German Real Estate Markets Property EU Germany Investment Briefing - - PowerPoint PPT Presentation

German Real Estate Markets Property EU Germany Investment Briefing

• Dr. Thomas Beyerle

London, September 6th 2016

SECTION European economy - Real Estate market in Europe

European transaction volume vs. available capital

2

Source: Catella Research, RCA

50 100 150 200 250 300

2015

50 100 150 200 250

2007

50 100 150 200 250

2013 Available capital for Real Estate Investments

Source: Catella Research 2015, IMF, FED, BIZ, Bloomberg, Deutsche Bundesbank, Thomson Reuter, INREV, RCA

EUR 226 billion EUR 140 billion EUR 285 billion

EUR 250 billion EUR 320 billion EUR 505 billion European transaction volume *All Assets: office, retail, industrial, hotel, residential

50 100 150 200 250 300 350

2016

EUR 290 - 320 billion

EUR 700 billion

3

SECTION European economy

Consumer spending drives economy

• The ongoing moderate recovery is projected to continue, with GDP

growth reaching 1.7% in 2017. Sustained monetary stimulus and low oil prices will support domestic demand, but the slowdown in emerging market economies will weigh on exports. As a result, the large external surplus will decrease slightly. The decline in unemployment should also continue at a modest pace, but differences across euro area countries will persist.

• Monetary policy should remain accommodative until inflation is clearly

rising to the target. Completion of the banking union would improve monetary policy transmission and strengthen confidence. Countries with fiscal space should use fiscal stimulus to support aggregate demand, especially through infrastructure investment.

• Falling oil prices and improved purchasing power have meant that the

European consumer has been a surprising driver of economic growth

• ver the last year. However, with the cost of oil now stabilising, the

labour market will need to provide more jobs and higher wage growth for this trend to continue.

• Further monetary easing by the ECB has helped lending conditions and

investment activity is showing some signs of life. That said, it remains a long way off pre-recession norms, a continuation of which will further hinder long-run growth potential.

• The UK’s EU referendum on June 23rd, threatens the departure of large

and influential member state. At the very least, this would lead to a period of prolonged uncertainty regarding Britain’s relationship with the

• EU. The crisis in Syria has heightened immigration concerns, which,

alongside stagnant wage growth and widening inequality, has given rise to populist candidates and protectionist policies on both sides of the Atlantic.

Unemployment rate, % Consumer spending, % Annual development of gross domestic product, %

Source: ECB, Eurostat, IMF, Catella Research

• 6.0
• 4.0
• 2.0

0.0 2.0 4.0 6.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Germany EU-28 EU-19 6.0 8.0 10.0 12.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Germany EU-28 EU-19

• 2.0
• 1.0

0.0 1.0 2.0 3.0 4.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Germany EU-28 EU-19

SECTION The German real estate market

Key figures

4

QUICK STATS 1HY 2016 COMPARED TO 1HY 2015 Commercial transaction volume € 18.1 billion

• 33 %

Prime office yield (average TOP5) 3.93%

• 35 bp

Prime yield high street retail (average TOP 5) 3.45%

• 33 bp

Prime office yield (average B-location) 5.50%

• 20 bp

Prime yield Shopping centre 4.35%

• 20 bp

Prime yield logistic 5.95%

• 35 bp

Volume per type of asset in Germany Commercial transaction volume, TOP 5 markets Commercial transaction volume

Source: Catella Research, RCA

10 20 30 40 50 60 70 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 In € billion First half year Second half year 7602 4163 1901 905 2172 1357 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Office Retail Industry Mixed use Hotel Others In € million 1HY 2013 1HY 2014 1HY 2015 1HY 2016 2050 801 1650 2100 2610 500 1,000 1,500 2,000 2,500 3,000 3,500 Berlin Dusseldorf Frankfurt Hamburg Munich In € million 1HY 2013 1HY 2014 1HY 2015 1HY 2016

53% 47% 63% 37%

domestic investors foreign investors

SECTION The German real estate market

Key figures TOP markets

5

• Cross border investments in German Top 5 markets decreased in the first half of 2016 to €

3.4 billion representing a share of 37% compared to 47% in the first half of 2015. The decline is not due to falling demand but rather a result of scarce supply.

• Further on declining office prime yields in all Top 5 markets to a current average of 3.93%,

a decrease of 35 basis points compared to the previous year.

• The shift to 2nd tier locations have further established resulting in a further decline in yield
• spreads. In the course of the year we expect that the decline in risk premiums is likely to

continue.

