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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 buildings 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 regarding housing policy developments throughout this year. At the Postplatz transport hub, there are approximate 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* ield 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. Its popu- an investment alternative lation growth is the highest among major German cities. The number of inhabitants has risen by almost ten per cent With sales of 810 million euros in 2018, Leipzig out- since 2013 and exceeded the 600,000 mark in 2018; the stripped the likes of Düsseldorf (578 million euros) and Leipzig statistics office is reckoning that the population Stuttgart (545 million euros). The average property price will grow to over 700,000 by 2030. People from rural of 1.61 million euros is slightly higher than it was the Saxony in particular as well as students from all around previous year (1.54 million euros). The average quoted the country are moving to the city in numbers. The rising rent in Leipzig rose year-on-year by 3.6%, though at 7.28 housing demand is accompanied by a continuously falling euros/m2 it is still low compared to other cities. The pur- vacancy rate. Vacancy decreased by 1.2 percentage points chasing power per capita in Leipzig has increased by year-on-year, coming in at just 3.5% in 2018. The Leipzig almost 17% since 2013. Despite this, purchasing power investment market for residential and commercial prop- still remains below average compared to other German erty is becoming increasingly comparable with the mar- states (purchasing power index: 86.5) and represents a kets of other large German cities when it comes to the factor limiting the development of the rents that can be renter/buyer mix as well as transaction volume. obtained. The number of transactions has decreased since

Number of transactions Transaction volume

900 1,100 806 779 950 945 836 674

720 880 810 789 538 502

540 480 660 529

Number 360 440 880 in mio. EUR

180 430 220

0 0 2014 2015 2016 2017 2018 2019* 2014 2015 2016 2017 2018 2019* * Forecast range * Forecast range

Source: Gutachterausschuss Leipzig, Engel & Völkers Commercial Source: Gutachterausschuss Leipzig, Engel & Völkers Commercial

Leipzig Residential Investment Market Report 2019/2020 7 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

Zentrum-Ost. Zentrum-Südost 615 8.72 (+ 4.1%) 6.00 – 12.22 10.76

Zentrum. Zentrum-Süd 312 8.56 (+ 3.0%) 6.50 – 10.99 10.22 Zentrum-Nordwest. Zentrum-West 413 8.76 (+ 10.6%) 6.24 – 12.41 11.60

Lindenau. Plagwitz. Schleußig 652 7.73 (+ 6.6%) 5.66 – 10.80 10.95 Gohlis-Mitte. Gohlis-Nord. Gohlis-Süd 1.054 7.43 (+ 8.3%) 5.30 – 10.50 9.72

Reudnitz-Thonberg. Stötteritz 815 6.90 (+ 0.8%) 5.11 – 9.00 9.13

Altlindenau. Leutzsch 647 6.88 (+ 1.9%) 4.80 – 8.99 9.71 Anger-Crottendorf. Neustadt-Neuschönefeld. Volkmarsdorf 912 6.72 (+ 4.2%) 4.95 – 8.70 –

Source: empirica-systeme. Engel & Völkers Commercial * First half of 2019

2014, though demand remains unabatedly strong. Hous- construction of 470 flats at Lindenau Port in the west of ing policy interventions on the Berlin housing market, for Leipzig. Nearly all locations are experiencing high example in the form of the rent cap, have resulted in demand for residential and commercial buildings. This investors turning to central German locations such as demand is responsible for a price increase up to a level Leipzig instead. of 2,850 euros/m2 in preferred neighbourhoods and prime locations. A limit therefore seems to have been High demand regardless of location reached for market entry by private investors. Sideways development can be seen in the prices for investment With over 15,000 heritage-listed landmarks, 80% of property. Like in Dresden, a ceiling has been hit for which built in the Gründerzeit style, Leipzig possesses asking prices and factors in attractive and premium an attractive housing stock close to the city centre. The locations, for the time being. Meanwhile, in average development of new-build projects is also progressing and modest locations, potential for new construction throughout the city in order to address growing demand and modernisation is one reason, among others, to for housing. Bayerischer Bahnhof station, for example, expect further increased prices per square metre. will be developed with schools, 1,600 flats and 150,000 Engel & Völkers Commercial is forecasting a trans square metres of commercial space. The city’s outer action volume between 880 and 950 million euros neighbourhoods are similarly popular, as shown by the for 2019.

