Market Survey Commercial | Investment

Market survey Commercial | Investment

2020/Q1-4 Hamburg

Hamburg | Sylt | Berlin Commercial | Investment Hamburg 2020/Q1-4

Key Facts Investment

€5.4bn | +24% year-on-year change

38% | +1 pp year-on-year change

Office: 53%| -22 pp year-on-year change

Office: 2.8%| ±0.0 pp year-on-year change Commercial: 2.7%| ±0.0 pp year-on-year change Logistics: 4.0%| -0.5 pp year-on-year change pp = percentage point Transaction volume Share of foreign investors Strongest asset class (Net) Prime yield

“The uncertainty caused in 2020 by the pandemic did not more than €220m. For a similar price Signa Holding became the curb investors’ enthusiasm for real estate in Hamburg. De- new owner of the HCOB headquarters including the shopping spite the coronavirus outbreak the city recorded the sec- mall “Perle”. Hamburg Commercial Bank (HCOB), whose con- ond-highest volume of transactions ever.” sultants included Grossmann & Berger, sold the property as part Sandra Ludwig | Managing director of a sale and leaseback arrangement and will continue to use the building for a transitional period of four years. At the end of this time the bank will then move into 11,000 m² of space in Transaction volume the projected new “Elbtower” development. Including these two Second-highest result - despite coronavirus sales, five properties were traded in 2020 for prices in excess of €200m. Indeed, two sales during the first half of the year, At the close of the 4th quarter of 2020 it was clear that the that of the “Gruner + Jahr publishing house” and the “Johann promise of the first three quarters had been fulfilled. The market Kontor” commanded prices of more than €300m each. for investment in commercial property in Hamburg proved immune to the ubiquitous coronavirus crisis and posted around By the end of 2020 over half of the transaction volume, about 110 transactions with a trading volume of some €5.37bn for the best result on record bar the year 2018 (€5.95bn). This result Transaction volume was 24 % higher than the prior year’s figure (2019: € 4.34bn). 2017-2021 | in € bn There was a strong recovery in the second half of the year following the hiatus of the spring lockdown which compensated 10-year average for the weak 2nd quarter. In the 4th quarter alone, properties (2011–2020): ca. €3.8bn valued at €1.7bn were traded. Forecast

For a majority of investors the increasing unpredictability of the pandemic’s impact on the economy meant that their over- riding principle in 2020 was to minimize risk. Interest thus fo- cussed on core real estate in central locations. Apart from the big-ticket trades in the first three quarters, one example of this approach is the 4th-quarter sale of “EDGE ElbSide”, sold by EDGE Technologies in the context of a forward deal. This office 3.6 6.0 4.3 5.4 4.8 block, almost all of which has been let to Vattenfall, a utility 2017 2018 2019 2020 2021 company, was bought by insurance company HanseMerkur for Source: Grossmann & Berger GmbH www.grossmann-berger.de | Page 2 Commercial | Investment Hamburg 2020/Q1-4

Selected transactions 2020/Q1-4

Johann Kontor | Klosterwall | City Mixed-use | Investor: Captiva | Purchase price: over €300m

Gruner + Jahr publishing house | Am Baumwall 11 | City Office | Investor: Tishman Speyer | Purchase price: over €300m

Karstadt | Mönckebergstrasse 16 | City Retail | Investor: Signa | Purchase price: ca. €260m

EDGE ElbSide | Amerigo-Vespucci-Platz | HafenCity Office | Investor: HanseMerkur | Purchase price: over €220m

