September 2021

Research Germany Residential market in Germany Rental growth is weakening, especially in the top rental price segment, while purchase prices continue to climb Residential market

Number of building permits granted in 2020 sees significant increase

After falling by 24% in 2019, the number of completed 60 new dwellings annually (around +8,850 per annum). In dwellings rose again by just over 16% to 8,239 in 2020. addition to pent-up demand for housing and additional This figure is still well below the previous record set in demand fuelled by structural demographic changes, the 2018 (+9,351 new dwellings), but with around 56 new growing population also remains a persistent driver of dwellings per 10,000 inhabitants, Munich has the third housing demand. Due to the mobility restrictions caused highest relative completion rate among the Big 8 cities by the pandemic and their significant impact on migration after Hamburg and Frankfurt. Demand in Munich is also behaviour, net migration was slightly negative in 2020 relatively high in a citywide comparison, at an estimated (-3,462 people). However, as a result of strong natural growth, Munich’s population could grow by around 0.13% Housing supply and demand for new buildings to 1.562 million in 2020. With 78 approved dwellings per 10,000 inhabitants (+11,528 approved dwellings in 2020), 16 1,000 residential units the number of building permits granted also recently 14 12 increased by around 5.5% compared to the previous year 10 and therefore continues to exceed the estimated demand. 8 Due to the increased construction surplus, a high number 6 of completions can therefore also be expected for 2021. 4 Nevertheless, the current level is still not sufficient to 2 achieve the city‘s declared goal of building an additional 0 120,000 dwellings by 2030. There is no alternative to a further expansion of large-scale new housing construction 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 in the periphery given the decreasing availability of Residential permissions total Residential completions total building land and the dwindling potential for City of Munich‘s target for residential completions redensification. JLL Needs Analysis*

* Additional annual need for housing units (includes also apartments in detached houses) without consideration of current construction deficits. Source: destatis, JLL (Status: July 2021)

Selected developments under constructions

Name Location Residential units Completion date div. Projekte Quartier Paul-Gerhardt-Allee -Obermenzing approx. > 4,000 ab 2021 Stadtquartier DiamaltPark Allach-Untermenzing approx. 720 2022 Stadtteilentwicklung Prinz-Eugen-Kaserne approx. 640 2022 Stadtquartier ehemaliger Viehhof Sendling approx. 600 2022 Stadtquartier Lipperheidestraße Pasing-Obermenzing approx. 340 2021

Source: Thomas Daily, JLL (Status: July 2021)

Cover page 2 Contacts Rental market Munich

Median rent loses significant momentum, most affordable rental price segment catches up strongly

The growth of asking rents in Munich slowed down Rental price bands for listed apartments Munich significantly in the first half of 2021, with a recent rise in the median rent of just 0.7% to €20.70/sqm/month, compared Asking rent in €/sqm/month to +5.7% in the same period last year. Average growth over 34 Upper 10 % the past five years was +5.2% per annum. A decline has 28.90 28.85 been observed in the top rental price segment in particular, 29 Upper 25 % with asking rents for the most expensive 10% of all rental 24 Median properties on offer falling by 4.6% on average to €28.90/ Lower 25 % sqm/month. This compares with rental growth of 9.6% in 19 the same period of the previous year and a five-year 17.60 Lower 10 % average of around +3.4% per annum. By contrast, rents in 14 15.55 the most affordable rental price segment (lowest 10% of 9 rental properties on offer) rose by 7.6% in the past six months, significantly above the average of the past five 4 years (+3.6% per annum), to their current level of €15.55/ Munich Munich total new built sqm/month. Similar to the top rental price segment, there was also a decline in asking rents in the new-build Source: JLL, VALUE Marktdaten (Status: July 2021) segment, by 2.1% to €21.00/sqm/month. The district with the highest asking rent is currently City Centre South at Development of rental prices €23.50/sqm/month, while the lowest median rent is observed in South East (€19.40/sqm/month). 35 Asking rent in €/sqm/month

Distribution of rental listings by price group 30

Price group in €/sqm/month 25 > 31 ≤ 31 ≤ 29 ≤ 27 20 ≤ 25 ≤ 23 ≤ 21 15 ≤ 19 ≤ 17 ≤ 15 10 ≤ 13 ≤ 11 ≤ 9 5 ≤ 7 ≤ 5 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H1 2021 -200 0 200 400 600 800 1,000 H2 2020 Median rent Half-year difference in the number of listings Prime rent (90% percentile of all rental listings) H1 2021 Median rent (existing properties)

Source: JLL, VALUE Marktdaten (Status: July 2021) Source: JLL. VALUE Marktdaten, IDN immodaten (Status: July 2021)

CoverStartseite page 3 KontakteContacts Asking rental prices Munich

Unterschleißheim Dachau Oberschleißheim Garching b. München

Karlsfeld B 13 Ismaning

Feldmoching- Hasenbergl Olching

B 11 - A 99 Allach- Untermenzing Freimann Gröbenzell Milbertshofen- Puchheim Am Hart A 9

A 8

Aubing- Schwabing- Lochhausen- Pasing- West Langwied Obermenzing Neuhausen- Bogenhausen B 2a Nymphenburg