Quoted prices by category of cities* ield versus inflation

8 7.6 7.4 A 3,545 6.9

6 5.6 5.3 B 1,753 6.4 6.2 5.7 4.4 4 4.9 4.6 C 1,771 4.1 in % 2 D 1,306 0 B Leipzig 1,780 – 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

8 Leipzig Residential Investment Market Report 2019/2020 Leipzig - Residential Investment locations

Prime location Good location Average location Basic location Commercial/Industrial area

Waters Green area

Seehausen

Lindenthal Wiederitzsch A14 Schkeuditz Plaußig- Lützschena- Mockau Portitz Taucha Stahmeln Nord Commercial Völkers © Engel & Gohlis-Nord Thekla Wahren Möckern Eutritzsch Gohlis-Mitte Mockau Süd Schönefeld- Heiterblick Gohlis-Süd Schönefeld- Böhlitz-Ehrenberg Ost A9 Abtnaundorf Paunsdorf Nord Leutzsch Sellerhausen- Ost Neu-Volkmars- Stünz Burghausen- Nordwest schöne- dorf Althen- feld Engelsdorf Kleinpösna Rückmarsdorf Altlindenau West Zentrum Anger- Neu- Crottendorf Lindenau Reudnitz- lindenau Mölkau Süd Thonberg Schönau Plagwitz Baalsdorf Grünau Südvorstadt Grünau-Ost Südost Stötteritz Miltitz Nord Schleußig Grünau-Mitte Klein- Marien- Grünau zschocher Connewitz brunn Holzhausen Lausen- Siedlung Probstheida Markranstädt Grünau Lößnig Großzschocher Meusdorf Dölitz-Dösen Liebertwolkwitz Mark- Knautkleeberg- kleeberg Knauthain

A38

Hartmannsdorf- Knautnaundorf

Market data for Residential Investment: Multiplier and prices

2017 2018 2019 Forecast

Multiplier 20.5 – 29.0 22.5 – 29.5 25.0 – 31.5

18.5 – 26.0 19.5 – 26.0 22.0 – 27.0

16.0 – 21.0 18.0 – 24.0 21.0 – 25.0

14.5 – 19.0 16.5 – 21.0 19.0 – 22.0

Price EUR/m2 1,350 – 2,500 1,500 – 2,800 1,800 – 2,850

1,100 – 1,790 1,300 – 2,000 1,400 – 2,200

1,000 – 1,380 1,150 – 1,690 1,350 – 1,800

800 – 1,190 980 – 1,300 1,100 – 1,500

Source: Engel & Völkers Commercial

Leipzig is undergoing an unprecedented rise to the top of the east German property sector. The number of inhabitants in the fair and university city grew more strongly than in any other German city in the years after 2005. The key economic data, like the dynamism and position of Leipzig within the global logistics industry for example, is impressive. Investors are responding with increasing demand, and the market with higher prices. Nevertheless, the yields to be gained are noticeably higher than in the top seven cities.

Ralf Oberänder, Engel & Völkers Commercial Leipzig

Leipzig Residential Investment Market Report 2019/2020 9 HALLE (SAALE)

241,333 19,982 EUR 404 7.6% 6.18 EUR/m² Population Purchasing power per capita Building completions Vacancy rate Av. quoted rent + 3.7% (over 2013) 83.3 (purchasing power index) – 29.6% (over 2017) 265.5 (vacancy rate index) + 1.0% (over 2018)

Source: Population register, MB Research, Destatis, CBRE-empirica-Leerstandsindex, empirica-systeme

Halle has developed into a popular investment location home to companies in the technology, industrial, IT and for German and international investors over the last three logistics sectors. With the emergence of the Halle– to four years. The reasons for this include price increases Leipzig economic region, there are additional towns in Germany as a whole as well as the significance of the surrounding the two cities that are gaining in appeal, Leipzig-Halle economic region. Within the region, it was such as Schkeuditz, Leuna and Merseburg. strongly apparent in 2018 – more so than in previous years – that investors were investing more in Halle due to A young city with attractive, the relatively high prices and increased project volume of old buildings the Leipzig market. The two cities are located at the inter- section of the Dortmund–Dresden and Berlin–Munich Halle has recorded continuous population increases since transport axes, building the hub of central Germany. 2010 and, with more than 241,000 inhabitants, is the Halle got access to the Berlin–Munich high-speed ICE second-largest city in Saxony-Anhalt after Magdeburg. railway line in 2018. Moreover, Leipzig /Halle Airport, A section of the population not to be underestimated are which serves as DHL’s aviation hub, is located at the the students of Martin Luther University of Halle-Witten- junction of the A 9 and A 14 motorways. Not far from berg and of Burg Giebichenstein University of Art and the airport is the 230-hectare Star Park industrial estate, Design Halle, who number over 21,000 in total. The most

