September 2021

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

Completion level continued to decline in 2020

The completion level in Stuttgart, Baden-Württemberg’s has decreased. This is a clear sign that building land is largest city, economic hub and university city, has simply scarce in the Swabian capital. The costs for new- remained at a relatively low level for years. With a decline build construction are therefore rising visibly and the of around 7% compared to the previous year, the number number of building permits granted fell by 24% to around of completions in 2020 (+1,376) not only fell for the third 1,570 new dwellings in 2020. This has caused a recent successive year, but fell to its lowest level in over ten years. reduction in the construction surplus with no significant Despite a doubling of building land prices for land ready increase in completion figures expected in the medium for construction (from around €757/sqm to €1,544/sqm term. Although demand for new construction of around between 2012 and 2019), the volume of building land sold 30 new dwellings per 10,000 inhabitants is relatively low in a comparison of the Big 8 cities, Stuttgart has one of Housing supply and demand for new buildings the highest discrepancies between the demand and supply of new homes (22 new dwellings per 10,000 4 1,000 residential units inhabitants per annum). The slight population decline in 2020 will not change this. While Stuttgart’s population 3 grew dynamically between 2010 and 2018, it stagnated in

2 2019 and then declined for the first time in 2020. The population of 608,000 was around 7,000 inhabitants 1 (-1.1%) below the previous year‘s figure. While the natural population balance remained positive, negative net 0 migration was recorded in 2020 due to the recent stagnation in inward migration figures, which led to the 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 population decline. The extent of this development is Residential permissions total Residential completions total therefore due mainly to the short-term crisis situation City of Stuttgart‘s target for residential completions and the associated reduced mobility. 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 Wohnquartier Giebel Giebel approx. 335 2023 City Prag – Wohnen im Theaterviertel Feuerbach approx. 250 2022 Wohnen am Höhenpark Killesberg Feuerbach approx. 200 2023 div. Projekte Hansa-Areal Möhringen approx. 340 ab 2021 Wohnquartier am Vogelsang West approx. 150 2022

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

Cover page 2 Contacts Rental market Stuttgart

New-build segment records lower rental reductions than top rental price segment

In the first half of 2021, median asking rents in Stuttgart Rental price bands for listed apartments Stuttgart fell by 1.6% to €15.15/sqm/month compared with the corresponding period in 2020. Over the same period Asking rent in €/sqm/month between 2018 and 2019, rents had increased by 5.8%; the 29 Upper 10 % five-year average is +5.2% per annum. This decline was 24.05 particularly noticeable in the top rental price segment 24 22.20 Upper 25 % (most expensive 10% of rental properties on offer), where Median asking rents fell significantly, by 11.2%. This segment is 19 Lower 25 % currently showing high volatility, as growth here in the same period last year was still +16.0%. In the affordable 14 14.25 Lower 10 % segment (lowest 10% of rental properties on offer) 11.45 however, there was significant growth of 8.5% to €11.45/ 9 sqm/month, which accelerated considerably compared to the previous year (+1.0%) and the five-year average (+3.6% 4 Stuttgart Stuttgart per annum). In the new-build segment (€17.95/sqm/ total new built month), there was only a slight decline of 0.8% compared to the previous year; the average growth over the last five Source: JLL, VALUE Marktdaten (Status: July 2021) years was +5.7% per annum. At district level, the highest rents are currently being asked in the city centre at €16.35/ sqm/month, and the lowest in the East district at €13.85/ sqm/month.