Transaction volume €2.8bn, had been generated by 15 trades priced at more than 2020/Q1-4 | in € millions | by price €100m each (2019: €1.4bn and 10 sales). A fifth of the total trading volume comprised properties selling for between €51m Transaction volume and €100m. One of the 15 trades in this segment was the office No. of transactions property named “Herrlichkeit” (Rödingsmarkt 16, City) that changed hands for some €60m in the last quarter of the year. 15 % of the volume traded was attributable to 21 transactions for properties costing between €26m and €50m. The sale of the medical centre “Struenseehaus” (Mörkenstrasse 47, Altona) to Captiva for a specialist fund belongs in this sector. Although both the €11m to €25m price category and the segment priced at €10m or less posted 30 trades each, the higher-priced sector 30 30 21 15 15 accounted for a share of 10 % of the transaction volume, the 3% lower-priced one for a mere 3 %. 10% 15% 20% 52% 143 562 800 1,058 2,807 In the coronavirus year of 2020, office real estate remained in- up to up to up to up to over vestors’ first choice. Even though the trading volume was 12 % 10 25 50 100 100 lower than the prior year, the 43 office properties traded en- Source: Grossmann & Berger GmbH sured that this asset class remained the front runner at 53 % of total turnover. The biggest office property trade was the 2nd- quarter sale of the “Gruner + Jahr publishing house” for more than €300m. The “Johann Kontor” was the top transaction of Transaction volume the year, propelling mixed use assets into second place in the 2020/Q1-4 | by asset class ranking. Mixed use properties accounted for 16 % of the trading volume, generating some €858m in eight transactions. Posting ten transactions, the retail asset sector followed close behind 8% Other with a share of 15 % of the total traded or around €819m. This Hotel 2% surprising third place for retail shop properties, an asset class Undeveloped sites 6% badly hit by the pandemic, was largely due to the take-over of shares in the retail shop portfolio “Signa Prime Selection”, the sale of the two “Karstadt” properties and the change of own-

Retail 15% 53% Office ership of the “Matrix” portfolio. Aroundtown sold the “Metro” markets, three of which are in Hamburg (Papenreye 33, by the Airport, Bargkoppelweg 50, Hamburg East and Grossmoor- bogen 1, Harburg) to P3, the European logistics platform held by the Singaporean sovereign wealth fund GIC. Most investors, 16% Mixed-Use however, gave hotels a wide berth (€130m, 2 %).

City sub-market recorded trades totalling €2.29bn, which trans- lates into 43 % of the market and the top slot in the ranking of Source: Grossmann & Berger GmbH www.grossmann-berger.de | Page 3 Commercial | Investment Hamburg 2020/Q1-4

sub-markets. Following in second place, Eppendorf sub-market accounted for 8 % of investments and trades of €442m. This result stemmed from sales of properties such as the “Area 5.0” Prime yields office complex (Deelbögenkamp4), the “Quartier am Zeughaus” 2016-2020/Q4 | (Net) initial yield | in % (Christoph-Probst-Weg 26-31) and the “Eppendorfer Zentrum” (Eppendorfer Landstrasse 77). HafenCity placed joint third Industrial/logistics with the sub-market Hamburg East (€428m, 8 % and €424m, 4.90 8 % respectively). 4.60 4.50 4.25 4.00 Office Yields 3.30 Risk aversion squeezes yields 2.90 2.80 2.80 2.80 3.30 The coronavirus crisis has made investors risk averse, and this is 2.90 Commercial buildings 2.70 2.70 2.70 reflected in the prime yields. Logistics firms were perceived to be beneficiaries of the pandemic and yields on logistics prop- 2016/Q4 2017/Q4 2018/Q4 2019/Q4 2020/Q4 erties fell by 0.25 percentage points year on year to 4.0 %. In- creased investor interest in this asset will without fail lead to Source: Grossmann & Berger GmbH further contraction of the prime yield, as has already been ob- served in other top locations. The yield on office properties remained unchanged from the prior year at 2.8 % but is again Transaction volume under pressure due to huge demand for prime properties. Yields 2020/Q1-4 | by investor groups on commercial buildings have also held steady year on year at 2.7 %.

