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Cologne

Dusseldorf

Hamburg

Munich A guide to investing

Stuttgart in ísafördur

Saudharkrokur Akureyri Borgarnes Keflavik Reykjavik Selfoss ICELAND Egilsstadir A guide to investing in Germany Introduction | 3

FINLAND

ME TI HT NORWAY IG HELSINKI FL R 2H TALLINN OSLO Introduction ESTONIA STOCKHOLM

IME T T GH LI Dusseldorf F IN 0M 3 RIGA investing in germany R 1H LATVIA

E frankfurt EDINBURGH IM T T LITHUANIA GH DENMARK LI F R COPENHAGEN VILNIUS BELFAST 1H MINSK IRELAND

Hamburg DUBLIN BELARUS IME HT T LIG F IN HAMBURG M 0 UNITED KINGDOM 3 WARSAW Germany is one of the largest Investment Markets in Europe, with an average commercial AMSTERDAM BERLIN KIEV NETHERLANDS POLAND transaction volume of more than €25 bn (2007-2012). It is a safe haven for global capital and LONDON BRUSSELS DÜSSELDORF COLOGNE UKRAINE offers investors a stable financial, political and legal environment that is highly attractive to both BELGIUM PRAGUE FRANKFURT CZECH REPUBLIC domestic and international groups. LUXEMBOURG

PARIS SLOVAKIA

STUTTGART BRATISLAVA

VIENNA MUNICH BUDAPEST This brochure provides an introduction to investing in German real estate. Jones Lang LaSalle HUNGARY BERN ROMANIA has 40 years experience in Germany and today has ten offices covering all of the major German SWITZERLAND SLOVENIA markets. Our full-service real estate offering is unrivalled in Germany and we look forward to LJUBLJANA CROATIA BUCHAREST ZAGREB BELGRADE sharing our in-depth market knowledge with you. BOSNIA & HERZEGOVINA SERBIA

SARAJEVO BULGARIA

ITALY SOFIA PRESTINA KOSOVO Timo Tschammler MSc FRICS SKOPJE HAMBURG MACEDONIA International Director ROME TIRANA MADRID ALBANIA Management Board Germany PORTUGAL Lisboa (Lisbon) SPAIN GREECE Office and Industrial, Jones Lang LaSalle Setúbal

ATHENS

BERLIN

Germany enjoys a thriving, robust and mature real estate market which is one of the DÜSSELDORF cornerstones of the German economy. Knowledge of the details of the law, the real estate market COLOGNE and its players has been one of Clifford Chance’s core competences for decades and forms the basis of the most experienced, integrated and largest real estate legal practice in Germany.

We will help you achieve your goals and minimise legal risks during the whole life cycle of your FRANKFURT real estate investments, wherever your investment strategy takes you.

Cornelia Thaler Partner Head of Real Estate Germany, Clifford Chance STUTTGART

MUNICH German Overview | 5

Overview of COMPETITIVE ADVANTAGES Germany OF GERMANY

German economy overview 10The variety of opportunities and competitive occupational costs make Germany an excellent destination for investment.

Germany is the strongest economy in Europe and one of the main trading partners include not only European countries such 1 Germany has the largest GDP and population in Europe with and strongest in the world. Small and medium-sized largest worldwide. It plays a leading role in the European Union as France, the UK, Italy, and the Netherlands, but international four cities having a population of greater than 1 million. enterprises (SME) are also an important part of the (EU) and benefits from the customs duty exemptions that this markets such as the United States, China and Russia. German economy with almost 60 % of all employees are membership provides. This membership allows Germany to take 2 First Class Infrastructure. Germany is Europe’s number working in SME’S. advantage of free trade between the community’s 27 member “Made in Germany” is a pseudonym for quality. This reputation one logistic market. A first-class transportation and states. Germany accounts for 20% of Europe’s GDP (EU-27) and is has been built on the consistent innovation shown by German communications network assures just-in-time delivery. 7 Germany is one of the big three global exporters (alongside home to 16% of the total European Union population. The German companies, making them global leaders in the development of China and the US). This supply-side strength is one of the economy is both highly industrialised and diversified – with equal new technologies. German dominance in the development of new 3 Germany has nine major international airports: main drivers in making Germany one of the top targets for focus placed on services and production. technologies continues to this day; in 2012 Germany had almost Frankfurt/M, Munich, Düsseldorf, Berlin, Hamburg, international investors. twice as many patents approved as France and Great Britain Cologne, Leipzig, Hannover and Stuttgart. The capital city of Germany is Berlin, however Germany combined. 8 Germany has one of the lowest unemployment rates in is a Federal Republic with sixteen “Bundesländer”. Every 4 Germany has highly developed economic and political Europe and worldwide. Alongside this, Germany benefits “Bundesland” has state , political institutions and Germany is the leading global force in high-tech solutions with legislation, providing the necessary legal framework for from an excellent standard of workforce, due to the quality administration. The federal structure ensures the division of German Engineering being a globally demanded commodity. the protection of investments. of education and vocational training available. authority between the Federal Government and the “Länder”. This dominance looks set to continue with 11% of all university For this reason there are some differences between the graduates having an engineering degree. 5 Germany, based on a 2013 survey of more than 26,000 9 The renewable energy sector in Germany is the most administrative / legislative protocols of the Länder, such people in 25 countries, is the world’s most popular country. innovative and successful in the world. as Building Codes or certain tax levels. From an economic Environmental research and technologies are also an area perspective, this federal structure presents investors with in which Germany will continue to lead. Germany is already 6 Economic diversity; manufacturing and the provision of 10 Liquid Markets. Due to Germany’s federal nature, it has a range of opportunities due to the variety of conditions found established as a global pioneer in developing renewable and services provide two distinct, yet complementary grounds many strong cities; this variety brings with it opportunities across the German regions and cities. environmental technologies and this trend looks set to continue. from which the strong and stable German economy is for diversification (There are 70 cities with more than anchored. The manufacturing sector is one of the largest 100,000 inhabitants). German manufacturing is internationally renowned for its Germany places strong emphasis on sustainability of the quality output and leading-edge design and technology. environment and encourages big companies take part in German chemical, automotive, and machinery & equipment “Corporate-Sustainability” for a healthy world. National targets manufacturing industries are recognised globally. Germany’s are aiming to reduce CO2 emissions by 80% to 60% in 2050.

Quality of Living Survey

Rank City Country

1 Vienna Austria

2 Zurich Switzerland

3 Auckland New Zealand

4 Munich Germany

5 Vancouver Canada

6 Düsseldorf Germany

7 Frankfurt Germany

8 Geneva Switzerland

Source: MERCER Ranking 2012 A guide to investing in Germany Legal Overview | 7

Legal overview

1.0 Ownership 1.2 condominium ownership In Germany, ownership title is one of the fundamental individual Condominium ownership is the result of the separation of rights, protected by the . The owner of an asset individual units in a building. Residential properties are such as real estate has the unlimited rights of use, enjoyment commonly held in this way, especially in larger German cities. of the fruits of their asset (rents, natural resources, interest However, this form of ownership is not common for commercial payments etc), disposal, letting, and the right to bequeath to purposes, such as offices (which are usually owned in full someone. freehold ownership).

