Investment Locations Germany 2021 Office – Rents and Yields
After a year of the pandemic, the German office markets are proving to be largely resilient to the crisis, despite the continuing high level of uncertainty and the resulting decline in take up. Investment demand is ensuring stable returns, while the low supply of space in many locations is only leading to a marginal increase in vacancies. B and C cities have become more attractive overall. Nevertheless, the outlook for the economically lagging office sector remains murky and the strong rent and price increases of recent years are increasingly being replaced by consolidation measures at Break Options 2021/2022 in the leases.
Kiel
16.00 5.2 Rostock
14.30 4.5 Lübeck
12.50 5.2 Schwerin Wilhelmshaven 9.60 Hamburg 8.60 6.9 5.8 31.00 2.7
Bremen
13.20 4.5
39.50 2.6
17.00 Berlin 3.8
12.90 Hannover Potsdam 4.4 Osnabrück Braunschweig 15.50 12.50 Salzgitter 3.7 5.0 Magdeburg 15.00 16.00 3.8 7.80 5.1 Münster Bielefeld 5.9 12.50 5.0 16.00 4.1 Gütersloh Cottbus 9.30 Paderborn 5.9 9.50 8.60 14.00 6,0 10.00 6.3 Krefeld 4.8 5.2 15.00 Hamm 4.6 12.50 Bochum Dortmund 15.50 Halle/Saale 5.5 Duisburg 4.3 12.00 5.1 Essen Hagen 10.30 10.00 Leipzig Krefeld Ratingen 5.6 Dusseldorf 6.8 Kassel Mönchen- Wuppertal 16.00 gladbach Solingen 3.6 28.50 14.00 12.50 Dresden 3.0 4.8 Dusseldorf 10.00 Neuss 6.8 5.2 Leverkusen Weimar 15.00 Erfurt Cologne Jena 3.6 Ratingen 12.50 Siegen Gera Marburg Chemnitz 26.00 5.3 11.30 8.80 15.00 Aachen 12.00 5.0 6,0 13.00 3.2 7.50 4.8 Bonn 6.0 12.50 5.1 11.00 16.50 5.7 6.7 5.9 4.1 Neuss 21.50 3.7 11.50 4.6 Koblenz 45.00 2.4 16.00 14.50 12.50 3.7 4.3 10.00 5.3 Frankfurt/M. 6.0 11.50 Prime rents and initial yields: Wiesbaden Offenbach/M. 5.2 Schweinfurt Mainz Aschaffenburg Darmstadt Bamberg 14.50 12.20 14.99 Prime rent in €/sqm 3.8 14.00 5.1 Würzburg Trier 14.50 4.0 4.2 5.4 Prime initial yield in% (net) 17.00 12.20 10.50 11.50 4.0 5.5 Erlangen 5.7 5.5 Fürth Mannheim Kaiserslautern Nuremberg Ludwigshafen Heidelberg 12.50 4.7 16.50 6-month trend: rising 10.80 12.50 16.80 3.6 Saarbrücken 5.2 5.5 3.6 stable Heilbronn Regensburg falling 13.50 Karlsruhe 4.9 14.50 14.40 14.50 4.6 4.2 Prime rent: 4.0 Stuttgart Ingolstadt Definition according to gif e. V.: The prime rent 25.50 2.9 15.00 represents the median of the uppermost price 3.8 segment, with a market share of 3 % of the total Ulm Augsburg letting take-up (excluding owner-occupiers), 16.00 during the last 12 months. 4.3 Munich
40.00 Freiburg 2.6 16.00 16.30 5.2 3.5 Prime yield: Konstanz Net Initial Yield is defined as the ratio of net rent income and purchasing price (including additional costs). 2021 Ø Prime rent 2020/2021 Ø Prime yield 2020/2021 * ∆ ∆ A locations €33.64/sqm 1.05% 2.83% -5 bp 4.01% B locations €15.87/sqm -0.94% -65 bp As of 1st quarter 2021 C locations €14.16/sqm 0.43% 4.47% -111 bp Contact: [email protected] D locations €11.40/sqm 0.44% 5.57% -63 bp Source: Catella Research 2021 * Due to changes in the methodology / data collection, a direct comparison with the previous year is not possible. Performance profile* office markets 2021 15
* Changeover to TR display due to increasingly synchronous development of returns 14
13 23 12
11 Wilhelmshaven
21 10 Gera Gütersloh Hagen Berlin 9 Salzgitter Kaiserslautern
Total Return (2010-2020) 8 19 Leipzig 7 2.50 2.70 2.90 3.10 3.30 3.50 3.70 3.90 Dresden Ratio (Cash Flow Return / Capital Growth Return) 2010-2020 17 Fürth Chemnitz 2,50 Freiburg (Breisgau) Potsdam Hannover Regensburg Aschaffenburg Frankfurt (Main) Osnabrück 15 Munich Heidelberg Wuppertal Jena Solingen Aachen Erlangen Braunschweig Stuttgart Kassel Koblenz
Total Return (2010-2020) Würzburg Münster Rostock Bielefeld Ludwigshafen Hamburg Mainz 13 Wiesbaden Schwerin Nuremberg Cottbus Augsburg Bamberg Trier Dusseldorf Karlsruhe Ingolstadt Erfurt Weimar Magdeburg Halle (Saale) Cologne Bonn Mönchengladbach Mannheim Bochum Leverkusen 11 Saarbrücken Schweinfurt Neuss Lübeck Siegen Essen Kiel Marburg Darmstadt Paderborn Heilbronn Ulm Dortmund Duisburg Offenbach (Main) Konstanz 9 Bremen Krefeld Ratingen
7 0.00 0.50 1.00 1.50 2.00 2.50
Ratio (Cash Flow Return / Capital Growth Return) 2010-2020
Expected total return 2021 to 2024 Office markets were classified according to their size (existing stock). Total Return is calculated as the sum of income yield** (cash flow return) and 9% 8.56% 8% capital growth return. The 10-year ratio of the two components is shown on the 8.30% 7% X-axis. At the X-axis value of 1.0, the return on actual rental income equals the 6% change in capital value. If the ratio is <1 (example Berlin), a larger part of the TR 5% Category A = > 5 million sqm 4.66% B = ≥ 2 million to 5 million sqm is due to changed capital values (yield compression). Conversely, if the ratio is 4% 3.64% 3.78% >1, a larger part of the total return is due to rental income surpluses of the property. 3% C = 2% 2.19% < 2 million sqm (further differentiation 1.26% D = } 1% C & D according to regional importance) 0.74% 0% 2021 2022 2023 2024 ** less non-apportionable operating costs A B C D
Source: Catella Research 2021, As of 1st quarter 2021