• In short to medium term prime yields in the Top 5 markets will decrease further but at a

slower pace, due to scarce supply and increasing demand shifting towards B-locations

Cross-border proportion Top 5 markets Office Prime – Yields (%)

2016 1HY total Top 5 volume € 9.2bn 2015 1HY total Top 5 volume € 11.2bn

Source: Catella Research, RCA

3.00 3.50 4.00 4.50 5.00 5.50 6.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 Berlin Dusseldorf Frankfurt Hamburg Munich

SECTION The German real estate market

Key figures TOP markets

6

• Acquisitions in German Top 5 markets reached a share of 51% of total investment volume in

Germany in H1 2016. Last years share amounted to 46% in H1 2015. Nevertheless the volume in German Top 5 markets dropped by approx. 18%.

• Demand from investors remains very high. That the transaction volume was not greater is primarily

attributable to the fact that purchasers remain highly focused on core assets.

• Demand for commercial property in Berlin continued unabated in the first half of 2016 and the boom

in demand is expected to persist in the second half of the year. However, since supply is clearly incapable of keeping pace with demand, further yield compression is expected.

• Düsseldorf is currently witnessing high levels of construction activity, which will create further new

investment opportunities, including large mixed-use quarters.

• The transaction volume in Frankfurt’s commercial investment market declined markedly (-41%). This

was not attributable to a drop in demand but to a scarce supply of core properties. Many investors are seeking properties with relatively secure income with long-term leases. This trend is also expected to persist over the coming months.

• Many owners in Munich are refraining from selling, particularly in the core segment. Consequently, B-

locations such as the Arnulfpark are attracting high levels of demand from investors, resulting in yield

• compression. Nevertheless, since the majority of purchasers remain risk-averse, peripheral locations

with less favorable fundamentals are rarely benefiting from this shift in focus.

Transaction volume by type of use “Top 5” markets

2016 1HY total Top 5 volume € 9.2bn 2015 1HY total Top 5 volume € 11.2bn

Source: Catella Research, RCA

61% 13% 6% 11% 9% Office Retail Industry Hotel Others 63% 21% 3% 8% 5%

SECTION The German real estate market

Yield compression continues

7

Source: Catella Research

Prime market yields

• Demand for core-office properties is still high and even more and more investors are seeking for opportunities in 2ND –tier locations. Yields are

expected to sharpen further supported by robust occupational fundamentals.

• With the persistent lack of quality space and a development pipeline unlikely to satisfy rising occupier interest, the demand/supply imbalance is

expected to continue across most prime locations in 2016.

• In addition value-add properties with great upside potential enjoy higher interest.
• Investors are looking for project developments with a low pre-lease rate to secure potential core assets at an early development stage as well.

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 10 YR government bond yields Office prime yield Retail prime yield

SECTION The German real estate market

Yield bottom not yet reached

166 bp

• Prime office yields in German Top 5 markets decreased significantly in 2015 by approx. 40 basis points and marks the highest decline since

2006.

• German B-locations also registered the strongest yield compression in the first quarter since 2010 by approx. 16 basis point compared to

2015.

• Conversely the further reduction in returns on government bonds means that the gap to office prime yields remains at an historic high.
• There will be even stronger yield compression in all non-core segments, such as all secondary and tertiary locations, markets outside of the

the top locations and less liquid market segments. Consequently risk premiums will contract further.

Office prime-yields Top 5 vs. B-locations Commercial transaction volume, Top 5 vs. Rest of Germany

Source: Catella Research,

5.0 9.2 11.1 13.7 16.7 19.8 26.8 3.5 5.5 10.1 12.0 11.7 14.0 20.2 28.5 4.37 0.0 10.0 20.0 30.0 40.0 50.0 60.0 2009 2010 2011 2012 2013 2014 2015 2016 € billion Top 5 Rest of Germany 3.00 3.50 4.00 4.50 5.00 5.50 6.00 6.50 7.00 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 % TOP 5 B-locations