The most common form of real estate ownership title is full Condominium ownership consists of the ownership of a specific freehold title. Of lesser importance is condominium ownership part of the building, usually the rooms of the apartment (Wohnungseigentum), or quasi-ownership forms such as (Sondereigentum), and the co-ownership, together with all other hereditary building rights (Erbbaurechte) or usufruct rights condominium owners, of the communal parts of the building (Nießbrach). The ownership title of real estate assets are always (Gemeinschaftseigentum), such as elevators, staircases and registered in the land register, as are the most important gardens. encumbrances which can rest on real property (such as mortgages). The relationship between the condominium owners is governed by a contract, which governs how decisions relating to the whole of the real estate are reached, and how costs are shared. In larger 1.1 full freehold ownership condominiums, there will be condominium administrator in Full freehold ownership is the ownership over a plot of land. charge of managing the affairs of the condominium owners. As a matter of law, immovable fixtures, most importantly buildings, are considered an integral part of the land. Thus, Condominium ownership is freehold ownership, albeit of only a part whoever is registered as the owner of the freehold in the land of a building, and as such can be let and sold on in the same way. register, also owns the buildings on the land. Full freehold ownership can be charged either for financing purposes with mortgages or with liens permitting/prohibiting certain conduct 1.3 hereditary building rights (e.g. cable rights, right of way etc). Hereditary buildings rights are a type of quasi-ownership rights to real estate. They are similar to freehold ownership Ownership title is transferred from one owner to the next insofar as they entitle the owner to use a plot of land. They can through the registration of ownership title in the land register. be sold, bequeathed and charged with mortgages and liens. Registration of the ownership title is based on an agreement But a hereditary building right is only temporary, and after the between the purchaser and the vendor. This agreement must term of the hereditary building right has passed, the right ceases always be notarised before a notary; if not notarised, an to exist and the usage rights are, with all other rights, conferred agreement to transfer real estate is void under German law, back to the full freehold owner. and a land register will refuse to transfer ownership title. The transfer of ownership title is usually affected some weeks Hereditary ownership rights are bought about by the agreement after the commercial closing between the parties has taken between the full freehold owner and the beneficiary of the place. There are certain legal safeguards in place to ensure that hereditary building right. The right needs to be registered in the both the purchaser and the vendor of real estate can enter into land register; for the hereditary building right, an additional land and execute a transaction involving real estate, despite being register page is formed to register all changes in title to this unable to close the transaction themselves. quasi-ownership right.

Typically a hereditary ownership right lasts for 99 years, but it is possible to extend this. Hereditary building rights are used by entities which, while allowing third parties to use and redevelop a plot of land on a very long-term basis, hesitate to sell full freehold ownership. The most prominent examples are German municipalities and the Christian churches, both of which make use of hereditary building rights regularly. A guide to investing in Germany Leasing Overview | 9

Leasing overview

Commercial buildings and properties are often let through 1.4 maintenance and repairs the vendor. There are only few exceptions to this rule; most commercial lease agreements. Commercial leases are governed notably, the original landlord will remain responsible for any Unless otherwise agreed between the parties, the obligation by special provisions of the German Civil Code. This law leaves rent security provided to them by tenants. In the worst case, the to perform and pay for maintenance and repairs is upon the most matters up for agreement between the parties, but provides tenant can claim back the rent security from the original landlord landlord. However, it is common for the tenant to take over the fall-back provisions on which the parties can rely if they do not even if they no longer own the property and have passed the execution and costs of certain maintenance and repair works, choose to deviate from the general rule of the law. Some of security on to the acquirer of the property. As a result, there are whereas the landlord will be responsible only for structural these provisions are pro-landlord, others are more pro-tenant. usually specific agreements relating to such security in purchase issues (Dach und Fach). Alternatively, a landlord can reach an In general, German lease law can be said to have a slight bias agreements. agreement where the tenant will be responsible even for these towards the tenant, more than for example in the UK, but less structural issues; however this is less common. German courts than in France. will closely scrutinise such agreements and are not shy of holding 1.6 acquisition options such provisions invalid if agreed upon due to overwhelming A German lease agreement will always contain provisions on the market power of the landlord. Agreements between tenants and landlord which entitle one following issues: party to ask for the property to be sold are not uncommon. However, they do require valid notarisation. 1.1 rent object 1.5 subletting / Assignment Subletting is permissible under German law, but usually subject This needs to be clearly defined to avoid problems. 1.7 Tax to agreement between the parties which restrict the tenant’s 1.3 Rent possibilities of sub-letting. The unilateral assignment of a lease German commercial lease agreements regularly are subject to by the tenant to a third party is, unless specifically allowed and VAT, provided that the tenant is an entity which can reclaim VAT. 1.2 Duration The rent can, and is, freely agreed between the parties provided for in the lease agreement, not possible under German There are certain types of tenants which are not, such as doctors of commercial leases. All the usual permutations of rent Under German law, the parties are free to agree to a fixed term, law. If not specifically allowed and provided for, it always requires or banks. This can lead to complications in the tax treatment of calculations can be found in Germany (fixed rent, turnover rent, or can leave the duration of a lease agreement unspecified. In the the consent of the landlord. the property which require specialist advice by tax experts. latter case, a commercial lease is generally terminable with six mix of both etc.), including all methods of incentivising tenants (rent-free periods etc.). to nine months’ notice. If a fixed term is agreed upon, the term However, in the event of a sale the lease will follow the land, is subject to market practice. Retail properties tend to be let for i.e. the purchaser of the real estate becomes landlord replacing 10-15 years, whereas office buildings usually are let for an initial The rent review mechanism in Germany links changes in rent term of 5-10 years, and shorter terms thereafter. Other usages to inflation (VPI – the German consumer price index). Often this can result in different market-standard terms. Contractual mechanism involves a hurdle rate at which point the change renewal options are common, but not a matter of statutory law; in rent will be triggered; once triggered the passing rent will Standard Rental Terms Office Retail Logistics they must be agreed upon by both parties. be amended to reflect the change in VPI. Frequently however, Rents 2/m²/month 2/m²/month 2/m²/month the change in VPI is not fully incorporated in the new rent. The term of a commercial lease can, as a matter of law, not For instance a standard rental increase may outline that after exceed 30 years; after that time, both parties can terminate the a given change in VPI, then the rent will be affected by 90% of this Typical lease term 5-10 years 5-10 years (High Street) 3-5 years for existing properties lease, even if the contract stipulates a longer period. In practice, change. It should be noted that rental adjustments, while possible and 7-10 years for new space there is a legal requirement that leases with a duration of more in principle, must allow for increase as well as decrease of rent, Frequency of Monthly in advance Monthly in advance Monthly in advance than one year must meet “written form” requirements. This reflecting the current market situation, to be valid. The only rent payable does not only mean that all material parts of the agreement exception is if a rent step-up plan is explicitly agreed upon in which form the lease agreement must be in writing, but advance. But “upward-only” rent reviews are not permissible Typical rent deposit 3-6 months Negotiable Negotiable furthermore that all parts of the lease must form one “deed”. in German law. (expressed in months) There are different ways to comply with these requirements. Basis of rent increase VPI with hurdle rates VPI with hurdle rates VPI with hurdle rates If a lease does not comply with the legal requirements of written Rent usually consists of the true compensation for the usage of at review form, it remains valid and in force, but after one year may be the property, as well as a prepayment by the tenant on costs the terminated by either party as if the lease had an unspecified landlord has vis-a-vis third parties (e.g. waste disposal, utilities, Frequency of rent Annual Indexation Annual Indexation Annual Indexation term, i.e. six to nine months’ notice. ground rent etc.). Unless the lease explicitly provides for such increases costs to be borne by the tenant, the landlord must carry them. It is standard to refer to certain legal provisions listing the most important kinds of ancillary costs. However, in some markets tenants refuse to carry certain costs (e.g. ground tax). In this case, the landlord must deduct these expenses from his income to calculate the true net rent. A guide to investing in Germany Environmental Overview | 11 environmental overview

