Residential City Profile

Residential Market Update Berlin 2nd half of 2013 Continued high level of population growth Number of building permits continues to rise Highest prices now for new-build projects Spandau and Marzahn-Hellersdorf enjoying an upswing Rise in rental prices a little subdued Differentiated price development for condominiums Reduced price increases for new-build apartments Record transaction volume in the German capital



On Point • Residential City Profile Berlin • Update 2nd half of 2013 2

Socio-economic trends in the second half of 2013 German economy According to preliminary estimates by the Federal Statistics Office, the Gross Domestic Product (GDP) increased by 0.5% (price, seasonally and calendar adjusted) over the year 2013. Despite an economically weak period at the start of 2013, the economy revived over the course of the year, and was significantly boosted by both private and government spending, whilst investment and foreign trade served to slow down economic growth. The labour market was also affected by this weaker economic development: despite record high employment figures averaging 41.8 million (+0.6% compared to the previous year), the employment rate rose by only half the level of the previous two years. The unemployment rate stagnated at 6.7% in December 2013 compared to December 2012. At the same time, the downwards trend in gross salaDivision of Berlin districts and areas District

Area

Mitte

Hansaviertel, Tiergarten, Moabit, Gesundbrunnen, Wedding, Mitte

FriedrichshainKreuzberg

Friedrichshain, Kreuzberg

Pankow

Prenzlauer Berg, Weißensee, Blankenburg, Heinersdorf, Karow, Pankow, Blankenfelde, Buch, Französisch Buchholz, Rosenthal, Wilhelmsruh

CharlottenburgWilmersdorf

Charlottenburg, Charlottenburg-Nord, Grunewald, Halensee, Schmargendorf, Westend

Spandau

Spandau, Haselhorst, Siemensstadt, Wilhelmstadt, Gatow, Kladow, Hakenfelde, Falkenhagener Feld, Staaken

SteglitzZehlendorf

Dahlem, Düppel, Lankwitz, Lichterfelde, Nikolassee, Schlachtensee, Steglitz, Südende, Wannsee, Zehlendorf

TempelhofSchöneberg

Schöneberg, Friedenau, Mariendorf, Marienfelde, Lichtenrade

Neukölln

Neukölln, Britz, Buckow, Rudow, Gropiusstadt

TreptowKöpenick

Alt-Treptow, Plänterwald, Baumschulenweg, Johannisthal, Niederschöneweide, Altglienicke, Adlershof, Bohnsdorf, Oberschöneweide, Köpenick, Friedrichshagen, Rahnsdorf, Grünau, Müggelheim, Schmöckwitz

MarzahnHellersdorf

Marzahn, Hellersdorf, Biesdorf, Kaulsdorf, Mahlsdorf

Lichtenberg

Malchow, Wartenberg, Falkenberg, Neu Hohenschönhausen, Alt-Hohenschönhausen, Fennpfuhl, AltLichtenberg, Rummelsburg, Firedrichsfelde, Karlshorst

Reinickendorf

Frohnau, Heiligensee, Hermsdorf, Lübars, Konradshöhe, Märkisches Viertel, Reinickendorf, Tegel, Waidmannslust, Wittenau

ries of employees in the third quarter of 2013 continued, with a fall of 0.3% registered since the same period in 2012. Over the course of 2013, the ifo Business Climate Index recovered noticeably, reaching an index rate of 109.5 points in December 2013. The assessment of future business development in particular improved significantly over the year, reflecting the increased optimism of companies. Leading economic institutes expect further recovery in the economy in 2014; most of which will be supported by domestic demand. Their forecasts indicate growth in GDP of 1.6% over the full year. Berlin economy According to the Berlin Chamber of Commerce, sentiment in the city’s economy improved noticeably in the second half of 2013. Business conditions were estimated to be weaker than in the same period in 2012, but expectations improved significantly. A slight upswing is expected for 2014, which will be reflected in expansionary manpower planning. Sentiment in the construction industry is particularly good, but manufacturing and service providers are also optimistic about the future. The labour market has benefitted from the aboveaverage economic development in Berlin, and this is expected to lead to a further increase in employment figures in the foreseeable future. In December 2013, the unemployment rate fell to 11.2% (-0.4% points year-on-year). Economy and demographics by comparison

