Housing Market Report Eastern Germany 2018
Total Page:16
File Type:pdf, Size:1020Kb
HOUSING MARKET REPORT EASTERN GERMANY 2018 Pressekonferenz 18. Oktober 2017 The entire study is available online at: https://www.tag-ag.com/en/service/downloads/housingmarketreport/ Speakers 22 Claudia Hoyer Martin Thiel Karsten Jungk Chief Operating Officer Chief Financial Officer Managing Director and Partner TAG Immobilien AG TAG Immobilien AG Wüest Partner Deutschland TAG Immobilien AG | October 2018 Table of Contents 33 I. Intention of the study 4 II. Key question: How viable are Eastern German cities for the future? 5 Economics 6 Demographics 7 Housing market 8 Housing costs 9 Risk / reward profiles 10 III. The Rostock Region 11 IV. The Berlin/Brandenburg Region 14 V. The Leipzig Region 17 VI. The Dresden Region 20 VII. The Erfurt Region 23 VIII. The Chemnitz Region 26 TAG Immobilien AG | October 2018 I. Intention of the study 44 To map the future viability of 27 large and medium-sized cities in Eastern Germany . Continuously monitor market and housing industry indicators . Provide current market data on rents, property prices, vacancies and yields . Raise transparency on smaller real estate markets . Promote the turnaround in Eastern Germany TAG Immobilien AG | October 2018 II. Key question: How viable are 55 Eastern German cities for the future? 1. Economics: Developments in employment, purchasing power, GDP and commuter traffic provide valuable information. 2. Demographics: Cities face the triple challenge of population growth, increasing numbers of households and evolving societal trends. 3. Housing market: Rental and property price dynamics must be considered alongside purchasing power and housing cost burdens. 4. Housing costs: The amount of housing costs determines the settlement of professionals and families. 5. Risk/reward profiles: For residential investors, opportunities for higher yields are the decisive factor where risks are calculable. TAG Immobilien AG | October 2018 II.1. Economics 66 The dynamic labour market is boosting productivity and incomes across the region as a whole. Regional unemployment rates and GDP in comparison with national average: Avg. Germany -1.2 8.3 Stralsund -8.1 9.0 . Employment has increased in Greifswald -7.0 13.4 almost all locations. Waren -5.8 14.9 Görlitz -5.4 13.0 Examples: Nauen, Berlin, Leipzig, Dessau-Roßlau -5,4 14.6 Greifswald, Dresden, Erfurt and Brandenburg a.d.H. -5.2 11.4 Leipzig -5.1 13.8 Strausberg registered growth of Eberswalde -5.0 19.3 >10% (2012-2017). Rostock -5.0 8.8 Strausberg -4.9 14.0 . Dresden, Chemnitz, Potsdam, Döbeln -4.5 3.3 Freiberg -4.5 3.3 Erfurt and Berlin have seen the Nauen -4.4 23.4 greatest increases in commuter Cottbus -4.2 17.0 trafic. Gera -3.9 20.4 Magdeburg -3.9 15.9 Chemnitz -3.9 13.2 . Purchasing power rose Berlin -3.9 6.1 significantly in all cities. Schwerin -3.7 16.0 Merseburg -3.6 7.1 Examples: Cottbus, Leipzig, Berlin, Eisenach -3.6 26.2 Merseburg, Weimar and Erfurt Dresden -3.5 16.8 registered growth of ≥ 20% (2011- Halle -3.4 13.3 Weimar -3.3 16.2 2018). Erfurt -2.9 17.5 Potsdam -2.5 16.9 Unemployment rate 2013-2017 in percentage points Jena -1.7 17.4 GDP 2011-2015 in % TAG Immobilien AG | October 2018 II.2. Demographics 77 Strong population growth over the last five years has had a very positive impact on the number of households and demand for housing. Growth in household numbers Schwerin 8.6% Rostock Nauen 5.1% . The number of households Greifswald 6.2% (+0.5%) in communities around the Potsdam 4.6% region’s major cities has Waren 4.4% increased significantly. Strausberg 4.6% Halle 6.4% . The strongest growth in the number of households was Berlin Merseburg 6.0% registered in Schwerin, (+3.1%) Leipzig, Halle and Görlitz 5.8% Magdeburg 4.8% Greifswald. Leipzig Freiberg 5.5% (+7.9%) Eisenach 3.8% Erfurt Dresden Chemnitz 2.8% (+4.3%) (+4.2%) Gera 3.7% Weimar 3.4% 2015/2016-2016/2017 in % TAG Immobilien AG | October 2018 II.3. Housing market 88 Strong population growth in communities around major cities is driving rental and property price growth. Rental and property price growth in selected Eastern German cities Rents Purchase prices (existing properties) . Year-on-year, asking rents Rostock 23.6% Nauen 41.6% have risen almost Berlin 14.8% Eberswalde 35.7% everywhere in the region. Brandenburg a.d.H. 9.2% Rostock 26.7% Nauen 9.1% Waren 18.6% . Rental price growth ranges Schwerin 7.3% Berlin 17.9% Strausberg 6.8% Merseburg 17.0% from 0.3% in Döbeln to