Green Buildings – Sustainability in Germany Contamination of land or buildings Germany is pursuing an ambitious program of transforming the The objective of these activities is to reduce the carbon footprint When land becomes polluted or a building becomes real estate industry from one of the largest consumers of fossil of buildings, both new and existing. These changes will have contaminated, the responsibility to remediate this usually lies fuels to an entity governed by the principles of sustainability. important implications on the allocation of the cost burden with the owner. However, if the polluter can be determined, they The Energieeinsparverordnung 2009 (EnEV 2009) is a piece of between landlords, tenants and (via subsidies or tax breaks) the too can be held responsible. Property tenants are usually not legislation which deals with energy consumption and energy government. Recent laws allow landlords to increase rent as held liable, unless they caused the pollution. Under German law, efficiency of buildings. Under this regulation, old and inefficient a result of energy efficiency measures, such as added insulation, a property owner cannot relieve itself from clean-up liability by heating systems must be replaced by efficient new ones and air new heat-insulating windows, more efficient heating systems selling or abandoning the land (concept of “eternal land-owners conditioning systems must be regularly inspected by experts. etc. However, these increases are limited to 11% of the rent. clean-up liability”). Indemnification clauses in agreements with Furthermore, all buildings must have energy certificates In addition, the tenant’s right to reduce the rent as a result of property purchasers only allocate liability between the contract (Energieausweis), which must be presented when selling or the disturbances and nuisances related to the construction work parties and significantly not in relationship to the authorities. letting a building. associated with such measures is now limited to only those construction measures which exceed three months. These regulations will be made tougher in the coming years, with the aim of tightening the obligations. New buildings will All of these measures have led to the rise of certificates have to observe ambitious energy efficiency standards; it is also confirming compliance with applicable energy-efficiency laws, possible that these stringent new regulations could be extended and even stricter standards, in German commercial real estate. to existing buildings as well. The new regulations will oblige For instance, it is now extremely rare for trophy office buildings Environmentally material facilities property owners to state the energy consumption and efficiency to be built without such certificates. Common certificates of their building when advertising their buildings for purchase or are the German “Deutsches Gütesiegel Nachhaltiges Bauen” Buildings or industrial facilities which may have an adverse rental purposes. As of 2021, all newly constructed buildings must (DGNB) and “Bewertungssystem Nachhaltiges Bauen” (BNB), impact on the environment and the surroundings, especially local be so-called minimal-energy buildings, i.e. require zero energy but other certificates such as the US “Leadership in Energy and neighbours, require permitting under special environmental for heating, or even produce energy. Buildings built by public Environmental Design” (LEED) certificate or the UK’s BREEAM laws. These deal with environmental hazards and nuisances such entities will have to achieve this by 2019. are also present in the German market. These certificates are as noise, air pollution, waste disposal, wastewater discharge, becoming increasingly important in minds of many institutional and many others. Environmental regulation is comprehensive investors. This trend of sustainability in real estate is set to and complex in Germany, as can be expected in a developed, continue. mature industrialised nation; much of it is determined by EU law. Specialised authorities of the Federal States are responsible for the permitting process and compliance monitoring of such facilities, which are governed under the German Federal Action to clean up can be brought either by the authorities, or by Emission Protection Act (Bundes-Imissionsschutzgesetz) and certain private parties (mainly property owners and neighbours). many other environmental laws. Depending on the kind of The procedure can take time and involves exact evaluation of the facility, the permitting process can be very time-consuming issues, agreement of possible remedies, planning and execution and elaborate and involve several public hearings. Smaller of remediation work and monitoring of the results. Usually, installations are subject to lesser requirements. Non-industrial environmental / technical experts are involved. The process real property usually is not subject to these permitting regularly is carried out in co-operation between the authorities requirements. and the party responsible for clean-up.

In most German states, if contamination is found it must be reported to the authorities. There is no legal obligation by the owner to actively search for contamination of the land or buildings. However, for some contaminants (such as asbestos), best management practices adopted by market participants, and also workplace safety and insurance requirements have led to thorough investigations of the majority of commercial buildings. There is no automatic obligation to remove contaminants (e.g. asbestos, PCB). Whether or not contaminants can remain in the building depends on the result of an assessment of the danger posed in each individual case. A guide to investing in Germany Key Issues Around Tax | 13

Ownership and operation of German real estate

Income Taxation Trade Tax key issues • In the case of corporate ownership, rental revenues derived • Any commercial trade or business is in principle subject to from German real estate are subject to German Corporate German Trade Tax (“TT”), if and to the extent the business Income Tax (“CIT”) at an effective standard rate of 15.825% is operated in Germany through a German permanent around tax (including solidarity surcharge). In the case of an individual establishment or a German permanent representative ownership, German Income Tax (“GIT”) with an individual (“German PE”). (progressive) income tax rate up to 47.475% (including • Generally, TT is levied on the business income calculated solidarity surcharge) on the rental income would apply. based on the profits determined for CIT or GIT purposes. In the case of ownership through a partnership structure, However, certain adjustments are required to determine the income taxation would depend on the relevant partners TT base (i.e. certain add-backs and deductions are made for (companies or individuals). Acquisition TT purposes). This applies in particular to interest expenses. • Expenses and costs economically incurred in relation to Special TT exemption for real estate companies may also be Real Estate Transfer Tax German real estate (including e.g. depreciation deduction available on a case by case basis. of in general up to 3% p.a. on the acquisition costs of the • • The TT rates currently range from approximately 7% to 17% The transfer of German real estate by way of an asset deal is building) should in principle be deductible for CIT and GIT RETT depending on the municipality in which the PE is located. subject to German Real Estate Transfer Tax (“ ”). purposes. • • Non-German resident companies merely leasing German real The transfer of shares/interest in entities holding German real • Interest expenses should generally also be tax deductible. estate should generally not be subject to TT provided they do estate is generally also subject to RETT if, inter alia, a) 95% or However, the tax deductibility of net-interest expenses is not act through a German PE. more of the shares/interest are directly or indirectly transferred limited under the so-called Interest Barrier Rules (“IBR”) to, or are unified in the hand of, a single purchaser or b) upon to generally 30% of the tax EBITDA of the relevant year. a transaction a taxpayer holds an economical participation of at However, no limitation would apply, inter alia, if the VAT least 95%, directly or indirectly, in a German real estate holding net-interest expenses are less than €3.0m p.a. entity. Moreover, if German real estate is held by a partnership, Other IBR exemptions might be available in the single case. • The leasing and letting of German real estate is subject to RETT is triggered, if within five years more than 95% of the VAT, but generally exempt from VAT. However, the possibility interest in such partnership are directly or indirectly transferred to opt for VAT is available under certain circumstances and to new partners. However, structures to mitigate RETT might be Withholding Tax commonly made use of provided the tenants use the property available. for businesses subject to VAT. • In principle, no German Withholding Taxation (“WHT”) should • The RETT rate depends on the German Federal State in which apply to (non-profit linked) interest payments and rental the property is located and currently ranges between 3.5% to revenues. However, in certain circumstances the German Land Tax 5.5%. tax authorities may order the application of WHT at a rate of 26.375% (including solidarity surcharge). • In general, German real estate owners are subject to Land • It is market standard that RETT is borne by the purchaser. Tax in Germany. However, it is almost standard that Land However, parties may also negotiate a deviating provision in • Dividends paid by a German corporation are generally subject Tax is borne by the tenant as an ancillary cost provided the a sale and purchase agreement. to German WHT at a rate of 26.375% (including solidarity respective lease agreement comprises such a pass-through surcharge). The rate might be reduced in case a double tax provision. treaty is applicable and might even be reduced to 0% under V alue Added Tax the European Parent-Subsidiary Directive, if applicable. • The Land Tax rates range between 1% and 2% of a special property value determined under German Valuation Tax Act • The transfer of leased German real estate constitutes (in most However, such reductions of WHT are subject to substantial (reflecting values as of the year 1964), which is generally cases) a sale of an ongoing business which is not subject requirements. substantially lower than the current fair market value of the to German Value Added Tax (“VAT”) provided, inter alia, the property. purchaser continues the leasing business of the seller. In such case the purchaser assumes the VAT position of the seller regarding the real estate (including VAT correction obligations, if any). • In any other case, the sale and transfer of German real estate Exit as well as shares in companies owning German real estate is generally VAT exempt. However, the possibility to opt for VAT Capital Gain Taxation might be available in order to allow a deduction of input VAT or to avoid any correction of input VAT in connection with the real • Capital gains realised in connection with the direct flat rate of 26.375% (including solidarity surcharge). If the estate acquisition in an asset deal. sale of a German real estate (i.e. asset deal) should in individual holds the shares as a business asset, 40% of principle be subject to GIT or CIT (as the case may be) at the capital gain would be exempt from GIT; the remaining • The current standard VAT rate is 19%. the standard rates mentioned above. If the capital gain is amount would be subject to the individual progressive connected to a German PE, TT also applies. income tax rate of the seller (and consequently only 60% of the expenses would be deductible). If the capital gain is • If the seller is a corporation, generally 95% of a capital connected to a German PE, also TT applies. gain from the sale of the shares in a corporation (i.e. share deal) holding German real estate would be exempt from • In case of non-German residents, Germany may have CIT. If the seller is an individual holding the shares as a waived its right to tax capital gains realised from the sale private asset, a capital gain from the sale of shares in a of shares in companies holding German real estate under corporation would generally be subject to GIT at a an applicable double taxation treaty. A guide to investing in Germany Berlin | 15