Number of transactions Transaction volume

250 350 285 187 200 185 280 181 179 166 165 217

150 210 185 146 Number 100 140 123 165 in mio. EUR 89 205 50 70

0 0 2014 2015 2016 2017 2018 2019* 2014 2015 2016 2017 2018 2019* * Forecast range * Forecast range

Source: Gutachterausschuss Halle (Saale), Engel & Völkers Commercial Source: Gutachterausschuss Halle (Saale), Engel & Völkers Commercial

10 Halle (Saale) 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

Altstadt 174 7.38 (+ 0.3%) 5.17 – 10.00 6.56

Giebichenstein, Kröllwitz 175 7.43 (+ 2.6%) 5.59 – 11.00 8.66 Nördliche Innenstadt, Paulusviertel 484 6.98 (+ 2.8%) 5.00 – 9.02 7.68 Lutherplatz/Thüringer Bahnhof, Südliche Innenstadt 755 6.41 (+ 2.2%) 5.00 – 8.86 –

Ortslage Trotha 106 6.24 (+ 1.1%) 5.43 – 7.00 – Damaschkestraße, Gesundbrunnen 148 6.32 (+ 3.9%) 5.40 – 7.54 –

Freiimfelde/Kanenaer Weg 81 6.07 (+ 8.2%) 4.73 – 7.51 –

Südstadt 291 5.66 (+ 4.6%) 4.70 – 7.00 – Nördliche Neustadt, Südliche Neustadt, Westliche Neustadt 586 5.32 (– 2.0%) 4.24 – 7.93 –

Silberhöhe 371 4.77 (– 2.7%) 3.90 – 5.77 –

Source: empirica-systeme, Engel & Völkers Commercial * First half of 2019

popular residential areas include neighbourhoods close quently, the transaction volume has increased rapidly to the universities, including Nördliche Innenstadt, over the last few years. While properties with a value of Mühlwegviertel, Paulusviertel and Giebichenstein. These 89 million euros were traded in 2015, the volume in 2018 areas attract the highest rents and factors. Halle’s historic clocked up 217 million euros. This figure meant that a old town came away from the war relatively unscathed year-on-year increase of 17.3% could be registered. The and today represents one of the largest heritage areas in number of properties traded rose slightly from 165 in Germany. Revitalised and let-out Gründerzeit buildings 2017 to 179, largely remaining at the same level as pre- are particularly appealing to investors, especially as rents vious years. The buyer mix comprises both private and are almost the same as in Leipzig but come at a lower institutional investors, with the majority of buyers com- price point with the result that a higher yield can often ing from west German states and Berlin. Furthermore, be achieved. international buyers – from Spain, Austria and Israel – are also active in Halle. Engel & Völkers Commercial is High demand from different investors forecasting a solid transaction volume between 205 and 285 million euros for 2019. Demand exceeds supply in the investment market for residential and commercial buildings in Halle. Conse-

Quoted prices by category of cities* ield versus inflation

10 A 3,545 9.0 8.8 8.6 8 7.4 B 1,753 7.6 6.3 6.1 7.3 7.1 6 6.5 5.8 1,771 5.4 C 4 in %

D 1,306 2

0 D Halle (Saale) 1,168 – 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

Halle (Saale) Residential Investment Market Report 2019/2020 11 Halle (Saale) - Residential Investment locations

Prime location Good location Average location Basic location Commercial/Industrial area