Leipzig 6.7% Leipzig 15.4% 23.6% in Rostock. Cottbus 6.6% Gera 12.9% Waren 5.4% Erfurt 10.6% . Purchase prices for Erfurt 4.8% Weimar 10.4% Jena 4.6% Magdeburg 10.3% existing properties have Dresden 4.1% Eisenach 9.6% risen in 23 cities since Magdeburg 4.1% Chemnitz 8.5% 2017 – including increases Weimar 4.1% Dresden 7.9% Eberswalde 3.8% Potsdam 6.8% of ≥ 10% in 11 cities Eisenach 3.2% Strausberg 6.0% Stralsund 3.0% Döbeln 4.7% . Prices in the new-build Gera 2.9% Schwerin 4.7% sector rose by between 3% Görlitz 2.6% Jena 4.3% in Magdeburg and > 50% in Brandenburg a. d. Havel. Rental and property price growth H1 2018 vs. H1 2017 in % TAG Immobilien AG | October 2018 II.4. Housing costs 99 . Housing cost burdens are falling in spite of rising rents - thanks to the positive purchasing power dynamics. 23.8 Purchasing power, 2011-2018, in % 22.0 21.1 21.0 20.6 Development of housing costs, 2008-2018 in %-points 19.9 17.5 17.4 17.4 17.2 16.6 16.6 16.4 16.4 15.4 14.5 14.2 12.8 12.7 12.3 12.1 11.9 11.6 11.4 9.5 9.9 8.8 6.2 3.6 2.9 1.8 0.7 0.3 0.1 0.3 -0.2 -0.4 -0.3 -0.6 -0.7 -0.6 -0.9 -0.6 -0.7 -1.9 -1.8 -1.4 -2.5 -2.3 -2.1 -2.9 -3.3 -4.0 -3.6 TAG Immobilien AG | October 2018 II.5. Risk / reward profiles 1010 Economic upswing, unemployment rates down across the board, strengthening purchasing power and declining vacancies are making Eastern Germany’s small and medium-sized cities ever more attractive. Risk/reward profiles in Eastern German cities in comparison with 50 reference cities in % . Weimar is more attractive than Potsdam, with the same level of risk. Greifswald and Schwerin are more attractive than Erfurt. Yields . Many markets in Eastern Germany offer investors yield potentials of between 8% and 10%. Depending on investors’ individual risk acceptance, these represent genuine investment Risk: 1 = very low alternatives. to Risk 5 = very high TAG Immobilien AG | October 2018 III. The Rostock Region 1111 Purchase prices continue to rise strongly . Value of existing properties in Rostock and Waren (Müritz) rose significantly – Rostock: EUR 2,750/sqm, Waren: EUR 2,000/sqm. Strong demand for new-builds in Greifswald, Schwerin, Rostock and Waren. Prices in the new-build segment range from EUR 2,550 (Greifswald and Waren) to EUR 3,650/sqm (Rostock). Schwerin: Following price surges over the last two years, prices have now stagnated in both the new-build and existing segments. Purchase prices for existing and new-build properties (H1 2018 vs. H1 2017) in % +26.7 % +18.6% +6.3% Existing +4.7%+3.8 % New-build +3.6% +3.2% +2.3% 0.0% +0.6% Rostock Waren Schwerin Greifswald Stralsund TAG Immobilien AG | October 2018 III. The Rostock Region 1212 Attractive risk/reward profiles in Mecklenburg-West Pomerania . Residential investments in Greifswald and Schwerin carry the same average risk as investments in Erfurt, but with achievable yields of approximately 8.5%. 8.3% yields in Schwerin available to investors with higher levels of risk acceptance. Risk/reward profiles in Mecklenburg-West Pomerania 12.0 Yields in % 2.0 Risk (1 = very low to 5 = very high) 1 2 3 4 TAG Immobilien AG | October 2018 III. The Rostock Region 1313 . In Rostock, rents rose by a significant 23.6%. The causes are above all new construction projects, which were rented for the first time. Schwerin (+7.3%), Waren (+5.4%) and Stralsund (+3.0%) also registered further rental price growth. Rents in Greifswald remained unchanged at an already above-average EUR 8.00/sqm. Apartment rents (2018 vs. 2017) in EUR/sqm/month 8.00 8.01 7.51 6.53 6.44 6.43 6.08 6.35 6.00 6.10 H1 2018 H1 2017 Greifswald Rostock Stralsund Schwerin Waren TAG Immobilien AG | October 2018 IV. The Berlin/Brandenburg Region 1414 Property purchase prices rise significantly around Berlin . Most dramatic increases for existing properties registered in Nauen and Eberswalde. In contrast, in Brandenburg a.d.H., Potsdam and Strausberg, the new-build segment saw the most dynamic price growth. Prices for existing properties range from EUR 1,000 (Eberswalde) to EUR 1,700/sqm (Strausberg), rising to EUR 3,000 in Potsdam and EUR 3,600/sqm in Berlin. Prices for new-build properties average between EUR 2,400 and EUR 3,000/sqm in surrounding communities, rising to EUR 4,800 in Potsdam and EUR 5,400/sqm in Berlin. Purchase prices for existing and new-build properties (H1 2018 vs. H1 2017) in % +52.2% +41.6% +35.7% +27.4% +17.9% +17.2% +14.4% +6.8% +6.0% Existing New-build Nauen Eberswalde Berlin Potsdam Strausberg Brandenburg a.d.H.