8

9

SECTION C - The German real estate market

Largest Investment transactions in 2016

DATE NAME ADDRESS CITY ASSET CLASS YEAR BUILT PRICE IN € CAP RATE BUYER SELLER Apr-16 NRW Apartments Apartment 600.000.000 LEG Vonovia SE Mar-16 Baywa HQ Arabellastrasse 4 Munich Office 1969 280.000.000 4,0% UniCredit - WealthCap Competo Capital Partners JV BayWa AG Jan-16 Debis Haus Marlene-Dietrich-Platz 5 Berlin Office 1997 226.700.867 3,5% Brookfield Property Partners JV KIC Savills Investment Mgmt Jan-16 Kollhoff-Tower Potsdamer Platz 1 Berlin Office 1999 194.790.195 3,5% Brookfield Property Partners JV KIC Savills Investment Mgmt Jun-16 IBC Complex Building C Theodor-Heuss-Allee 70 Frankfurt Office 2003 189.178.941 GEG German Estate Group RFR Holding Jun-16 IBC Complex Building B Theodor-Heuss-Allee 72 Frankfurt Office 2004 166.252.550 GEG German Estate Group RFR Holding Mar-16 Berlin Portfolio Berlin Apartment 165.000.000 Immeo Wohnen Arztekammer Steiermark Jan-16 Potsdamer Platz Arkaden Alte Potsdamer Strasse 7-13 Berlin Retail 1998 162.838.884 3,5% Brookfield Property Partners JV KIC Savills Investment Mgmt May-16 German High Street Assets Retail 150.000.000 Corestate Capital Apr-16 Designer Outlet Wolfsburg An Der Vorburg 4 Wolfsburg Retail 2007 150.000.000 BNP Paribas REIM JV Invesco RE OBO BVK Europa Capital JV Outlet Centres International Apr-16 German Retail Fund Retail 141.683.101 Patrizia Savills Investment Mgmt Mar-16 Victoriastadt Lofts Schreiberhauer Strasse 30 Berlin Office 1927 130.000.000 5,1% Schroder RE Invt Trust OBO Immobilien Europa Direkt JV Ilmarinen Colony Capital REIT Feb-16 FRM Portfolio Apartment 124.000.000 Heitman Grainger plc Jan-16 B! Forum Tower Potsdamer Platz 11 Berlin Office 1999 113.685.339 3,5% Brookfield Property Partners JV KIC Savills Investment Mgmt Jan-16 B4 Linkstrasse 2 Berlin Office 1998 113.525.042 3,5% Brookfield Property Partners JV KIC Savills Investment Mgmt Mar-16 Telekom Campus Kapstadtring 2A Hamburg Office 113.333.333 Amundi Real Estate TAS KG May-16 Meandris Europa-Allee 48 Frankfurt Office 2014 105.000.000 Triuva Strabag RE GmbH Jan-16 Linkstrasse A Eichhornstrasse 3 Berlin Office 1998 103.454.917 3,5% Brookfield Property Partners JV KIC Savills Investment Mgmt

Source: Catella Research

SECTION The German real estate market

Expectations for 2016

Source: Catella Research

• Real Estate Market benefits from a positive economic

environment and still historic low interest rates

• Office markets will register increasing take-up`s and

prime rents. Consequently vacancy rate will decline further

• Further yield compression in Core segment as well as

non-core assets in 2ND-tier and 3RD –tier locations

• Investors will move up the risk-curve
• The demand/supply imbalance is expected to continue

across most prime locations

• Strong cross-border activity, especially from US and Asia
• .. And of course the rise of resi......

1

Catella in Germany

Berlin Neues Kranzler Eck, Kurfürstendamm 21 10719 Berlin Tel.: +49 (0)30 31 01 93-0 Fax: +49 (0)30 31 01 93-109 Dusseldorf Hofgarten Palais, Bleichstraße 8-10 40211 Düsseldorf Tel.: +49 (0)211 527 00-0 Fax: +49 (0)211 527 00-110 Frankfurt FBC, Mainzer Landstraße 46 60325 Frankfurt am Main Tel.: +49 (0)69 310 19 30-0 Fax: +49 (0)69 310 19 30-107 Hamburg Neuer Wall 39 20354 Hamburg Tel.: +49 (0)40 21 111 28-0 Fax: +49 (0)40 21 111 28-100 Munich Karolinen Karree, Karlstraße 14 80333 München Tel: +49 (0)89 54 59 56-0 Fax: +49 (0)89 54 59 56-100 info@catella.de

www.catella.de

The link between property and finance™

German residential market

SECTION A

13

• Strong demand for residential properties in metropolitan areas

and in locations with a positive population balance is clearly based on urbanization effects and a structurally good economic foundation in Germany.

• In the last few years, housing markets in large cities have

been characterised by substantial rent rises. The main driving force behind this has been a sharp rise in the number of

• inhabitants. The population in Germany's seven top locations

has increased by almost 10 per cent since 2000.