Investors and vendors Project 22% developers Project developers seize their chance Other 30% The most active players on both sides of the market were project developers. They seized their exit opportunities for de- Listed velopments (34 % of sellers) or acquired real estate for new pro- property investment jects (22 % of buyers). Listed property investment AGs/REITs 17% companies-AGs Specialist /REITs and open-ended mutual property investment funds were also funds 9% very active, following in second and third place both as buyers Private equity Open-end retail and sellers. funds/ 12% funds (real estate) opportunity funds 10% Although at times the crisis imposed travel restrictions, interna- tional investors traded just as briskly on the Hamburg market Source: Grossmann & Berger GmbH as in 2019, accounting for 38 % of the total volume. This result owed much to the Austrian investor Signa, the firm that pur- chased the HCOB headquarters and the Karstadt properties. Transaction volume 2020/Q1-4 | by vendor groups Outlook Another record year is unlikely

Demand for properties in Hamburg will remain high in 2021 in view of the lack of alternative investment opportunities and Other 25% persistently low interest rates. The pandemic will not alter that, 34% Project developers even though its economic effects will continue to be felt until beyond the end of the year. In view of the current range of prop- Private equity erties on the market, 2021 is not expected to match the record funds/ opportunity result seen in 2020. funds 7%

Corporates/ 8% owner-occupiers Open-end retail funds 14% (real estate) Listed property 13% investment companies-AGs/ REITs

Source: Grossmann & Berger GmbH www.grossmann-berger.de | Page 4 Commercial | Investment Hamburg 2020/Q1-4

Skilled consultancy Services und contacts From left to right: Tatjana Merger | Anna Martens

What can we do for you? Anna Martens | Diplom-Ingenieur Master of Urban Planning An analysis of the property markets is an important part of the Phone: +49 (0)40 / 350 80 2 - 615 wide-ranging consultancy services offered by Grossmann & Mail: [email protected] Berger. We would be pleased to be of assistance in your deci- sion-making process and can draft an offer that is tailored to Tatjana Merger | Master of Science Urban Planning your specific requirements. Phone: +49 (0)40 / 350 80 2 - 641 Mail: [email protected]

Glossary Definitions, investment market

Transaction volume: The transaction volume is the sum of the purchase prices of Photo credits: Cover: “Bleichenhof“, Bleichenbrücke 9-11 © Jenner Egberts Fotografie, Page 2: Blohmstrasse 23 all commercial property sold in Hamburg during the period under review. The date © Jenner Egberts Fotografie, Page 3: “HCOB headquarters/Perle”, Gerhart-Hauptmann-Platz of signing determines when a transaction is included in the statistics. Buy to let 50 © Jenner Egberts Fotografie investments in residential properties are not included in the transaction volume. We draw your attention to the fact that all statements made here are non-binding. Most of Asset class: A property is allocated to an asset class according to the predominant the information is based on third-party reports. The sole intention of this market survey is to provide general infomation for our clients. way in which space is used (at least 75%) when the contract is signed. Individual properties and portfolio transactions: An individual property trans- Grossmann & Berger GmbH | Bleichenbrücke 9 (Stadthöfe) | 20354 Hamburg Phone: +49 (0)40 / 350 80 2 - 0 | Fax: +49 (0)40 / 350 80 2 - 36 action means the purchase of a building used for commercial purposes or of a [email protected] | www.grossmann-berger.de piece of land for development. Portfolio transactions involve the purchase of at Managing directors authorised to represent the company: least two separate properties in different locations. Sandra Ludwig, Holger Michaelis, Andreas Rehberg (Speaker), Lars Seidel Prime yield: The prime yield is the initial return attainable on a property that has Chairman of the supervisory board: Frank Brockmann Register court: Hamburg • Register no.: B 25866 been let on normal market terms (tenants with good credit ratings), has top quality structure and fit-out and stands in one of the very best locations. It is stated as the net initial yield in per cent, i.e. the ratio between the annual rental income less non- apportionable ancillary costs and the gross purchase price (net purchase price plus land acquisition tax, notary’s fees and agency commission.)