Waters Green area

Seeben Tornau Lettin Industriegebiet Nord

Gottfried-Keller- Mötzlich A14 B100 TrothaSiedlung Commercial Völkers © Engel & Dölau Blumenau Frohe Zukunft Kröllwitz Landrain Giebichen- Dölauer Heide stein Paulus- Heide-Süd viertel B6 Dautzsch Nördliche Diemitz Gebiet Innenstadt Nördliche der Frei- Reideburg Nietleben Neustadt Altstadt DR imfelde B80 Büschdorf Westliche Neustadt Südliche Neustadt Südliche Saaleaue Innenstadt Gewerbegebiet Neustadt Lutherplatz Gesundbrunnen Diesel- straﬂe Damaschke- B6 Kanena/ straﬂe Südstadt Bruckdorf Böllberg/ B91 A143 Wörmlitz SAA LE Ammendorf/ Beesen Radewell/ Osendorf

Planena

Market data for Residential Investment: Multiplier and prices

2017 2018 2019 Forecast

Multiplier 15.5 – 18.8 16.5 – 22.0 18.0 – 23.0

14.5 – 16.5 16.0 – 18.5 17.0 – 20.0

12.3 – 14.8 14.5 – 17.0 15.5 – 17.5

9.5 – 12.8 12.0 – 15.0 12.5 – 16.0

Price EUR/m2 930 – 1,350 1,050 – 1,500 1,100 – 1,600

800 – 1,100 950 – 1,250 1,000 – 1,350

650 – 850 800 – 1,000 850 – 1,150

450 – 700 600 – 800 700 – 900

Source: Engel & Völkers Commercial

The development of Halle (Saale) as a university city is a classic example of the east German property market. Investors are impressed by the sustainable mix of business, academia and culture, positive population trends and the relatively attractive prices. The consequence of this is that demand for investment properties in the most populous city of Saxony-Anhalt is increasing unabated. The most popular neighbourhoods include Nördliche Innenstadt, Giebichenstein and Paulusviertel.

Tarik Pawelke, Engel & Völkers Commercial Halle (Saale)

12 Halle (Saale) Residential Investment Market Report 2019/2020 CHEMNITZ

247,721 21,461 EUR 513 8.5% 5.21 EUR/m² Population Purchasing power per capita Building completions Vacancy rate Av. quoted rent + 2.3% (over 2013) 89.4 (purchasing power index) – 0.2% (over 2017) 295.7 (vacancy rate index) + 2.4% (over 2018)

Source: Population register, MB Research, Destatis, CBRE-empirica-Leerstandsindex, empirica-systeme

Chemnitz has been a site for industry for over 200 years, Chemnitz has no need for discussions regarding housing with a favourable geographic location close to Dresden. policy instruments such as a cap on rents or rent control. Saxony’s third-largest city has been experiencing a struc- The lack of such proposals offers investors security for tural transformation since 1990. The automotive and their planning. Engel & Völkers Commercial has identi- automotive supplier industry within the city, information fied the potential of the city and was the first agency technology and machinery and plant engineering all active across regional boundaries to tap into the market enjoy great importance, as does the technical university. early on. This is how Engel & Völkers Commercial has As a city to which young people are flocking, Chemnitz succeeded in strongly building up its current market attracts students from all different regions as well as share of over 20% over the last three years. workers from the foothills of the Ore Mountains. The influx of people is having a positive effect on purchasing Attractive investments for private buyers power, which, at 21,461 euros per capita in Chemnitz, is higher than in Leipzig (20,755 euros). The present situa- The city’s upturn can be felt at locations where project tion in the Chemnitz housing market in terms of available developers are committing and new construction is under space is comparable with Leipzig’s situation ten years way. The refurbishment of the historic former spinning ago. The vacancy rate has decreased slightly year-on-year, mill by the central station into a university library and the though at 8.5%, it is a sign of the high availability of revitalisation of the adjacent Brühl neighbourhood to space. Considering the supply and housing affordability, become an urban district frequented by students have

Number of transactions Transaction volume

350 250 305 210

280 260 200 245 163 223 156 213 210 208 150 . EUR 97 Number

140 100 85 190 78 275 in mio

70 50

0 0 2014 2015 2016 2017 2018 2019* 2014 2015 2016 2017 2018 2019* * Forecast range * Forecast range

Source: Gutachterausschuss Chemnitz, Engel & Völkers Commercial Source: Gutachterausschuss Chemnitz, Engel & Völkers Commercial

Chemnitz Residential Investment Market Report 2019/2020 13 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

