DGAP-News: TLG IMMOBILIEN AG / Key word(s): Study/Real Estate
TLG IMMOBILIEN AG: Eastern German office markets continue to offer
attractive yield potential
14.07.2016 / 10:15
The issuer is solely responsible for the content of this announcement.
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Press release
Eastern German office markets continue to offer attractive yield potential
- Report "Property Market in Berlin and eastern Germany 2016" published
- Transaction volume of approx. EUR 8.3 bn breaks record for commercial
property investments in Berlin
- Office: Berlin with substantial increase in office rents - strong
investor demand in further eastern German cities
- Retail: Berlin leads the way with highest take-up and transaction
volume in Germany
- Hotel: Overnight stays in eastern Germany's hotels have surged by 21 %
since 2011
Berlin, 14 July 2016 - All signs point to continued office property market
growth in eastern Germany's office centres: Dresden, Leipzig, Rostock,
Erfurt and Potsdam. Buoyed by increased employment, the five cities have
enjoyed sustained rises in demand for office space. At the same time the
total volume of office space in these five cities has increased only
moderately, leading to take-up concentrating on vacant space in existing
office schemes. This development has been most pronounced in Leipzig, where
the office vacancy rate has fallen by 6.1 percentage points since 2011.
Only Potsdam has seen office vacancies remain unchanged over the past five
years. Nevertheless, Brandenburg's state capital already boasts the lowest
vacancy rate among the five eastern German cities, at 4.3 %. This is one of
the key findings of the annual report "Property Market in Berlin and
eastern Germany", which has just been published by TLG IMMOBILIEN AG.
"In eastern Germany's growing cities, demand for office space remains
strong. However, hardly any new office space is being developed right now,
and the market has focussed on absorbing excess capacity, which is in ready
supply", said Niclas Karoff, Member of the Management Board of TLG
IMMOBILIEN AG. These positive developments are clearly reflected in the
office rental market: Peak rents of EUR 12.60/sqm in Leipzig and EUR 12.20/
sqm in Dresden mean that eastern Germany's office landlords are already in
a position to charge the same rents as their peers in Mainz, western
Germany. In Potsdam and Rostock, where peak rents have risen to EUR 14.00/
sqm, markets have now reached a level comparable with Wiesbaden or
Mannheim. Erfurt's peak office rent of EUR 10.00/sqm offers significant
growth potential, particularly given the city's position as a major
university location. In terms of average rents, the EUR 11.50/sqm payable
for office space in central Potsdam was the highest among the five eastern
German centres. Dresden and Leipzig followed, each reporting average rents
of around EUR 10.00/sqm. Rostock and Erfurt brought up the rear, with
averages of EUR 9.00/sqm and EUR 8.00/sqm, respectively. Office space in
city fringe locations in Rostock, Dresden and Erfurt are available for an
average of EUR 6.00/sqm. While the achievable average rent in Leipzig is
somewhat lower, at EUR 5.80/sqm, Potsdam once again distances itself from
the pack, with rents in this segment averaging EUR 8.00/sqm.
Eastern Germany's office markets: Yields of 7 to 8 % are common
Despite the fact that prices have increased over the last few years, office
property in eastern Germany's major cities remains attractive to potential
investors. A net initial yield of 7.4 % was generated by office properties
in city fringe locations in Leipzig last year, and in Dresden the yield
stood at 7.6 %. In the remaining three cities analysed for this study,
yields in excess of 8 % are commonplace. The pacesetter in the office
segment is Erfurt. The net initial yield for offices with fair to average
utility value in Erfurt's city fringe locations amounted to 8.8 %. Erfurt
was closely followed by Rostock at 8.6 % and Potsdam at 8.5 %. In contrast,
office space in central locations, or with good utility value, only offered
yields of 5.2 % in Leipzig and 5.4 % in Dresden. In the other three major
eastern German centres, investors can also expect attractive yields: 6.1 %
in Erfurt, 6.0 % in Rostock and 5.6 % in Potsdam. "Net initial yields have
declined across the board in all five eastern German cities over the last
twelve months. This is a direct result of the surge in demand for office
properties in these locations", said Karoff in relation to yield trends.
The only locations where yields remained unchanged at the previous year's
levels were on the city fringes of Erfurt and Rostock, with yields of 8.8
and 8.6 %, respectively.
Commercial property market: New investment volume record in Berlin
The market for commercial property in Berlin set a new record in 2015, with
investment totalling EUR 8.3 bn - the highest twelve-month total ever in a
single German city. This figure represents a year-on-year increase of 94 %,
and lifted Berlin to top of the city rankings, pushing Frankfurt and Munich
down to second and third spots. Germany's capital also occupied first place
in the rankings for retail space take-up and retail property transaction
volumes. "Berlin's office property market continues to exceed all
expectations and confirms that the city has well and truly established
itself in the top league of European investment locations", said Karoff.
Office property is the fastest growing category in Berlin's investment
market
Office property was the dominant asset class in Berlin's commercial
property investment market in 2015, accounting for 54 % of all property
transactions. This represents an increase of 14 percentage points over the
previous year. Retail was the second most popular property category,
increasing its share of the German capital's investment market by 4
percentage points and climbing to 25 %. The hotel property segment
attracted around 8 % of overall investment. "Start-ups are one of the major
drivers of Berlin's office property market. No other German city is
attracting as many company founders as Berlin", explained Karoff.
