Residential Investment · Market Report 2019/2020 Dresden · Leipzig · Halle (Saale) · Chemnitz · Zwickau EDITORIAL Dear Readers, As a real estate firm active across different regions, we would like to provide you – a potential buyer or owner of multi-dwelling units or residential or commercial build- ings in Saxony or Saxony-Anhalt – with an informative overview of current market developments, possibilities for buying and selling and market trends. In our “2019/2020 Report on the Investment Market for Residential and Commercial Property”, you can find extensive analyses of and detailed insights into the property markets in Dresden, Leipzig, Halle (Saale), Chemnitz and, for the first time, Zwickau. We are a consulting firm offering intermediary services for investment property, successfully brokering over 300 properties at our locations in 2018. Based on our market experience and expertise, we can offer you a presentation of developments regarding transactions, factors and prices per square metre and, furthermore, a studied interpretation and assessment of the current market environment. As always, we are happy to speak with you at any time and provide individual advice free of charge about the development of your property, regardless of whether you are seeking to purchase real estate or sell or bequeath a property in future. Take advantage of the obligation-free advice offered by our experts! Yours, Ralf Oberänder Managing Partner Editorial Residential Investment Market Report 2019/2020 3 DRESDEN 560,641 21,948 EUR 2,233 1.8% 8.18 EUR/m² Population Purchasing power per capita Building completions Vacancy rate Av. quoted rent + 4.6% (over 2013) 91.4 (purchasing power index) – 14.1% (over 2017) 61.7 (vacancy rate index) + 5.3% (over 2018) Source: Population register, MB Research, Destatis, CBRE-empirica-Leerstandsindex, empirica-systeme Dresden has developed into a prospering metropolis with power at 22,000 euros. The average basic rent for the a sustained population and economic growth and a housing stock has increased in all neighbourhoods since property market growing sustainably since the turn of 2018, reaching between 2.7 and 5.7% depending on the the millennium. Saxony’s capital has enjoyed positive location. net inward migration since the year 2000 and has also seen births outnumber deaths every year since 2006. As a Consistently high demand for housing result, the population of Dresden has grown by just under five per cent to over 560,000 inhabitants in the last five The number of transactions only increased slightly years alone. Associated with that is a rise in housing year-on-year in 2018, whereas the volume of the trans- demand. The strong demand is reflected in the falling actions achieved a considerable increase of 27%. The vacancy rate, which reached a new record low of 1.8% reasons behind this record amount of 1.13 billion euros in 2018. The average basic rents for the housing stock include a series of forward deals in Dresden’s city centre. came in at between 7.24 and 9.08 euros/m2 in individual Although this city formerly home to the royal family sub-locations, meaning that Dresden achieved the highest does not possess either neighbourhood preservation rents among the cities studied in this report. Dresden zones or a cap on rents, political discussion on the sub- simultaneously also has the highest per capita purchasing jects has had a dampening effect on the activity of some Number of transactions Transaction volume 550 2,000 496 440 1,600 1,450 375 349 356 346 321 330 1,200 1,127 886 Number 220 800 676 675 604 in mio. EUR 340 1,340 110 400 0 0 2014 2015 2016 2017 2018 2019* 2014 2015 2016 2017 2018 2019* * Forecast range * Forecast range Source: Gutachterausschuss Dresden, Engel & Völkers Commercial Source: Gutachterausschuss Dresden, Engel & Völkers Commercial 4 Dresden Residential Investment Market Report 2019/2020 Quoted rents 2019* Number of Av. net rent (existing) Spread of net rents Av. net rent (new- City district apartments on offer in euros/m² (over 2018) (existing) in euros/m² build) in euros/m² Innere Altstadt. Wilsdruffer Vorstadt/Seevorstadt-West 317 9.08 (+ 4.1%) 6.00 – 14.29 12.60 Äußere Neustadt. Innere Neustadt. Leipziger Vorstadt 685 8.42 (+ 2.7%) 6.74 – 11.37 10.81 Bühlau/Weißer Hirsch. Loschwitz/Wachwitz. Radeberger Vorstadt 345 8.47 (+ 3.9%) 6.02 – 11.03 10.50 Plauen. Strehlen. Südvorstadt-West 465 8.06 (+ 3.4%) 5.68 – 10.48 11.10 Striesen. Blasewitz 588 8.10 (+ 4.9%) 6.56 – 10.75 10.35 Gruna. Johannstadt-Nord. Johannstadt-Süd 416 7.75 (+ 5.7%) 6.13 – 10.00 12.31 Mickten. Pieschen-Nord/ Trachenberge. Pieschen-Süd 579 7.50 (+ 3.5%) 6.00 – 10.50 10.37 Cotta. Löbtau-Nord. Löbtau-Süd 684 7.49 (+ 4.3%) 6.04 – 9.05 9.63 Laubegast. Leuben. Tolkewitz/ Seidnitz-Nord 476 7.24 (+ 4.8%) 5.80 – 9.98 11.08 Source: empirica-systeme. Engel & Völkers Commercial * First half of 2019 project