Berlin: Retail High Streets with Key Data (2/sq m/month)

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rg u b e Markt m ß e a S e x r Al traße Hackescher t e u S xa The Capital of Germany aß L t- n r - c d a e er s n p o k la R b tz hlosst €120 ie -L Sc S Hackescher Markt rl Alex U Französische Str. a Berlin is the capital of Germany and seat of the German workforce is highly qualified, due to the proximity of €140 / 73% K an S der U government. It is also the largest city in Germany with excellent universities and this is a major driver in the U p €85 / 72% Bhf. Alexanderplatz l. 3.4 million inhabitants. The wider Metropolitan Region decision of companies to locate here. R U Brandenburg/Berlin comprises over 5.8 million inhabitants A103 €160 / 76% e aß with a forecasted population growth of 7.1 % until 2030. Berlin is always strongly rated in location and quality of U tr rs life rankings. The largest companies in the area include: ne U Stadtmitte ru Straße rie G The capital benefits from one of the most modern traffic , Vivantes, Siemens, Lufthansa, BVG and Leipziger and transport infrastructure systems in Europe, with Deutsche Telekom. long-distance, regional-trains and the international airport U completing the network. Berlin’s geographical location As Berlin continues to grow it provides ever new offerings % is percentage of Chain Stores in each location makes it attractive for those companies looking to do for business, living and retail accommodation. The project business in central and eastern Europe. “Berlin Adlerhof – City of Science, Business and Media” Berlin: Office Space Market Areas with Rental Bands (2/sq m/month) is a new district being created on 420 hectares of land in PANKOW NIEDERSCHÖNHAUSEN SME’s are the backbone of the economy in Berlin, making southeastern Berlin. So far the scheme has proved popular KONRADSHÖNE HEINERSDORF Moabit HAKENFELDE it an extremely competitive business location. The city’s with forward looking companies and residents alike. REINICKENDORF A105 Hansaviertel Mitte TEGEL BERLIN Berlin-Tegel Mitte 1A WEIßENSEE (Otto-Lilienthal) Outercity North €13.00 - 22.00 €5.00 - 9.00 WEDDING A111 TIERGARTEN

Logos of companies that occupy significant space in the city Areal Potzdamer Kreuzberg GESUNDBRUNNEN Leipziger Platz HASELHORST PRENZLAUER CHARLOTTENBURG-NORD BERG €15.00 - 21.00

SIEMENSSTADT FENNPFUHL MOABIT MARZAHN

SPANDAU LICHTENBERG WILHELMSTADT FRIEDRICHSHAIN A100 MITTE Innercity East HANSAVIERTEL €7.50 - 16.00

Outercity West WESTEND €5.00 - 10.00 TIERGARTEN

FRIEDRICHSFELDE RUMMELSBURG CHARLOTTENBURG KREUZBERG Outercity East HALENSEE Innercity West €6.00 - 11.00 €8.00 - 17.00 ALT-TREPTOW

SCHÖNEBERG A115 WILMERSDORF KARLSHORST GRUNEWALD SCHMARGENDORF PLÄNTERWALD A104

Buckow ALTGLIENICKE GRÜNAU TEMPLEHOF Tiergarten Rudow A113 FRIEDENAU A100 Outercity South Bohnsdorf €5.00 - 9.00 Charlottenburg

Flughafen Berlin-Schönefeld (BBI) Charlottenburg 1A A103 €11.00 - 21.00 A102 SCHÖNEBERG STEGLITZ Areal Airport Berlin Brandenburg €9.50 - 17.50 BRITZ

Wilmersdorf MARIENDORF LICHTERFELDE A113 0 1 2 Kilometer LANKWITZ A guide to investing in Germany Berlin | 17 city Focus: BERLIN

Berlin is the main hot spot for With the influx of young people, birth rates continue to stay high international retailers in certain districts. These young families also often attempt to stay in the city centre, which gives rise to natural increases in Berlin is the centre for innovation, creativity and academic population in these districts such as Friedrichshain-Kreuzberg research in Germany; it is also a fashion capital and tourist and Mitte. Rents for new-build apartments in city centre locations hotspot in Europe. There can be no doubt that Berlin is one of the range between €10.00 and €14.00 per sq m. Since 2006 rental most interesting retail locations in Europe. The range of products levels have grown 37%, this is largely due to increasing demand on offer is unique with some 10 km of prime shopping locations, and a scarcity of supply. covering more than 870,000 m² of space across 8 top areas. In addition, Berlin’s tourist appeal is a strong magnet for national and international retail formats. Berlin is not only the most Growing demand from business services frequently visited city in Germany – it is also among the top three Strong economic growth during the last two decades has driven most visited cities in Europe. employment growth. Berlin is the capital of Germany and traditionally demand for office space has been largely driven In spite of – or maybe because of – its size, Berlin is constantly on by government related companies and institutions. However the move. Alexanderplatz Square has been transformed rapidly, this trend has been changing as businesses see Berlin as an with sales space doubling over the past five years. Hackescher increasingly attractive office location. Berlin’s youthful, stylish Markt has turned from an insider’s tip to an internationally and contemporary atmosphere has most recently attracted accepted top location. Friedrichstraße has also found its own strong interest from the booming TMT sector. Recently Amazon, niche. The street is now uniquely positioned as a premium eBay, Groupon and Zalando have taken a large amount of location with a strong tourist appeal. As one of the symbols office space. We expect that this trend will continue and this of Berlin, Kurfürstendamm remains in the focus of developers. sector will further bolster office demand in the coming years. While a nationwide comparison shows that Berlin does not have Representatives of industrial companies, which have had little the highest rents and the highest footfall, the German capital presence in Berlin for some time, have recently started to rent clearly remains the No. 1 in terms of internationality, variety more office space. Demand is concentrated around the prime and brand diversity. locations of Mitte, Innerstädtisch Ost and Charlottenburg.

Sustained population growth It should be noted that Berlin has an extremely large amount of undeveloped land, a consequence of this is that land prices are At year-end 2011, Berlin’s population exceeded the 3.5 million relatively low in comparison with other cities. mark for the first time since Reunification as the result of an influx of almost 40,000 inhabitants per annum. Berlin’s Senate expects further population growth to 3.756 million inhabitants Platform for Transport to Eastern Europe up to 2030. Immigration to Berlin is predominantly from the The large population in Berlin and its surrounding area make young, who tend to move into the city centre. In addition to the it an attractive location for warehouses, discounter and retail traditionally fashionable locations such as Prenzlauer Berg and orientated companies. By German standards however, it is by Kreuzberg, there is increasing demand for locations in the less no means an industrial hotspot, in fact there is relatively little well developed areas in the Mitte district such as Wedding and industrial space in the area. Rather Berlin is, due to its excellent Moabit due to the comparatively cheaper rental levels. infrastructure, a trade hub connecting Eastern and Western Europe.