Distribution of rental listings by price group Development of rental prices

Price group in €/sqm/month 25 Asking rent in €/sqm/month > 31 ≤ 31 ≤ 29 20 ≤ 27 ≤ 25 ≤ 23 15 ≤ 21 ≤ 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 H2 2020 -100 0 100 200 300 400 500 600 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 Stuttgart

Ludwigsburg Remseck am Neckar

Kornwestheim

Stammheim Mühlhausen Korb Korntal-Münchingen Waiblingen Ditzingen Münster

Fellbach Weilimdorf B 10/27 B 295 Feuerbach Kernen im Remstal

Gerlingen Stuttgart- B 10 Leonberg Nord

Untertürkheim Mitte Stuttgart- B 27a Ost Obertürkheim Stuttgart- Wangen West Stuttgart- Süd B 14 Hedelfingen

Degerloch Sillenbuch Vaihingen Esslingen am Neckar A 831 B 27 Möhringen Ostfildern Birkach

A 8

Sindelfingen

Leinfelden-Echterdingen Flughafen Stuttgart Denkendorf Bö0blingen 5 10 km Neuhausen auf den FildOeprennStreetMap-contributors

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

13.00 < 15.00 16.00 < 17.00 Water Area Industrial or Traffic Area 15.00 < 16.00 >= 17.00 Green Area Other Area

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

Cover page 4 Contacts Market for condominium apartments Stuttgart

Purchase prices for condominium apartments continue their relentless rise, especially in the most affordable purchase price segment

In the first half of 2021, the median asking price in Stuttgart Purchase price bands for condominiums Stuttgart rose by 8.1% year-on-year to its current level of €5,190/ sqm. This growth rate is roughly unchanged since the Purchase price in €/sqm previous year and matches the average of the past five 11,000 10,240 Upper 10 % years. Growth was even stronger in the top purchase price 10,000 segment (most expensive 10% of the properties being 9,000 8,150 Upper 25 % offered for sale). There, momentum has once again 8,000 Median increased significantly with a rise of 13.4% compared to 7,000 Lower 25 % +5.7% in the previous year. Over the five-year period, 6,000 6,400 growth averaged +4.4% per annum, with a current average 5,000 Lower 10 % asking price in this segment of around €8,150/sqm, but top 4,000 3,880 products can also command prices in excess of this. The 3,000 most affordable purchase price segment (lowest 10% of 2,000 the properties being offered for sale) saw the largest 1,000 Stuttgart Stuttgart increase, similar to the previous year, of +14.0% to €3,420/ total new built sqm. While purchase prices in the new-build segment increased by 18.2% in the first half of 2020, momentum in Source: JLL, VALUE Marktdaten (Status: July 2021) this segment has slowed down slightly recently, but a significant rise in purchase prices of 6.5% to €8,150/sqm was still achieved in the first half of 2021. Median purchase prices in the city centre are around €5,790/sqm, followed by the South and East districts.

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

Purchase price in €/sqm/month 9,000 Purchase price in €/sqm > 8,500 8,000 ≤ 8,500 7,000 ≤ 8,000 ≤ 7,500 6,000 ≤ 7,000 5,000 ≤ 6,500 ≤ 6,000 4,000 ≤ 5,500 3,000 ≤ 5,000 2,000 ≤ 4,500 ≤ 4,000 1,000 ≤ 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 -50 0 50 100 150 200 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 Stuttgart

Ludwigsburg Remseck am Neckar

Kornwestheim

Stammheim Mühlhausen Korb Korntal-Münchingen Zuffenhausen Waiblingen Ditzingen Münster

B 10/27 Fellbach Weilimdorf B 295 Feuerbach Bad Cannstatt Kernen im Remstal B 10 Gerlingen Stuttgart- Leonberg Nord

Untertürkheim Botnang Mitte Stuttgart- B 27a Ost Obertürkheim Stuttgart- Wangen West B 27 Stuttgart- Süd Hedelfingen B 14

Degerloch Sillenbuch Vaihingen

A 831 Esslingen am Neckar

Möhringen Ostfildern A 8 Birkach

Sindelfingen Plieningen

Leinfelden-Echterdingen Flughafen Stuttgart Denkendorf Bö0blingen 5 10 km Neuhausen auf den FildOeprennStreetMap-contributors

Condominium price level Average in €/sqm on postcode level

< 4,500 5,500 < 6,000 Water Area Industrial or Traffic Area 4,500 < 5,500 >= 6,000 Green Area Other Area

5,000 < 5,500

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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