Reichenhain. Rabenstein 44 6.06 (+ 1.9%) 4.76 – 7.36 –

Kaßberg 882 5.50 (+ 3.0%) 4.49 – 7.00 8.33

Altendorf 264 5.33 (+ 0.4%) 4.34 – 6.30 8.37

Schönau. Siegmar 94 5.51 (+ 4.1%) 4.20 – 7.73 –

Borna-Heinersdorf 88 6.11 (+ 15.7%) 4.38 – 8.50 – Lutherviertel. Gablenz. Yorckgebiet 802 5.13 (– 0.8%) 4.20 – 6.50 –

Schloßchemnitz 589 5.23 (+ 1.2%) 4.00 – 6.91 8.05

Kapellenberg. Bernsdorf. Kappel 774 5.13 (– 0.4%) 4.00 – 7.04 7.35

Zentrum. Ebersdorf 578 5.07 (+ 0.2%) 3.85 – 7.25 – Altchemnitz. Hilbersdorf. Sonnenberg 1.648 4.91 (+ 3.5%) 3.71 – 6.77 8.13

Source: empirica-systeme. Engel & Völkers Commercial * First half of 2019

created a positive boost for the city centre. Investors rec- commercial buildings increased in almost all locations in ognise the opportunities associated with the city’s devel- 2018. In spite of this, properties are still offered at under opment, resulting in the number of transactions rising 1,000 euros/m2, including in average and good locations, continuously and regardless of location. With a financial which for price-sensitive investors is an argument to volume of approximately 163 million euros from a total survey the Chemnitz market. Popular locations include of 260 registered sales, the highest sales result in over ten Kaßberg, where vacancy is roughly only one per cent, years was achieved in 2018. A property changed hands and Schloßchemnitz. Lutherviertel and Bernsdorf benefit for 626,900 euros on average (down 1.3% year-on-year). from their proximity to the technical university. Unlike The typical entry price for multi-dwelling units ranged Leipzig and Dresden, where nearly all neighbourhoods between 400,000 and 800,000 euros, which is attractive promise good investments, location characteristics play a for private investors. For institutional investors, the pur- larger role in Chemnitz when it comes to the rents that chase of property portfolios is an attractive offer. can be obtained. In particular, investors need to consider the future development of the micro-location when decid- Favourable property prices even ing on an investment. Engel & Völkers Commercial fore- in attractive locations casts a transaction volume amounting to between 190 and 210 million euros for all of 2019. Concomitant with the demand, prices for residential and

Quoted prices by category of cities* ield versus inflation

10 9.4 A 3,545 8.9 7.9 8 7.1 6.7 B 1,753 7.9 7.7 6.1 7.0 6 6.3 5.7 1,771 5.4 C 4 in %

D 1,306 2

0 D Chemnitz 806 – 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

14 Chemnitz Residential Investment Market Report 2019/2020 Chemnitz - Residential Investment locations

Prime location Good location Average location Basic location Commercial/Industrial area

Waters Green area

Wittgensdorf Glösa- Draisdorf

Ebersdorf B169

Borna- B107 Commercial Völkers © Engel & Röhrsdorf Heinersdorf Furth B173 B95 Hilbersdorf A4 Schloßchemnitz Euba Sonnen- Rottluff Zentrum Yorck- A72 berg gebiet Altendorf Kaßberg Luther- Rabenstein viertel Kapellen- Gablenz B173 berg B174 Schönau Adelsberg Reichenbrand Bernsdorf Grüna Siegmar Kappel Alt- Helbers- chemnitz dorf Stelzen- Kleinolbersdorf- dorf Reichenhain Altenhain Mittelbach Morgen- leite Markers- Erfenschlag Hutholz dorf B95 Harthau

Einsiedel

Klaffenbach

Market data for Residential Investment: Multiplier and prices

2017 2018 2019 Forecast

Multiplier 16.0 – 21.0 17.0 – 25.0 17.5 – 25.5

13.0 – 19.0 14.0 – 21.0 15.0 – 22.0

11.0 – 17.0 12.5 – 19.0 13.0 – 20.0

9.0 – 15.0 10.0 – 17.0 10.0 – 17.0

Price EUR/m2 850 – 1,350 920 – 1,450 950 – 1,650

630 – 1,080 750 – 1,150 750 – 1,335

470 – 950 550 – 1,050 600 – 1,100

280 – 700 400 – 900 500 – 950

Source: Engel & Völkers Commercial

Investors from various regions looking for investments with strong yields have been interested in the university city of Chemnitz for some years now. Saxony’s third-largest city currently still offers lucrative possibilities for investments. To be counted among the sustainably positive factors is above all its success in academia and business, which ensures stable growth in the Chemnitz region. The attractive city locations of Schloßchemnitz, Kaßberg, Lutherviertel and the centre benefit most.

