September 2021

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

Construction surplus at its highest level in 20 years

After rising continuously in recent years, Cologne’s expected to continue in the coming years. With an annual population declined for the first time in 2020, by 3,800 demand for around 44 dwellings per 10,000 inhabitants, to 1.088 million. This can be attributed to significant the city’s housing requirement is at a lower level than the negative net migration. In 2020, 4,284 more people other Big 8 cities but it also has the lowest completion moved out of Cologne than moved in. Although rate among the cities mentioned with 19 new dwellings population growth had already slowed down in per 10,000 dwellings, and therefore the greatest previous years, the sharp decline in inward migration discrepancy between new supply and demand. There is mainly due to the mobility restrictions in the wake of was a further fall in the number of completions in 2020 the COVID-19 crisis and the resulting lower fluctuation. with a total of 2,013 new dwellings (from 2,175 in 2019); Nevertheless, the need for additional housing is this was the second lowest level in the past ten years, second only to 2019. By contrast, the number of building Housing supply and demand for new buildings permits granted in 2020 rose by around 35% compared to the previous year, to 3,659 approved dwellings. This 6 1,000 residential units means that the construction surplus (a total of 8,694 5 dwellings approved but not yet built) has increased 4 once again and is now at its highest level in 20 years.

3 It is particularly noteworthy that 5,400 of the total number of approved dwellings were already under 2 construction at the end of 2020. It is for this reason that 1 a significant increase in housing supply is expected 0 again for 2021. This is a necessary development, as construction has clearly fallen short not only of the 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 projected demand, but also of the target volume set by Residential permissions total Residential completions total the City of Cologne (around 4,800 new dwellings per City of Cologne‘s target for residential completions annum) in recent years. 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 Clouth-Quartier Nippes approx. 1,200 2022 Ehrenveedel Ehrenfeld approx. 550 2022 Cologneo I Mülheim approx. 500 2022 Ossendorfer Gartenhöfe Ossendorf approx. 435 2021 Parkstadt Michaelshoven approx. 400 2024

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

Cover page 2 Contacts Rental market Cologne

Growth in median rents slows down

The median rent in the first half of 2021 increased by 5.6% Rental price bands for listed apartments Cologne year-on-year to its current level of €13.10/sqm/month. This is also a rise of 4.6% compared to the five-year average. By Asking rent in €/sqm/month contrast, the prime rent (€19.65/sqm/month) increased by 24 Upper 10 % just 2.6% compared to the same period last year. However, 22 21.25 19.65 compared to the second half of 2020, it is a minimal 20 Upper 25 % decrease of €0.35/sqm/month. Taking a five-year 18 Median perspective, the rent has increased by 7.2% per annum. In 16 Lower 25 % the most affordable rental price segment (lowest 10% of 14 rental properties on offer: €9.65/sqm/month) there has 12 12.25 Lower 10 % been an increase of 7.2% over the past six months 10 9.65 compared to the corresponding period of the previous 8 year. The weakest rental growth was observed in the case 6 of smaller apartments (< 45 sqm; €16.40/sqm/month) for 4 which an average increase of just 1.5% was registered. The Cologne Cologne total new built largest increase in asking rents was observed in the new- build segment at 11.6% (€15.45/sqm/month). At district Source: JLL, VALUE Marktdaten (Status: July 2021) level, the highest median rents are currently being asked in the city centre at €15.55/sqm/month, followed by Ehrenfeld at an average of €14.75/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 10 ≤ 15 ≤ 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 -200 0 200 400 600 800 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 Cologne

Leichlingen (Rheinland) Monheim Dormagen Langenfeld (Rhld.) Burscheid

Rommerskirchen A 57

Odenthal

Chorweiler A 1 Kürten

B 51

Pulheim

Nippes Mülheim Bergisch Gladbach B 59

A 3 Ehrenfeld

B 506 B 9

B 55a B 55n B 8 Overath Lindenthal Innenstadt B 55 Kalk B 264 B 265 A 559 Frechen B 9/51

A 59 A 4

Rösrath Hürth A 555 Rodenkirchen Porz

Kerpen

Erftstadt Brühl 0 5 10 km Wesseling Lohmar Niederkassel Troisdorf OpenStreetMap-contributors

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

< 10.00 13.00 < 14.00 Water Area Industrial or Traffic Area 10.00 < 11.50 >= 14.00 Green Area Other Area

11.50 < 13.00

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

Cover page 4 Contacts Market for condominium apartments Cologne

Purchase prices rise in all segments of the residential market

Momentum increased again in the first half of 2021 in Purchase price bands for condominiums Cologne Cologne‘s market for condominium apartments. Median Purchase price in €/sqm asking prices rose by 15.4%, double the growth recorded 8,000 over the same period of the previous year (+7.8%) and the 7,300 Upper 10 % 6,910 five-year average (+7.9% per annum), with the median 7,000 purchase price now standing at €4,800/sqm. At 11.3%, the Upper 25 % 6,000 growth in the top purchase price segment also significantly Median exceeded the previous year‘s figure of +6.2%, which itself 5,000 Lower 25 % was already slightly above the current five-year average of 4,910 4,000 +5.9% per annum. The average asking price for the most Lower 10 % expensive 10% of apartments on offer is currently €6,910/ 3,000 2,980 sqm, but prices of individual properties can be even higher. 2,000 A significant rise of +16.0% in the average asking price for the least expensive 10% of all the properties being offered 1,000 Cologne Cologne for sale has also been observed, which is four percentage total new built points above the five-year average. The price increase in the new-build segment was also significantly higher than Source: JLL, VALUE Marktdaten (Status: July 2021) the previous year‘s figure and the five-year average (+7.4% per annum) at +15.4%, with an average purchase price of €6,380/sqm recorded. The highest median asking price at district level was recorded in Ehrenfeld (€5,900/sqm) and the lowest was in Porz (€3,190/sqm).

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

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

Leichlingen (Rheinland) Monheim Dormagen Langenfeld (Rhld.) Burscheid

Rommerskirchen A 57

Odenthal Leverkusen

Chorweiler A 1 Kürten

B 51

Pulheim

Nippes Mülheim Bergisch Gladbach B 59

A 3 Ehrenfeld

B 506 B 9

B 55a B 55n B 8 Overath Lindenthal Innenstadt B 55 Kalk B 264 B 265 A 559 Frechen B 9/51

A 59 A 4

Rösrath Hürth A 555 Rodenkirchen Porz

Kerpen

Erftstadt Brühl 0 5 10 km Wesseling Lohmar Niederkassel Troisdorf OpenStreetMap-contributors

Condominium price level Average in €/sqm on postcode level

< 3,000 4,500 < 5,500 Water Area Industrial or Traffic Area 3,000 < 3,500 >= 5,500 Green Area Other Area

3,500 < 4,500

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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