Retail property: Berlin is number one for take-up and transaction volumes
Berlin's retail property sector was the clear winner in Germany last year.
With 42,000 sqm of retail space take-up and a transaction volume of EUR 2.1
bn (+135 % in comparison with 2014), Berlin left the other German cities in
its wake. Demand for large retail spaces in the Spree metropolis also
surged. The top rent for retail spaces over 150 sqm rose by 19 % to EUR
250/sqm.
The most positive developments among eastern Germany's five biggest cities
were reported in Leipzig and Rostock. Rostock's market for retail property
made year-on-year gains across all size and location categories. Rents for
smaller retail spaces in Rostock climbed to EUR 90/sqm: an increase of 6 %
in comparison with 2014's figure. Although the net initial yield in Rostock
is also trending down, the 8 % achievable in peripheral locations and the
6.7 % in central locations are still the best yields in this segment in
eastern Germany. Leipzig reported the highest peak rents, averaging EUR
140/sqm for retail spaces up to 100 sqm, followed by Dresden at EUR 110/
sqm. Leipzig's average rent of EUR 90/sqm for retail space in central
locations was enough to secure first place in eastern Germany. The net
initial yield in Leipzig's retail property sector ranged from around 5 % in
central locations to 7.3 % in central fringe locations. The retail property
transaction volume in Leipzig registered a threefold year-on-year increase
in 2015, rising to EUR 565 m.
Eastern Germany registers another significant jump in tourist numbers
Eastern Germany's regional centres, Dresden, Leipzig, Rostock, Erfurt and
Potsdam, have become tourism magnets. Taken together, the five cities
analysed with Berlin for this year's study, have registered a 21 % jump in
overnight stays in the last five years. Around 2.2 m foreign tourists spent
their holidays in eastern Germany in 2015 (excluding Berlin). An increasing
number of domestic tourists also chose to enjoy their holidays in Germany's
eastern regions in 2015 compared with 2014. The number of domestic tourists
rose by 2.1 % to approx. 24.1 m. Berlin enjoyed yet another record-setting
year. The city reported 30 m overnight stays, an increase of 5.5 % over the
previous year. "In addition to Berlin, eastern Germany's tourist magnets
include Dresden, Leipzig, Erfurt and Potsdam. Their unique historical
landmarks and strong cultural offerings are major factors, as is the Baltic
Sea coastline for cities such as Rostock", explained Niclas Karoff.
Hoteliers in Potsdam and Erfurt saw the volume of overnight stays shoot up
the most in 2015. The figure for Potsdam rose by 6.7 % in comparison with
2014, and was up by 4.8 % in Erfurt.
Since 1993, TLG IMMOBILIEN AG has employed some 2,000 internal and external
datasets to track property market developments in eastern Germany's major
cities: Dresden, Leipzig, Rostock, Erfurt, Potsdam and Berlin. This market
report provides insights into economic and demographic trends, office and
retail rents, investment volumes and key performance indicators for the
region's office, retail and hotel property markets, along with details of
rates within the hotel sector.
The full report "Property Market in Berlin and Eastern Germany 2016" is
available for download at: www.tlg.eu > News & Publications > Publications.
Contact
<pre>
Christoph Wilhelm Sven Annutsch
Corporate Communications Investor Relations
Telephone: +49 30 2470 6355 Telephone: +49 30 2470 6089
E-Mail: christoph.wilhelm@tlg.de E-Mail: sven.annutsch@tlg.de
</pre>
About TLG IMMOBILIEN AG
TLG IMMOBILIEN AG is a stock exchange-listed leading commercial real estate
company focusing on Berlin and growth regions in Eastern Germany. For 25
years, TLG IMMOBILIEN AG is synonymous with real estate expertise in
Germany's East. TLG IMMOBILIEN AG generates stable rental income and
exhibits low vacancy rates, very good building stock and profits from its
local employees' excellent market knowledge. As an active portfolio
manager, TLG IMMOBILIEN AG is specialised in commercial properties for
office and retail use. TLG IMMOBILIEN AG focuses on managing a high-quality
portfolio of office properties in Berlin and other regional economic
centres, as well as a regionally diversified portfolio of retail properties
in highly frequented micro locations. The portfolio also includes seven
hotels in Berlin, Dresden and Rostock. TLG IMMOBILIEN AG's properties stand
out not only due to their excellent locations but also because of their
very long-term rental or lease agreements.
As at 31 March 2016, the value of the properties under IFRS totalled EUR
1,865 bn. As at the same reporting date, the EPRA Net Asset Value per share
amounted to EUR 17.64.
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14.07.2016 Dissemination of a Corporate News, transmitted by DGAP - a
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Language: English
Company: TLG IMMOBILIEN AG
Hausvogteiplatz 12
10117 Berlin
Germany
Phone: 030 - 2470 - 50
Fax: 030 - 2470 - 7337
E-mail: kontakt@tlg.de
Internet: www.tlg.de
ISIN: DE000A12B8Z4
WKN: A12B8Z
Indices: SDAX
Listed: Regulated Market in Frankfurt (Prime Standard); Regulated
Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover,
Stuttgart
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482199 14.07.2016
DGAP-News: TLG IMMOBILIEN AG: Eastern German office markets continue to offer attractive yield potential
| Source: EQS Group AG