Christian Koge, Engel & Völkers Commercial Chemnitz

Chemnitz Residential Investment Market Report 2019/2020 15 ZWICKAU

89,540 20,968 EUR 307 11. 2 % 5.34 EUR/m² Population Purchasing power per capita Building completions Vacancy rate Av. quoted rent – 2.2% (over 2013) 87.4 (purchasing power index) – 46.5% (over 2017) 390.32 (vacancy rate index) + 3.3% (over 2018)

Source: Population register, MB Research, Destatis, CBRE-empirica-Leerstandsindex, empirica-systeme

Engel & Völkers Commercial is currently the first though could soon almost reach the result attained nationwide agency to be exploring the Zwickau market by Chemnitz (in 2018: 163 million euros). While the at an early stage, as done previously in Halle and prices per square metre for residential and commercial Chemnitz. It is expected that property owners in Zwickau buildings barely differ in the two cities, a higher aver- will profit from a similar influx of buyers in the medium age quoted rent of 5.34 euros/m2 could already be term just like other central German locations experi- obtained in Zwickau in 2018 when compared to Chemnitz enced over the previous decade. Investors increasingly (5.21 euros/m2). turned their back on Berlin between 2010 and 2012 and shifted to Leipzig in expectation of higher yields. Their Company workers and students focus subsequently moved towards Halle and later ensure housing demand Chemnitz, and now prospective buyers are also scouting out Zwickau as a location for investment. The volume The Chemnitz-Zwickau economic region profits from of transactions for residential and commercial build- car manufacturer Volkswagen’s sites. In Zwickau ings more than quintupled in Zwickau between 2014 alone, the group has invested approximately 1.2 billion and 2018, totalling 121 million euros. It is still under euros in the expansion of a plant for electromobility, the level of the other cities studied in this market report, providing about 8,000 jobs. Volkswagen’s affiliate part-

Number of transactions Transaction volume

200 200 180 175 165 160 160 140 130 121 120 120 100 88

Number 80 80 155 59 in mio. EUR 140 42 40 40 23 19

0 0 2014 2015 2016 2017 2018 2019* 2014 2015 2016 2017 2018 2019* * Forecast range * Forecast range

Source: Gutachterausschuss Zwickau, Engel & Völkers Commercial Source: Gutachterausschuss Zwickau, Engel & Völkers Commercial