Berlin is the centre for innovation, creativity and academic research, it is also a fashion capital and tourist hotspot A guide to investing in Germany Cologne | 19

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Bocklemünd/Mengenich Weidenpesch Höhenhaus Ossendorf Other Locations Dellbrück 6.00 - 11.50 Mauenheim € Mülheim Brauweiler Widdersdorf Bilderstöckchen Widdersdorf Logos of companies that occupy significant space in the city Vogelsang Nippes Köln Bickendorf Köln Neuehrenfeld Holweide Lövenich Riehl Buchheim Ehrenfeld/ Merheim Neusdadt- Bensberg Braunsfeld Nord €6.50 - 13.00 Buchforst Müngersdorf A4 Peripherie Altsdadt- Höhenburg West Braunsfeld Nord Deutz Kalk/MülheimBrück Weiden €7.00 - 9.50 Kalk €7.00 - 13.00 Neusdadt-City Centre Deutz/Messe Rath/Heumar Süd €9.50 - 20.50 €9.50 - 20.00

Altsdadt- Vingst Buschbell Lindenthal Süd Rhinebank-West Neubrück Marsdorf Lindenthal/ €13.00 - 22.00 Sülz Ostheim A559 €7.50 - 12.50 Rath A4 A3 Junkersdorf Poll Sülz Gremberghoven Eil Zollstock Raderberg A59 Bayenthal Westhoven A1 Zollstock Porz/Gremberghoven/ Klettenberg Bayenthal/ Airport Rösrath Marienburg €8.50 - 11.50 Marienburg Hürth €9.00 - 15.00 Ensen Rodenkirchen Gleuel Raderthal Finenberg Weifl

Berrenrath Rondorf Rodenkirchen A555 €7.00 - 10.50 Urbach Other Porz Flughafen Konraderhoehe Locations Köln/ (Konrad Adenauer) €6.00 - 11.50 Hahnwald Other Elsdorf Meschenich Sürth Locations Grengel 0 2 4 Kilometer Immedndorf Wahnheide Godorf €6.00 - 11.50 Wahn Meschenich Langel A guide to investing in Germany Cologne | 21

city Focus: Cologne is, with 1 million inhabitants Germany’s fourth largest city (after Berlin, Hamburg and Munich) and North Rhine-Westphalia’s cologne biggest city. The wider “Rhine-Ruhr” Metropolitan Region comprises more than 10 million inhabitants.

Tourism & Retail In the city centre, rental prices have now reached €11.00 to €15.00 per sq m, whilst in peripheral locations, new-build Cologne is also something of a cultural metropolis, attracting apartments are already being offered from €8.00 per sq m. millions of tourists each year with its historic sights and Rents have been rising again in Cologne since 2009 and have numerous high profile events like Carnival or Christopher Street increased by around 10%. Day. Tourists and residents alike can indulge in a 3 km long shopping tour through downtown Cologne. No other German city offers a comparable circuit. All major shopping streets Growing office market form an almost closed loop. Schildergasse and Hohe Strasse are among the most frequented shopping streets in Germany. Since 2005 office employment has grown by more than 13% to Retail premises in the prime locations of Cologne command almost 290,000 office workers. Cologne has developed as an among the highest rental levels in Germany. However, when attractive office location and office employment is expected compared to other cities, there are only a small number of to grow further in the coming years with a continued focus on shopping malls in Cologne. The retail landscape here continues business services, trade and media companies. to be characterised by highly functional street level locations. Logistics Cologne’s population is continuing to grow with population growth at its highest in locations close to the city centre. The central The logistic market in the Cologne Region benefits from areas are still relatively affordable and are particularly attractive the relatively high purchasing power of the population and for newcomers; this includes the large numbers of students who well-established infrastructure with several motorways, come to the city to study. harbours and the second largest freight airport in Germany. A guide to investing in Germany Düsseldorf | 23

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Germany. Düsseldorf is also a growing city with population in Düsseldorf such as Fujifilm (Japan), HSBC (UK), L’Oreal e ß ra growth forecasted to be 3.5 % per annum until 2025. (France), TATA Steel (India), Huawei (China) and Statkraft st rl Kasernen a (Norway). Due to this, 40 consulates and 33 foreign K Haroldstra Düsseldorf is one of the most important German chambers of commerce are also based here. ße H aroldstraße 0 100 200 Meter Graf- commercial centres, playing a leading role in exporting Adolf-Platz raße goods from Germany to foreign trade partners. Due to Düsseldorf, is the state capital of North Rhine-Westphalia Graf-Adolf-St this strong track record in exporting goods, Dusseldorf region and is home to all ministries of the provincial % is percentage of Chain Stores in each location has attracted internationally oriented service providers government. such as bank, insurers, logisticians, media experts Düsseldorf: Office Space Market Areas with Rental Bands (2/sq m/month)

Boesinghoven Wittlaer Kalkum Oberkassel Pemplefort Lank-Latum €8.00 A52 - 13.50 Langstkierst

Altstadt City Kaiserwerth Ratingen U Struemp Ilverich Airport Banking District €9.00 - 27.50 Logos of companies that occupy significant space in the city €11.00 Ratingen Karlstadt€17.50 - 27.50 - 16.00 Stadtmitte

Lichtenbroich U Lohausen U A44 Flughafen Düsseldorf International

Stockum Unterrath HafenGovernment District €11.50 - 17.50 Rath North €8.00 - 15.00 Düsseldorf Mörsenbroich Oberbilk Seestern City-South €9.50 - 13.50 Golzheim Derendorf Friedrichstadt Ludenberg €8.00 - 11.00 Lärick Kennedydamm Hubberath €12.50 - 19.50 A3 Düsseltal A52 Niederkassel Heerdt Linksrheinisch Pemplefort Grafenberg Grafenberg/East €7.00 - 13.50 Oberkassel City €9.00 - 13.50 €9.00 - 27.50 Flingern Altstadt Banking District Harbour €17.50 - 27.50 Nord Gerresheim Other A57 €13.50 - 21.50 Karlstadt Stadtmitte Locations Kaarst Hafen Flingern Süd Government District City-East €11.50 - 17.50 Friedrichstadt Düsseldorf €9.50 - 12.50 Lierenfeld Unterbilk Hamm Vennhausen Oberbilk Erkrath

City-South Eller €8.00 - 11.00 Unterfbach Unterfeldhaus €7.00 - 10.00 A46 Flehe Volmerswerth Wersten South €8.00 - 11.50 Hassels

A46 Reisholz A59 Holthausen Himmelgeist Holzheim Itter Benrath 0 2 4 Kilometer A57 Kalstert Neuss A guide to investing in Germany Düsseldorf | 25 city Focus: Düsseldorf is one of the top 3 retail locations Düsseldorf in Germany… it has benefited from the growing interest of international retailers looking to expand

Düsseldorf – a retail metropolis period in 2011. Asking rents for new-build apartments are currently around €12.50 per sq m. Rents in Düsseldorf have been Düsseldorf is a retail metropolis and one of the top 3 retail rising since 2008 (c.18%). New developments have had a great locations in Germany. In recent times it has benefited from the effect on the Düsseldorf rental market over the long-term. growing interest of international retailers looking to expand, Taking this increase into account and the fact that the rising trend attracting these groups due to its mix of luxury, consumer and is currently slowing down in Düsseldorf, there has been rather fashionable locations. a moderate rental price increase since 2004, which has been at approximately the same rate as inflation. Further rental price Düsseldorf is a famous city for fashion industries. Major companies development in Düsseldorf remains to be seen and is dependent like Peek & Cloppenburg are headquartered here. The Königsallee on the large number of project developments. or “The Kö” has one of the highest rents for retail space in Germany and a strong draw for tourists. Königsallee is by far the most heavily frequented luxury shopping location in Germany. Office Market Several fashion stores have recently reopened following major refurbishing exercises. Construction work on the landmark project Demand for office space in the region is bolstered by the general Kö-Bogen will be finished this year. Some additional 19,000 sq m of importance of the service sector. The share of people employed new retail space will be created in this prominent location between in this sector in Düsseldorf is extremely high, at over 80%. Königsallee and Schadowstrasse. In addition to the strong service sector Düsseldorf as the capital of Northrhine-Westfalia is well known as the so-called “Desk of the Ruhr-Area” which mean there is a significant share of office Residential Market space demand coming from local and regional government. Düsseldorf’s population is continuing to grow, largely due to inward migration. Following population growth of 0.4% in 2011, a similar Logistic Platform for Europe level of growth was registered in North Rhine-Westphalia’s state capital by mid-2012, which means that the city’s population Düsseldorf has an advantageous geographic location for continues to increase. With the growth in the numbers of trade – Benelux, France and the remainder of Germany are households exceeding population growth, the trend for smaller all easily accessible. Excellent infrastructure is fundamental households in Düsseldorf continues. The average asking rent to Düsseldorf’s role as a trade hub for western and central for accommodation in Düsseldorf is €9 per sq m/month, which European business. equates to a rise of more than 6% compared with the same A guide to investing in Germany Frankfurt am Main | 27