• Population growth and hence the increase in demand for

housing has been strongest in Munich where the number of inhabitants has increased by almost 20 per cent since 2000.

• Frankfurt is in second place with an increase of 12 per cent.

Even in Dusseldorf, which has had the slowest population growth, the number of inhabitants has still increased by 6 per cent.

• The proportion of vacant flats has fallen steadily in the last

few years. Housing demand can practically no longer be met from the existing stock, which means that new builds are becoming ever more important. Residential stock and average apartment size in Germany

Source: Destatis 2010: Ab 2010 Ergebnisse auf Grundlage der Gebäude- und Wohnungszählung 2011

Population change Germany vs. Top 7 markets

Source: Destatis Ab 2011: Ergebnisse auf Grundlage des Zensus 2011

SECTION A – German residential market

Germany is raising but supply remains low

80 82 84 86 88 90 92 94 36,500 37,000 37,500 38,000 38,500 39,000 39,500 40,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Average apartment size thousands Residential stock Average apartment size

• 2.0%
• 1.5%
• 1.0%
• 0.5%

0.0% 0.5% 1.0% 1.5% 2.0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 annual change Germany annual change Top 7

14

Rent development in Germany, newly build apartments vs. all years of construction

• Apartment rents increased further in Q2`16 but at a slower pace than prices for condominiums. Compared to Q1`16

rents in Germany increased by 0.6%, 0.9% in cities and 0,4% in counties. Compared to the same quarter of the previous year (Q2`15) rents all over Germany went up by 3.1%.

• Since 2004 rent for newly built apartments in Germany therefore increased by 22.1%
• We expect a further rise in rents for flats. Consequently, rents are likely to continue to converge towards the mostly

higher level of rents in many European cities.

• However, the pace of the rise is likely to be well below the level in previous years.

SECTION A – German residential market

Rents increasing further but at a slower pace

5.00 5.50 6.00 6.50 7.00 7.50 8.00 8.50 9.00 I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EUR/sq.m. newly bult all years of construction

Source: Catella Research,, ZIA

15

German cities with launched rent control

What?

The rent control regulates rents for existing apartments (let and used before 1. October 2014) in announced residential districts and large cities. Therefore rents for releasing apartments may not exceed the comparative rent by more than 10%.

Where?

The rent control obtain cities with a “tense residential market”. Each German state determine these markets by itself

Why?

The rent control prevents enormous rent increases by 20% or 30% in sought after residential districts/markets.

When?

The law was launched on June 1 2015

SECTION A – German residential market

German rent controls – key figures

Rent control since

Source: Catella Research, Die Welt

16

Change in asking rents 2012 to 2015, all years of completion

• On June 1, 2016, the much-discussed rental brake has

been in force for more than a year. Since then, the rental brake has been implemented in 308 German cities.

• It remains to be seen whether rent control will also have

an impact. Although new builds are exempt from this new measure, the cap/slowing in rent increases for existing flats will increase the rent gap between new or completely renovated flats and existing stock.

• The rent gap between newer flats (later than 2000) and

existing stock is already evident in cities like Nuremberg, Dresden, Munich and Augsburg. The biggest gap of increase can be seen in Leipzig with 56%.

• Even investors seem to be of the opinion that the

regulations will have no substantial effect in the future: the causal effects of the rental brake on the development of housing prices—as a reflection of future rental income— are relatively small.

• In order to provide a sustainable solution to the housing

shortage, priority should be given to measures that stimulate an expansion of construction activity and make the housing supply more flexible.

• From a social policy point of view, a temporary rental

brake can still be justified. It must, however, be structured in such a way that it does not restrict incentives for housing construction in the future.

Source: Catella Research, empirica,

SECTION A – German residential market

Rent controls: no effect to date

19.9% 17.1% 14.0% 13.4% 12.6% 11.5% 11.4% 10.1% 9.6% 14.80% 21.80% 11.10% 20.40% 56.40% 9.90% 12.70% 16.70% 8.22% 0% 10% 20% 30% 40% 50% 60% Berlin Augsburg Hannover Munich Leipzig Dortmund Dresden Nuremberg Cologne year of construction later than 2000 all years of construction

Catella yield / risk profile Germany 2016

SECTION B

SECTION B – Catella yield / risk profile for residential market in Germany

Catella housing market ranking – Top25 locations

1 8

• An assessment of the geographic distribution of the top

25 locations shows that the strong housing markets are clearly clustered in northern and southern Germany.