16 Zwickau 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

Bahnhofsvorstadt 130 5.36 (+ 5.3%) 4.05 – 7.49 7.53

Eckersbach 106 5.35 (+ 7.6%) 4.50 – 5.59 5.51

Innenstadt 262 5.67 (+ 4.8%) 4.28 – 7.49 7.06

Marienthal 318 5.13 (+ 3.0%) 4.16 – 6.50 –

Neuplanitz 107 4.67 (+ 5.4%) 4.22 – 5.16 –

Niederplanitz 55 5.06 (+ 0.4%) 3.93 – 6.20 –

Pölbitz 326 5.28 (+ 1.1%) 4.51 – 6.42 –

Zentrum 56 5.24 (– 0.2%) 4.38 – 6.50 –

Source: empirica-systeme. Engel & Völkers Commercial * First half of 2019

Attractive for private investors ner is the University of Applied Sciences Zwickau, which has moved and is now located in Zwickau’s Like in Chemnitz, an increased number of regional centre. VW employees and students represent key investors have also been coming in over the past five renter categories and ensure that there is rising demand years. Investors from outside the region – including for housing and, by extension, certainty for the plans of players from Berlin and Munich – are also active in real estate investors and project developers. The grow- Zwickau and have expanded their portfolios. As a rela- ing demand for housing is the reason for rents increas- tively small city with smaller transaction volumes and ing to eight euros/m2 in some places in the city centre. property sizes, Zwickau does not appeal to investors the The premium central locations of Mitte, Mitte-West, same way that Halle or Chemnitz does. Nevertheless, the Mitte-Nord, Nordvorstadt and Bahnhofvorstadt are city will remain an interesting little market with rela- therefore appealing for investors at present. The factors tively affordable properties and appeal for private inves- achieved in modest locations in 2018 were low. Since tors thanks to its simplicity. Zwickau could be interest- the Zwickau property market can be expected to expe- ing for investors looking to invest 300,000 to 700,000 rience similar development to the Chemnitz market, it euros in the short term. Engel & Völkers Commercial is primarily the better location that will record a price forecasts a transaction volume amounting to between increase in the coming years. 140 and 165 million euros for the current year.

Quoted prices by category of cities* ield versus inflation

10 A 3,545 8.0 8 7.5 7.1 B 1,753 6 6.9 6.6 6.0 1,771 C 4 in %

D 1,306 2

0 D Zwickau 704 – 2 0 1,000 2,000 3,000 4,000 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

Zwickau Residential Investment Market Report 2019/2020 17 Zwickau - Residential Investment locations

Prime location Good location Average location Basic location Commercial/Industrial area

Waters Green area

B175

Schlunzig

Mosel

B93

Oberrothenbach Crossen

Schneppendorf Niederhohndorf

Auerbach Pölbitz Weißenborn Eckersbach B175 Nordvorstadt Talstraße B173 Mitte- Trillerberg Marienthal B175Nord Eckersbacher West Innen- Siedlung Pöhlau Marienthal stadt Ost Mitte- Äuß. Dresdner Mitte- West Str./Pöhlauer Str. B173 Süd Brand Geb. Reichenbacher Str. B93 Schedewitz/ Geinitzsiedlung Oberhohndorf

Niederplanitz Bockwa Neuplanitz

Oberplanitz Cainsdorf

Hüttelsgrün A72 Rottmannsdorf

Market data for Residential Investment: Multiplier and prices

2017 2018 2019 Forecast

Multiplier 13.0 – 19.0 14.0 – 20.0 15.0 – 22.0

12.0 – 17.0 13.0 – 18.0 14.0 – 19.0

11.0 – 14.0 12.0 – 15.0 12.0 – 16.0

9.5 – 13.5 10.0 – 14.0 11.0 – 15.0

Price EUR/m2 770 – 1,200 790 – 1,240 820 – 1,360

600 – 1,130 630 – 1,165 690 – 1,210

500 – 900 520 – 930 550 – 940

480 – 820 490 – 850 520 – 890

Source: Engel & Völkers Commercial

IIn terms of overall economic conditions, Zwickau – Saxony’s fourth-largest city – does not trail any of central Germany’s big cities in any respect. As part of the Chemnitz–Zwickau economic region, the city offers a future-proof mix of a prospering economy, education, science, e-mobility innovation (including VW and a university of applied sciences), business and culture. For investors, these elements represent the foundation of a positive rental market with attractive investment options.

Tobias Hahn, Engel & Völkers Commercial Chemnitz

18 Zwickau Residential Investment Market Report 2019/2020 OUR COMMERCIAL OFFICES IN SAXONY AND SAXONY-ANHALT We are where you are.

Halle (Saale) Leipzig

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Engel & Völkers Commercial Leipzig Engel & Völkers Commercial Chemnitz/Zwickau Burgplatz 2 Innere Klosterstraße 4 04109 Leipzig 09111 Chemnitz Phone +49-(0)341-46 37 62 10 Phone +49-(0)371-91 19 93 40 [email protected] [email protected]

Our Commercial offices in Saxony and Saxony-Anhalt Residential Investment Market Report 2019/2020 19 All information has been compiled with the greatest possible care. We cannot accept any liability for the accuracy and completeness of this information. We shall not be held responsible for damage of any kind whatsoever incurred either directly or indirectly through the use of this information, with the exception of liability for intent or gross negligence. Last update of information and data published: October 2019. The provided information regarding the site and market development refer to: Population (2018, Population register), purchasing power (2019, MB Research), building completions (2018, Destatis), vacancy rate (2017, CBRE-empirica-Leerstandsindex), average quoted rent (2019, empirica-systeme). Duplication only with reference to source, source: Engel & Völkers Commercial GmbH

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