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o u Germany. Frankfurt is also a growing city with a forecasted Gr airports in the world. In addition to this, the “Frankfurter K growth of around 1% p.a. Kreuz” is one of the most used motorways in Europe. Frankfurt is the financial centre of Germany and a global The Frankfurt Trade Fair is the second largest exposition financial centre. It is home to The European Central Bank, in the world. It brings together companies from more than % is percentage of Chain Stores in each location The German Federal Bank and The German Stock Exchange 150 countries and has the largest revenue of any trade fair as well as several large commercial banks like Deutsche of worldwide €538 million. Frankfurt is home to more than Frankfurt am Main: Office Space Market Areas with Rental Bands (2/sq m/month) Bank and Commerzbank. Oberhoechstadt/Ts. Oberursel 70 consulates, 100 chambers of commerce and industry and Kalbach Königstein Kronberg other foreign representations. Bad Bergen- Merton-Viertel Frankfurter Vilbel Enkheim Berg Steinbach A5 €8.50 - 12.00 Frankfurt is also well known for offering its residents a high Frankfurt quality of life. The city is also called a “green city” as more than Schwalbach 50% of the inner city is made up of protected “green” areas. €7.50 - 14.50

Praunheim Bad Dornbusch Soden Eschborn Logos of companies that occupy significant space in the city Seckbach A66 North A661 Bischofsheim Hausen €10.00 - 12.50 East Nordend- €8.00 - 15.00 Rödelheim Bockenheim West €9.00 - 12.00 Westend- West Nord Nordend- A66 €9.50 - 17.50 Ost Rödelheim City €11.00 - 28.00 Westend-Süd A648 Innenstadt Westend Offenbach Banking District Ostend am Main City-West €15.00 - 30.00 €21.00 - 34.00 €12.00 - 17.50 Altstadt Kaiserlei €8.00 - 11.50 Gallusviertel Höchst Sachsenhausen- Nord Oberrad Central Station Area Sachsenhausen Griesheim €9.00 - 22.00 €11.50 - 17.00

Niederrad Other Locations Frankfurt am Main Schwanheim €9.00 - 14.50 Sachsenhausen- Süd

Hattersheim A3

Gravenbruch Okriftel Heusenstamm Meu-Isenburg 0 2 4 Kilometer Flughafen A guide to investing in Germany Frankfurt am Main | 29

Office demand highly concentrated by Logistics – in the heart of Germany financial business Thanks to its central geographic location and transport Frankfurt is the German centre of the banking and finance infrastructure, the Frankfurt/Rhein-Main region is probably the industry and is in competition with other global financial centres most accessible region in the whole of Germany and Europe. It is city Focus: like London and Paris. Several hundred national and international home to the Rhein-Main Airport, the largest airport in Continental banks, in addition to many financial service advisors, dominate Europe, and is located near to the junction of the A3 and A5 the office market. As a result Frankfurt has the highest share motorways, the two main north-south links. Frankfurt am Main of office employment in Germany (53%), a total of more than 315,000 are working in offices and the long term average trend Frankfurt’s infrastructure underpins the economic potential of shows that banks, financial and business services account for the region. As an industrial location, the Frankfurt/Rhein-Main almost half of the total demand. The Frankfurt office market region has the second highest density of industrial companies is the most volatile market in Germany, and as a consequence in Germany (second behind the Ruhr area). The most important offers the largest scope for opportunity. The market consists of industrial sectors are the chemical/pharmaceutical industry, an office stock of around 12 million sq m. The Frankfurt office the automotive industry and the logistics sector. Frankfurt airport market is the only established high-rise office market in Germany is another main driver for the logistics market and several air and traditionally the market with the highest prime rents. The freight related companies are located in the surrounding area. market structure is characterised by a concentrated prime The depth of demand for logistics space in this area means that Banking District, together with the other two major sub-markets rents for logistic space are around 25% higher compared to other City and Westend. Frankfurt is home to a large number of blue logistic sub-markets. chip corporate tenants, including DekaBank, McKinsey & Co, Schroder IM, Societe Generale and UBS.

Home to The European Central Bank, The German Federal Bank and The German Stock Exchange – Frankfurt is the financial powerhouse of Europe.

High international profile backs Continued population growth in the city Retail business on the Main Frankfurt combines a metropolitan profile (it is known as Population growth continued in 2012. Growth is steady, with “the World’s Smallest Metropolis”) with idyllic and traditional around 5% more people living in the city than 5 years ago. characteristics. The attractiveness of the city is reflected in the Within Frankfurt’s city limits, the highest population growth has key retail and tourism indices. The centrality indices of Frankfurt been experienced in its environs, which are 11% more populated (113.9) shows that it has an above-average appeal and benefits than 5 years ago. Large development zones here include the from a strong influx of purchasing power from surrounding areas. Am Riedberg site, which attracted not only more than 6,000 new This contributes to consistently strong levels of retail demand and residents by year end 2012, but also Goethe-University’s natural is further bolstered by Frankfurt’s cultural offerings. science faculties and numerous research institutes in Science City.

The most important prime locations are concentrated around The main cause of population growth is the high level of inward the city centre, such as Zeil, Grosse Bockenheimer Strasse migration. The Federal Institute for Research on Building, and Goethestrasse. The attractive retail offering range from Urban Affairs and Spatial Development (BBSR) residential consumption oriented, highly frequented shopping streets to chic market forecast estimates that the city of Frankfurt requires luxury destination shopping locations. The consumption-oriented some 3,300 new apartments every year until 2025 to be able to stores are concentrated in the east of the city centre, with the provide sufficient residential space for the growing population. higher quality locations found primarily towards the west. As in other major German cities, Frankfurt’s rental history shows that rents have not always been rising. But if the upwards spiral in rents continues at the same rate as in the last few years, it is likely that the average asking price for apartments will reach €12.00 per sq m by the end of 2013. A guide to investing in Germany Hamburg | 31

hamburHa bugrg: Retail etai Highl High Streets Streets with Keyith Datae (2at/sqa m/month)

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a t e u Mönckebergstr. With 1.8 million inhabitants, Hamburg is the second largest Hamburg consistently achieves top positions in quality of i s aße n b tr bergs t ke o r Mönc r city in Germany after Berlin. The wider Metropolitan Region life. The largest companies are: Airbus, Asklepios Kliniken, ü Rathaus w c

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comprises over 5 million inhabitants with approximately Hochbahn, Otto Group, Union and BDF Beiersdorf. e l 215 / 88% l € Steinstraße traße 300,000 people commuting to Hamburg each day. Hamburg Stadhausbrücke Steins is a growing city with forecasted population growth of Many of the companies in Hamburg are involved in foreign S

around 1% p.a. until 2025. trade as Hamburg is a hub for external trade with the ße ra st Steinstr. U Baltic Sea region and consequently the rest of the world. m 0 100 200 Meter o Hamburg is called a gateway to the world, because of In addition to this, around 100 consulates are based in D its port, which is one of the most important in Europe. Hamburg, as well as the International Tribunal for the U Hamburg is home to foreign trade professionals and Law of the Sea. The inner city continues to grow and offers % is percentage of Chain Stores in each location internationally oriented service providers, such as bankers, space for working, living and retail. Of particular note, insurers, logisticians, media experts and legal and tax is , Europe’s largest inner-city development hamburg: Office Space Market Areas with Rental Bands (2/sq m/month) consultants. project. The project is developing a complete new urban Wilhemsburg Flughafen Hamburg Langenhorn Hummelsbüttel district on a site that covers 157 hectares. Hamburg-south of the Niendorf Airport Wellingsbüttel river Elbe €6.50 - 12.00 Hamburg North-East €5.00 - 8.00 Fuhlsbüttel