• Eleven of the top 25 locations are in Bavaria and the

Rhine-Main area. A further seven are situated in Lower Saxony and Bremen.

• It is notable that many top 25 cities have middling to low

levels of market liquidity, i.e. these cities offer a low volume of housing investments.

• In line with economic principles, assuming a

corresponding level of demand, a low volume of supply is reflected in higher prices.

Accordingly, in addition to the yield and the performance of the housing market in question, the available volume of investments should also be considered.

Source: Catella Research

SECTION B – Catella yield / risk profile for residential market in Germany

Yield / risk profile for residential markets in Germany 2016

1 9

Potential Investmentcorridor

Source: Catella Research

SECTION B – Catella yield / risk profile for residential market in Germany

Yield / risk profile for residential market in Germany 2016

2

Potential Investmentcorridor

Potential Investmentcorridor:

• Hannover
• Bonn
• Potsdam
• Darmstadt
• Wolfsburg
• Erfurt
• Osnabrück
• Bremen
• Dortmund
• Hildesheim
• Duisburg
• Braunschweig

Source: Catella Research

Residential investment market

SECTION C

22

• In view of the extremely attractive fundamental data and

favourable (growth) prospects from an investor's perspective, it is almost logical that the German residential market has also attracted large amounts of international capital in recent years.

• A total of almost €70bn was invested between 2010 and 2015,

with Germany attracting around half of the capital invested in European residential property during this period.

• There has been a marked fall in the volume of transactions in the

investment market for residential property in the first half of 2016

• f -57% compared to H1`15. The decrease is mainly due to the

lack of largescale transactions. Analysed in greater detail, the five largest deals in the first six months generated a mere €690 million.

• Thus, not only does the German residential market stand out with

attractive and stable conditions, it is simultaneously one of the most liquid residential investment markets in the world.

• When the historically low bond yields are added to the equation,

the German residential market therefore remains a sensible cornerstone of portfolios, particularly for risk-averse investors.

• Consequently, two investor groups, namely property companies

and special funds, have been the principal net investors in the market over the lastfive years

• Since these investors also make their allocation decisions based

upon the relative attractiveness of property compared with other asset classes, and primarily bonds, the yield differential between residential property and long-term bonds is a principal allocation criterion.

• Since this environment is not expected to change in the current

year or next year in view of continued expansionary monetary policy, at least from the European Central Bank, demand for residential property in Germany will remain high. Residential transaction volume in Germany and Europe Prime net yields and Government bond yield SECTION C – Residential investment market in Germany

German residential investment market is the most liquid in the word

0% 10% 20% 30% 40% 50% 60% 70% € - € 5 € 10 € 15 € 20 € 25 € 30 € 35 € 40 2007 2008 2009 2010 2011 2012 2013 2014 2015 H1 2016 share EUR billion Germany Europe German share 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 In % 10Y Government bond yield Office Top 7 Retail Top 5

Source: Catella Research, RCA

23

• This substantial demand is faced with a limited supply. In recent years, there has been more capital in the market than it has been

ultimately possible to invest. This surplus demand has led prices to grow at a faster rate than rents, causing a corresponding hardening in initial yields.

• The yield compression is highly likely to continue this year in view of the sustained high risk premium compared with bonds, albeit

at a slower pace.

• Although the looming rise in bond yields should dampen demand for residential property in the medium to long term, the

significant surplus demand will persist at least for the current year.

• A not insignificant reason why there will still be purchase opportunities for investors going forward is that prices have risen so

sharply in recent years. This will enable investors that bought early in the cycle to bank significant capital gains. For owners with no long-term commitment to the residential property market, it may therefore be sensible to realise these gains and part with (some of) their holdings.

• The rapid growth in the development segment is also creating purchase opportunities. Last year alone, the transaction volume for

development projects totalled more than €1.7bn, which represented an increase of almost one fifth compared with the previous

• year. In view of the rising development activity, investors will be able to invest significantly more capital here over the coming

years. Residential transaction volume in German A-cities vs. rest of Germany SECTION C – Residential investment market in Germany

High demand versus low disposals

1 2 3 4 5 6 7 8 9 10 2007 2008 2009 2010 2011 2012 2013 2014 2015 H1 2016 EUR billion German A cities Rest of Germany

Source: Catella Research, RCA

24

• The micro-living segment often sits between the poles of living and

lodging and includes apartment buildings, student accommodation and serviced apartments.

• In the investment market, there has been a noticeable and

significant increase in demand for micro-living assets over the last two and a half years, particularly for student accommodation.

