015(onadoubleroombasis)

Keyhotelmarketindicators|39

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CONTACTS

TLGIMMOBILIENAG

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E-Mail:nord@tlg.de

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Tel.08008540000

Fax:03024303123

South Branch

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42 |Contacts

COMPANY AND LEGAL INFORMATION

Publisher:

TLGIMMOBILIENAG

CorporateCommunications

Hausvogteiplatz12

10117Berlin,Germany

Concept,projectmanagement,editorialcontent:

RUECKERCONSULTGmbH,Berlin

Production:

DUOWerbeagentur,Berlin

Dataasof12/2014

Noliabilityisacceptedforthe

accuracyandcompletenessofthe

informationcontainedherein.

Copyright:

09/2015©TLGIMMOBILIENGmbH,Berlin

Thispublication(includingtablesandcharts)isprotectedbycopyright.

Anyusewithoutthepublisher’sconsentisprohibitedandliabletoprosecution.

Thisapplies,inparticular,toreproductions,translations,microfilming,

aswellasstorageandprocessinginelectronicsystems.

Companyandlegalinformation| 43

TLG IMMOBILIEN AG

Hausvogteiplatz12

10117Berlin,Germany

Tel.030247050

Fax03024707337

www.tlg.de