developers. They are being slow to initiate further High level of construction construction projects in order to gain certainty regard- ing housing policy developments throughout this year. At the Postplatz transport hub, there are approxi mate ly On the other hand, demand for residential and commer- 1,000 flats being completed with rents of about cial buildings continues to remain just as strong as ever, 16 euros/m2. Construction of another roughly 1,000 irrespective of location. Prices seem to have reached a flats is also planned for Elbepark. One factor behind temporary ceiling in premium locations. Given the Dresden’s appeal for project developments remains prices of over 3,000 euros/m2 that these areas attract, Saxony’s very low land transfer tax, which, like in the difference from the entry prices of other German Bavaria, is assessed at a low 3.5%, while in other states cities – and therefore alternative investments – has it varies between 4.5 and 6.5%. However, there is lim- become less. Dresden’s modest locations, however, ited availability of land for construction in the city. offer lucrative investment potential thanks to their good Based on the trend, the Engel & Völkers Commercial accessibility and recreational opportunities. A price forecast for 2019 is roughly the same number of trans- increase can still be expected for these locations over actions and an increasing transaction volume of approx- the medium term. imately 1.3 to 1.4 million euros. Quoted prices by category of cities* Yield versus inflation 8 A 3,545 6.5 6.1 5.8 6 5.2 B 1,753 4.9 4.8 5.7 5.6 5.1 4.9 4 4.3 4.3 C 1,771 in % 2 D 1,306 0 B Dresden 1,765 – 2 0 1,000 2,000 3,000 4,000 2014 2015 2016 2017 2018 2019 2 in EUR/m good location average location * 2018 according to bulwiengesa inflation rate covered bonds (10 Y.) Source: empirica-systeme, Engel & Völkers Commercial Source: Destatis, Bundesbank, Engel & Völkers Commercial Dresden Residential Investment Market Report 2019/2020 5 Dresden - Residential Investment locations Prime location Good location Average location Basic location Commercial/Industrial area Waters Green area Marsdorf Gomlitz A13 Lausa Schönborn Weixdorf Langebrück Wilschdorf Commercial Völkers © Engel & Klotzsche Hellerau Hellerberge Dresdner Heide Pieschen-Nord/ Niedergohlis A4 Trachau Trachtenberge Niederwartha Obergohlis Albertstadt Pieschen Leipziger Kaditz Cossebaude Stetzsch Vorstadt Mickten Radeberger Oberwartha Leuteritz Kemnitz Äußere Mobschatz Vorstadt Brabschütz Übigau Neustadt Weißer Hirsch Weißig Rossendorf ELBE Rennersdorf Merbitz Briesnitz Innere Bühlau Friedrichstadt Neustadt Losch- Leutewitz Blasewitz witz Roch- Unkersdorf Podemus Gönns- Cunners- Schull- Omsewitz Cotta witz witz Ockerwitz Altstadt I dorf dorf Roitzsch Altstadt II Striesen Wach- Papp- Schön- Eschdorf witz ritz feld Steinbach Gompitz Gorbitz Wölfnitz Löbtau Helfenberg Pennrich Gruna Tolke- Nieder- Naußlitz Südvorstadt witz Malschen- Reitzen- Zöllmen Laube-poyritz dorf Altfranken Roßthal Seidnitz dorf Strehlen gast Krieschen- Zaschen- Plauen Räcknitz Hosterwitz dorf dorf Dölzschen Zschertnitz Dobritz Borsberg Leubnitz- Coschütz Kleinpestitz Reick Leuben Neuostra Pillnitz Kaitz Mockritz Klein-/Groß- Ober- Gittersee Gostritz Prohlis zschachwitz Torna poyritz Niedersedlitz Meußlitz A17 Nickern Sporbitz Zschieren Söbrigen Kauscha Großluga Lockwitz Kleinluga Market data for Residential Investment: Multiplier and prices 2017 2018 2019 Forecast Multiplier 18.0 – 25.0 22.0 – 29.0 22.0 – 31.0 18.0 – 23.0 20.0 – 26.0 20.0 – 27.0 16.0 – 22.5 17.0 – 24.5 17.0 – 25.0 13.0 – 17.0 15.0 – 21.0 16.0 – 23.0 Price EUR/m2 1,600 – 3,050 1,800 – 3,100 1,900 – 3,300 1,330 – 2,500 1,450 – 2,700 1,500 – 2,700 1,180 – 1,880 1,200 – 1,990 1,300 – 2,100 900 – 1,400 900 – 1,670 1,000 – 1,750 Source: Engel & Völkers Commercial Dresden undeniably occupies a leading position in the east German property market, something which can certainly be built on in future. The indicator of success for short- and long-term investments here is the continuous population growth, which above all comprises students and young, well-educated newcom- ers. The state capital’s economic growth is primarily concentrated in cutting-edge technologies which strengthen salaries as well as purchasing power. Michael Wittig, Engel & Völkers Commercial Dresden 6 Dresden Residential Investment Market Report 2019/2020 LEIPZIG 601,737 20,755 EUR 2,314 3.5% 7. 28 EUR/m² Population Purchasing power per capita Building completions Vacancy rate Av. quoted rent + 9.5% (over 2013) 86.5 (purchasing power index) + 39.9% (over 2017) 121.7 (vacancy rate index) + 3.6% (over 2018) Source: Population register, MB Research, Destatis, CBRE-empirica-Leerstandsindex, empirica-systeme Leipzig forms the backbone of the central German urban Leipzig, a big city offering region thanks to its socio-economic dynamism.