• Accordingly, the transaction volume for micro-living property in

Germany has risen to its highest level recorded to date. Properties changes hands for a total of around €440m during the first seven months of this year, already significantly exceeding the annual totals for the last two years (€331m in 2014 and €371m in 2015).

• With a worldwide transaction volume of around €16.5bn last year,

capital flows into micro-living assets were greater than ever before.

• While the German investment market remains significantly behind

the most mature market, Great Britain, in terms of volume, the growth rate in Germany is considerable (+139% compared with the corresponding period in the previous year).

• The rising interest of both domestic and foreign investors in German

micro-living property is explained by the positive projections for the

• segment. Demand for small residential units is likely to increase

further for a number of reasons:

• 1. The number of single-person households in Germany has risen by

an average of 210,000 households per year since 1992 and, according to projections, will rise by a further 1.1 million by 2030 (compared with 2012).

• 2. The number of students has reached a new all-time high of 2.75
• million. Despite a moderate long-term decline, university entrant

numbers will remain high and, in view of the rising mobility of students and the strained housing markets, we expect demand for student apartments to increase.

• 3. Mobility is also increasing in the world of work.

Transaction volume of mico-living properties SECTION C – Residential investment market in Germany

Micro apartments: an increasingly sought after segment

Source: Catella Research, RCA

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 12 month rolling, EUR billion Global Great Britain Germany

25

SECTION C – Residential investment market in Germany

Residential investments 2016

Date Property Name Market Units Price in €Mln Price in €/sq.m. Buyer Seller Jan-16 NRW Portfolio

• 13.800

600 43.478 LEG Vonovia SE Mär-16 Berlin Apartments Berlin 945 165 174.603 Immeo Wohnen

• Jul-16

Berlin Apartments Berlin 1877 218 116.143 ADO Properties

• Feb-16

FRM Portfolio

• 1.595

124 77.743 Heitman Grainger plc Mär-16 Apartment Portfolio

• 2.700

103 38.148

• Corestate Capital

Feb-16 Berlin Lichtenrade Berlin 860 83.7 97.326 Mahren Holding Deutsche Wohnen AG Jun-16 Rhein/Main Portfolio

• 80
• ZBI
• Jun-16

NRW Apartment

• 1.100

73 66.364 LEG Grainger plc Jun-16 Leipzig apartments Leipzig 717 65.4 91.213 LWB mbH

• Mär-16

Postplatz Dresden 242 63.4 261.983

• CG Gruppe

Mär-16 Olympia Karree München 345 60 173.913 DREF MIK GmbH Feb-16 Blue Horizon Frankfurt Main 118 55 466.102

• Unmussig

Bauträgergesellschaft May-16 Berlin apartments Berlin 329 55 167.173 DSR Deutsche Investment

• Jun-16

Berlin Apartments Berlin 486 55 113.169 Phoenix Spree

• Apr-16

Portfolio

• 1.223

55 44.971 Arsago Real Estate DRV May-16 Panorama Baakenhafen Hamburg 142 54.2 381.250 BMO RE Partners Justus Grosse GmbH

Source: Catella Research, RCA

• German residential sector still an hotspot
• Continued high attractiveness for housing in tier 1 and 2 cities
• Main push factors: urbanization, money market bubble, security doctrine
• Yield range shows a wide - attractive – spectrum
• M&A expected next quarters
• Long-term challenges:
• energetic requirements
• demographic development
• Integration of immigrants

26

Source: Google-Picture

SECTION C – Residential investment market in Germany

Conclusion

Catella in Germany

Berlin Neues Kranzler Eck, Kurfürstendamm 21 10719 Berlin Tel.: +49 (0)30 31 01 93-0 Fax: +49 (0)30 31 01 93-109 Dusseldorf Hofgarten Palais, Bleichstraße 8-10 40211 Düsseldorf Tel.: +49 (0)211 527 00-0 Fax: +49 (0)211 527 00-110 Frankfurt FBC, Mainzer Landstraße 46 60325 Frankfurt am Main Tel.: +49 (0)69 310 19 30-0 Fax: +49 (0)69 310 19 30-107 Hamburg Neuer Wall 39 20354 Hamburg Tel.: +49 (0)40 21 111 28-0 Fax: +49 (0)40 21 111 28-100 Munich Karolinen Karree, Karlstraße 14 80333 München Tel: +49 (0)89 54 59 56-0 Fax: +49 (0)89 54 59 56-100 info@catella.de

www.catella.de

The link between property and finance™