Ohlsdorf

Neuland Airport/ Heimfeld Grofl Borstel Logos of companies that occupy significant space in the city A253 €7.00 - 10.00 Grofl Borstel City North Farmsen- €6.00 - 11.00 Berne Barmbek- Nord Eiflendorf Barmbek/ Wilsdorf Gut / Bramfeld Moor €9.00 - 12.50 €7.00 - 13.00

Lurup Eimsbüttel €8.00 - Eppendorf 11.50 Hamburg-West €6.00 - 10.50 Tonndorf -Ost €6.00 - Osdorf Stellingen Winterhude 10.50 Wandsbek Hoheluft-West Eppendorf/ / €12.00 - 19.00 Barmbek- Süd Eimsbüttel A7 Uhlenhorst St. Pauli €10.00 - 19.00 Rotherbaum Grofl- Altona- Nord Flotbek Altona-- City Centre Bahrenfeld €12.50 - 24.00 Hohenfelde Marienthal A24 €8.00 - 13.00 East of /St. Sankt Georg €9.00 - 16.00 Georg Sankt Pauli Horn Altona- City South Ottensen Altstadt Altstadt (outer zone) Neustadt €5.00 - 10.00 / HafenCity /Billstedt/ €5.00 - 10.50 Harburg-south City South (core of the river Elbe Harbour fringe area) €7.00 - 13.00 €6.50 - 12.00 €11.00 - 21.50 Kleiner Billbrook Grasbrook HafenCity €16.00 - 22.50 0 2 4 Kilometer A255 A guide to investing in Germany Hamburg | 33

city Focus: The second largest city in Germany, hamburg centred around one of the most important deep water ports in Europe

A Retail Metropolis for the North equates to an average rise of 8% p.a. Although supply has begun to increase, it has been too slowly to have had a noticeable effect Hamburg is an attractive retail location and because of its on rents, a trend that looks likely to continue. polycentric structure the city offers various interesting shopping areas. The core retail areas are located in the city centre, totalling around 320,000 sq m of retail space. The best known Many different Service Sector companies retail streets are Jungfernstieg, Neuer Wall, Spitalerstraße and drive the Office Market Mönckebergstraße and these are amongst the most prestigious retail destinations in Germany. Hamburg has a diverse economic makeup, with major industries including the shipping industry, aviation, and life sciences. The service sector also plays an important role in Hamburg. High Demand for Apartments Hamburg is also a leading media location and the second biggest Hamburg offers residents a high quality of life, based on large banking location in Germany. Hamburg has a total office stock of and plentiful open spaces and recreational areas (approximately around 15 million sq m and is the third largest behind Berlin and one seventh of Hamburg’s urban areas are green recreation Munich. In comparison to the other major German office markets areas), a low population density and a varied cultural offering. Hamburg has a traditionally low vacancy rate, relatively stable levels of demand and moderate rental levels. Hamburg City Council estimates the population will have grown to 1.9 million inhabitants by 2030. The proportion of inward A Centre for the Logistics Sector migration from abroad has increased significantly and accounts for around one third of all arrivals. This is due to Hamburg’s The logistics market benefits from the advantageous geographic consistently sound economic performance, which appeals in location of Hamburg – with the North Sea and Baltic Sea particular to workers from Eastern and Southern Europe. both easily accessible. Hamburg’s harbour is the second biggest seaport in Europe after Rotterdam and this excellent Depending on location, rents for new-build apartments in infrastructure underpins Hamburg’s role as a trade hub. Hamburg range between €10.00 and €16.00 per sq m. Due to the Goods from the Nordic countries as well as from Asia and the high demand for apartments, the Hamburg rental market has Baltics pass through Hamburg making space for warehousing experienced the strongest uplift of all major German cities since and logistics highly demanded. 2007. Since the first half of 2007, rents have risen by 40%, which A guide to investing in Germany Munich | 35

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Munich: Office Space Market Areas with Rental Bands (2/sq m/month)

Oberscheiflheim Dachau A9 b. München A92 Rothschwaige

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West Bezirk Kircheim €10.50 Olympiapark West b. München - 16.50 €10.50 - 17.00 North- Schwabing €12.00 - 18.00 München East Arabellapark €10.00 €12.00 - 17.00 - 16.00 A99 Heimstetten City Centre Bezirk €15.00 Mitte - 31.00 Bogenhausen A94 €15.50 - 26.50 Riem Westend Bezirk Moosfeld/Riem €11.00 Ottendichl - 18.00 Ost €8.00 - 14.50 Gräfelfing Haar

South Planegg Martinsried €8.50 - 14.50 Martinsried Neuperlach Planegg €8.50 - 12.50

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Unterhaching A95 A8 Neubiberg Periphery North Gauting €8.00 - 12.00 Ottobrunn 0 2 4 Kilometer Grünwald A99 A guide to investing in Germany Munich | 37

Office Market Platform for Transport to North and The office market in Munich is the largest in Germany South Europe (20 million sq m office stock) and has the highest take up As the south-east logistic region of Germany it is an attractive volumes (on average) compared with the other main German location for warehouses, retail oriented companies and city Focus: office markets. Munich is Germany‘s most important location local industry. It benefits from excellent infrastructure with for the IT and Biotech sector and is considered a centre for several motorway and railway connections making Munich a innovation. It has a diversified economic structure and a mixture fundamentally important trade reloading point between northern Munich of large international-oriented and medium sized companies. and southern Europe. Munich is a HQ-Location for six DAX-Companies and for many IT and insurance companies, and is the leading education and research location in Germany. This breadth of demand has meant that despite the economic slowdown in the last years office employment grew above average to a total of around 465,000 office workers for the city.

Munich is a unique city offering an exceptionally high quality of life; the city is known for its safe, clean, wealthy and cosmopolitan lifestyle

Munich’s prime retail locations Munich a young and growing city Munich is a unique city offering a high quality of life. Its location Munich, the Bavarian state capital and Germany’s third largest is attractive because of its proximity to the and the short city, continues to boom. Munich grew by 30,000 inhabitants in distance to Italy. The local market for retail property is equally 2012. The reason for this is that many of the new arrivals to attractive and Munich commands the highest rents and multiples in come to Munich over the last decade have been young people. Germany. It consistently ranks among the most important European This youthful influx has not only driven down the average age metropolitan centres. Investors and retailers compete for the best (41.2 years, as opposed to the national average of 43.5 years), investment opportunities and shop locations. Prime locations fetch meaning that population has risen due to increasing in birth rates store rents of up to €300 per sq m and this is the highest found in and the corresponding fall in mortality rates. Germany. The prime streets – Kaufingerstrasse and Neuhauser Strasse, Theatinerstrasse, Weinstrasse and Residenzstrasse – are among Germany’s most popular shopping streets. In addition, Munich is set to grow to 1.6 million inhabitants by 2030, meaning the Maximilianstrasse is one of Germany’s most prominent luxury that Munich will have the highest population density of all major shopping miles. In summary these retail streets have a total retail German cities. As a result of this growing population, average space of 290,000 sq m. rents have been rising and now sit at around €14.00 per sq m. The highest prices are achieved in the southern part of Munich city centre around and in the historic city-centre, as well as in the northeast of the city along the river Isar. A guide to investing in Germany Stuttgart | 39