B 2 - A 94 Schwanthalerhöhe Lehel Ludwigsvorstadt- Trudering- Germering Riem A 96 Isarvorstadt Au- Gräfelfing Sendling- B 304 Westpark Sendling K 12 Haar Planegg B 2r Ramersdorf- Untergiesing- Perlach Thalkirchen- Harlaching B 995 Obersendling- Forstenried- Fürstenried- Solln Neubiberg

Gauting Unterhaching Ottobrunn

0 5 10 km Grünwald Taufkirchen OpenStreetMap-contributors

Rent Level Average in €/sqm/month on postcode level

< 18.00 22.00 < 24.00 Water Area Industrial or Traffic Area 18.00 < 20.00 >= 24.00 Green Area Other Area

20.00 < 22.00

Source:Source: JJLL,LL, e VALUEmpirica Marktdaten systeme

Cover page 4 Contacts Market for condominium apartments Munich

Range of purchase prices narrows due to sharp increase at the lower end

Asking prices for condominium apartments in Munich Purchase price bands for condominiums Munich increased year-on-year by 9.7% to €9,200/sqm in the first half of 2021, similar to the previous year and almost two Purchase price in €/sqm percentage points higher than the five-year average. By 15,000 13,430 Upper 10 % contrast, the 4.5% increase in the top purchase price 12,880 segment (most expensive 10% of the properties being 13,000 Upper 25 % offered for sale: €12,880/sqm) was lower than in the 11,000 Median previous year (+10.7%) and below the five-year average 9,000 Lower 25 % (+8.7% per annum). The price rise at the lower end of the 8,260 price range (lowest 10% of the properties being offered for 7,000 6,860 Lower 10 % sale) of +13.2% over the past year was significantly stronger 5,000 than in previous years (five-year average: +8.7 per annum). The new-build segment recently showed a comparatively 3,000 moderate increase of +5.4%. At €9,970/sqm on average, 1,000 growth has declined slightly compared to the previous year Munich Munich total new built (+7.0%) and the five-year average (+7.8% per annum). At district level, City Centre South showed the highest median Source: JLL, VALUE Marktdaten (Status: July 2021) purchase price at €12,020/sqm, followed by City Centre North. The tail end is the North district, with an average of €8,220/sqm.

Distribution of condo listings by price group Development of purchase prices for condominiums

Purchase price in €/sqm/month 14,000 Purchase price in €/sqm

> 8,500 12,000 ≤ 8,500 ≤ 8,000 10,000 ≤ 7,500 ≤ 7,000 8,000 ≤ 6,500 ≤ 6,000 6,000 ≤ 5,500 4,000 ≤ 5,000 ≤ 4,500 2,000 ≤ 4,000 ≤ 3,500 0 ≤ 3,000 ≤ 2,500 ≤ 2,000 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H1 2021 H2 2020 -500 0 500 1,000 1,500 Median price Half-year difference in number of listings Prime price (90 % percentile of all condo listings) H1 2021 Median prices (existing properties)

Source: JLL, VALUE Marktdaten (Status: July 2021) Source: JLL. VALUE Marktdaten, IDN immodaten (Status: July 2021)

Cover page 5 Contacts Asking condominium prices Munich

Unterschleißheim Dachau Oberschleißheim Garching b. München

Karlsfeld B 13 Ismaning

Feldmoching- Hasenbergl Olching

B 11 Allach- Schwabing- Untermenzing Freimann Gröbenzell A 99 Milbertshofen- Puchheim Am Hart Moosach A 9

A 8

Aubing- Schwabing- Lochhausen- Pasing- West Langwied Obermenzing Neuhausen- Bogenhausen B 2a Nymphenburg Maxvorstadt

B 2 Altstadt- A 94 Laim Schwanthalerhöhe Lehel Ludwigsvorstadt- Trudering- Germering Berg am Laim Riem A 96 Isarvorstadt Au- Gräfelfing Sendling- Haidhausen Westpark Sendling K 12 Hadern B 304 Obergiesing Haar Planegg B 2r Ramersdorf- Untergiesing- Perlach B 995 Thalkirchen- Harlaching Obersendling- Forstenried- Fürstenried- Solln Neubiberg

Gauting Unterhaching Ottobrunn

0 5 10 km Grünwald Taufkirchen OpenStreetMap-contributors

Condominium price level Average in €/sqm on postcode level

< 7,000 9,000 < 10,000 Water Area Industrial or Traffic Area 7,000 < 8,000 >= 10,000 Green Area Other Area

8,000 < 9,000

Source:Source: JJLL,LL, e VALUEmpirica Marktdaten systeme

Cover page 6 Contacts Contacts

Michael Bender Helen Lindner Ralf Kemper Head of Residential Germany Head of Residential Development Head of Valuation & Transaction Frankfurt Germany, Berlin Advisory Germany, Frankfurt +49 (0) 69 2003 2333 +49 (0) 30 203980 703 +49 (0) 69 2003 1092 [email protected] [email protected] [email protected]

Helge Scheunemann Roman Heidrich Sebastian Grimm Head of Research Germany Lead Director Valuation & Lead Director Valuation & Hamburg Transaction Advisory, Berlin Transaction Advisory, Frankfurt +49 (0) 40 350011 225 +49 (0) 30 203980 106 +49 (0) 69 2003 1196 [email protected] [email protected] [email protected]

Authors

Dr. Sören Gröbel Christian Giesemann Director Research, Berlin Lead Director Research, Berlin +49 (0) 30 203980 151 +49 (0) 30 203980 201 [email protected] [email protected]

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