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en ße U tra K d ßs B hlo i A Sc e - e n e r est l ß U Schloflplatz ad i a r ne U ra r Lieserhalle t n ß o r e S - K P s l s a u raße t Berliner e P st z H l ß - a hlo Platz r ni Eugensplatz U Sc o e U d eo h T one of the most significant economic cities S €180 / 70% F ti r €80 / 39% ße ft it a e s raße straße z t t r - ß r. s E Stadtmitte a e ls r Str tr e Sc d a ß lga s e s h Sib - z a u U Charlottenplatz O an S S in tr ls x The city of Stuttgart is the capital of the state of Baden- Stuttgart achieves top positions in location rankings for t r s tr er r Calw . le a p ig €160 / 74% ß e C A bu e on ß h Wurttemberg. It has a population of around 613,000 and quality of life. It was also awarded “The securest major city r a a rgs K Kön tr rl S o is the sixth largest city in Germany. The wider Stuttgart in Europe”. Stuttgart has two universities, universities of e tte tr le ß n a a s a r U e tr Metropolitan Region hosts more than five million applied sciences and renowned research institutions such ß hm ß aß e Rotebühlplatz c chst a e S s tr r s inhabitants with more than 200,000 commuters into as Max-Planck and Fraunhofer. i lz H 85 / 56% o Stuttgart. The population is anticipated to increase by € H 2.6% until 2025. In the past years Stuttgart saw a strong economic 0 100 200 Meter Ebe ß e Olgaeck U development, especially in the high tech segment. rh ardstra U Rathaus Stuttgart is one of the most significant economic cities Stuttgart has a diversified economic structure with because of its central location and is renowned as an a mixture of SMEs and large-scale enterprises. % is percentage of Chain Stores in each location innovative high-tech centre. Key industries are the automobile industry (Daimler, Porsche), electronics Stuttgart 21 is one of the largest German urban Stuttgart: Office Space Market Areas with Rental Bands (2/sq m/month) industry (Bosch) and the IT sector (Hewlett Packard, IBM) development projects currently under construction. Pattonville Remseck Hauptbahnhof as well as finance and insurance sectors. Furthermore, It is located north of the city centre and is a railway and Aldingen am Neckar Stuttgart-Stuttgart-North Europaviertel Mühlhausen €10.00 - 14.50 Kornwestheim am Neckar Nord Kernerviertel there is a broad mix of companies from the small firm urban development project. The main train station will be Stammheim Hegna U Münchingen sector in the manufacturing as well as in the service transformed from a terminus to an underground through Neuwirtshaus U Schoeckingen Stuttgart-West €9.50 - 14.50 Stuttgart- industry. The export share of Stuttgart’s manufacturing station. Part of this process is the redesign of around U Ost ObererCity accounts for about 50%. 134 hectares of inner city railway areas that will provide Hirschlanden €6.50 - 9.00 U Stuttgart U €Schlossgarten12.00 - 18.50 Zuffenhausen space for urban development. Korntal-Münchingen U Ditzingen Neue Stuttgart- Münster Vorstadt U Ost Stuttgart U Diemershalde Hoefingen A81 Weilimdorf Rathaus Stuttgart- U Ost €6.50 - Feuerbach Fellbach 10.50 €8.50 - €8.00 - 11.00 11.50 Stuttgart- Stuttgart-East West U €8.00 - 11.00 Stuttgart- Ost Stuttgart-South U Leonberg Gerlingen Stuttgart-North €9.00 - 14.00 Stuttgart- €10.00 - 14.50 süd Stuttgart-Nord Stetten A8 im Remstal Schnait Stuttgart-East €8.00 - 11.00 Unter- Struempfelbach /Obertürkheim Stuttgart-Mitte €6.00 - 9.00 Stuttgart-West Wangen €9.50 - 14.50 Stuttgart- Obertürkheim South Warmbronn €9.00 - 14.00 Frauenkopf Hedelfingen

A8/81 Wangen- Hedelfingen Vaihingen €6.50 - 10.50 €8.00 - Degerloch Esslingen 13.00 €10.50 - am Neckar 14.50 Vaihingen Möhringen Hoffeld 8.00 - 1 € A831 11.50 Ostfildern Moehringen Kemnat Plochingen Fasanenhof €9.00 - Sindelfingen 10.50 A81 Plieningen Fasanenhof Leinfelden- €6.00 - 10.50 Echterdingen Leinfelden-Echterdingen €8.00 - 11.50 A8 Denkendorf Wernau (Neckar) Böblingen Airport Flughafen Stuttgart €9.00 - Neuhausen 0 2 4 Kilometer 12.00 auf den Wendlingen Bernhausen Fildern am Neckar A guide to investing in Germany Stuttgart | 41 city Focus: Stuttgart

A key German city with a world leading manufacturing industry

Sustained population growth Stuttgart as a hot spot for international The strong population growth of 2011 weakened slightly during retailers the course of 2012, but remains high at 0.9% p.a. As in other Stuttgart is an attractive retail location with high demand from major cities, population growth is closely linked to the economic occupiers and investors alike. The city offers various shopping climate, as people are drawn by the creation of new jobs. areas, but the core retail areas are located in the city centre. Thus, the global interdependence of the Stuttgart economy has Königsstraße, Calwer Straße and Hirschstraße are the best a direct effect on residential market demand. An above‑average known retail streets in Stuttgart. An extensive variety of shops proportion of new arrivals are single person households, attracts consumers to the city centre and the up and coming for example in Vaihingen in the South. areas like Marienstraße, both of which offer first class shopping facilities. Both centrality index and purchasing power in Stuttgart are well above the German average. Office-market in Stuttgart The strong economic growth during the last years has affected headline rents in Stuttgart. By the end of 2012 prime rents A Centre for the Logistics Sector were €18.50 per sq m in comparison to €18.00 per sq m in The logistic market benefits from Stuttgart’s advantageous 2011. For the year 2013 the market expects a rent level of over location. The metropolitan region around Stuttgart is one of €19.00 per sq m. the most successful economic-areas in Europe. With 155,000 companies, it is the top-selling industrial-region in Germany and one of the most successful in Europe. The industries that the region is famous for include the automotive, manufacturing, electrical engineering and IT.

Logos of companies that occupy significant space in the city A guide to investing in Germany Contact | 43

Make Contact Make Contact JONES LANG LASALLE CLIFFORD CHANCE

Timo Tschammler Joerg Ritter Dr. David Elshorst Dr. Gerold M. Jaeger International Director, International Director, Partner, Partner, Offices and Industrial Retail Investment Real Estate Real Estate Tel: +49 69 2003 1110 Tel: +49 69 2003 2316 Tel: +49 69 7199 1965 Tel: +49 69 7199 1539 Email: [email protected] Email: [email protected] Email: [email protected] Email: [email protected]

Marcus Luetgering F raser Bowen Dr. Christian Keilich Stefan Löchner Regional Director, Regional Director, Partner, Partner, Office Investment Pan-European Office Capital Markets Real Estate Real Estate Tel: +49 89 2900 8858 Tel: +44 207 399 5535 Tel: +49 69 7199 1053 Tel: +49 69 7199 1526 Email: [email protected] Email: [email protected] Email: [email protected] Email: [email protected]

Steve Collins Alistair Meadows Thomas Reischauer Thorsten Sauerhering International Director (Washington DC), International Director (Singapore), Partner, Partner, International Capital Group (Americas) International Capital Group (Asia Pacific) Real Estate Tax Tel: +1 202 7195 626 Tel: +65 6494 3878 Tel: +49 69 7199 1527 Tel: +49 69 7199 1709 Email: [email protected] Email: [email protected] Email: [email protected] Email: [email protected]

Fadi Moussali Matthew Richards Reinhard Scheer-Hennings, M.C.J. Dr. Horst Schlemminger Regional Director (Dubai), Regional Director (London), Partner, Partner, International Capital Group (Middle East and North Africa) International Capital Group (Europe, Middle East and Africa) Real Estate Real Estate Tel: +971 4 4266955 Tel: +44 207 399 5458 Tel: +49 211 4355 5794 Tel: +49 89 21632 8310 Email: [email protected] Email: [email protected] Email: [email protected] Email: [email protected]

Helge Scheunemann Willi Weis Jörn Stobbe, FRICS Cornelia Thaler National Director, National Director, Partner, Partner, Head of Research Germany Head of Industrial Investment Germany Real Estate Real Estate Tel: +49 350 011 225 Tel: +49 69 2003 1026 Tel: +49 69 7199 4245 Tel: +49 69 7199 1357 Email: [email protected] Email: [email protected] Email: [email protected] Email: [email protected]

Christian Trenkel, Maître en droit Partner, Real Estate Tel: +49 89 21632 8314 Email: [email protected] berlin

Cologne

Dusseldorf

frankfurt

Hamburg

Munich

Stuttgart

A guide to investing in Germany