Sources: destatis, municipal statistics offices, GfK GeoMarketing GmbH, Federal Employent Agency, Oxford Economics



On Point • Residential City Profile Berlin • Update 2nd half of 2013 3

Continued high level of population growth The population growth of the past few years continues unabated in Berlin. The population figures from the 2011 census have been updated to mid-2013 and show that around 3.394 million people now live in the city. The population has therefore grown by 19,000 in the first six months and the deciding factor in terms of population growth continues to be inward migration. According to statistics for the individual districts from 2012, the population is developing particularly strongly in the most sought-after city centre districts. In the recent past, new arrivals particularly prefer the districts Charlottenburg-Wilmersdorf and Lichtenberg. Charlottenburg-Wilmersdorf is popular with high earning new Berliners, and Lichtenberg is a more reasonably priced alternative to the increasingly expensive trendy locations in the eastern part of the city centre. Worthy of mention is the fact that the high level of population growth in Friedrichshain-Kreuzberg has actually been the result of a baby boom. The natural population balance of births minus deaths has accounted for a large proportion of the population growth in the district. In the same way, there is a below-average rise in the number of households in city centre districts such as Mitte. As there are more family households, household size is increasing slightly here compared with the previous year in contrast to the overall trend in the city. However, the single-person household is the predominant household type in Berlin, particularly in the city centre districts. At the same time, the number of households in Berlin is rising even faster than the population, which means that there is a continued trend towards smaller households.

Development of inhabitants and households between 2011 and 2012 (%)

Source: State Statistical Institute Berlin-Brandenburg

Population and households 2012 Population

Households

Total

Development since 2011 (%)

Migration balance*

Natural population growth*

Total

Development since 2011 (%)

Single-person households (%)

Mitte

329,969

2.4

5,344

1,520

202,357

-0.2

61.6

Friedrichshain-Kreuzberg

259,483

1.9

2,520

1,829

167,413

0.4

60.4

Pankow

364,794

1.8

4,756

1,283

231,276

1.4

59.7

Charlottenburg-Wilmersdorf

298,567

1.7

5,093

-537

201,697

3.5

60.4

Spandau

218,935

1.3

3,356

-640

129,801

1.7

50.7

Steglitz-Zehlendorf

281,604

1.0

3,269

-1,064

164,652

3.5

48.7

Tempelhof-Schöneberg

320,917

0.5

-275

-257

191,486

-0.4

53.8

Neukölln

308,342

1.7

4,481

533

177,732

2.8

55.0

Treptow-Köpenick

242,000

1.1

2,707

-242

143,095

4.0

50.9

Marzahn-Hellersdorf

248,786

1.2

2,317

440

138,141

2.9

46.1

Lichtenberg

258,586

1.7

3,903

376

154,240

1.5

49.4

Reinickendorf

243,239

1.3

3,853

-781

128,613

1.2

44.7

3,375,222

1.5

41,324

2,460

2,030,504

1.8

54.3

District

Berlin

*Migration balance includes the difference between immigration and emigration. Natural population growth means the difference between births and deaths. Source: State Statistical Institute Berlin-Brandenburg



On Point • Residential City Profile Berlin • Update 2nd half of 2013 4

Housing market supply in Berlin in the second half of 2013 Residential building completions* 2011 and 2012

Housing stock 2007-2012

Source: State Statistical Institute Berlin-Brandenburg, Jones Lang LaSalle GmbH

Number of building permits continues to rise Building activity continues to rise in Berlin in 2013, and the number of building permits is around one quarter higher than in the previous year. Preliminary figures show that there have been 12,000 building permits. As a result, the number of new-build completions will increase noticeably in the next few years, but there can be delays of up to three years between obtaining permits and completing developments. However for the time being, the total stock of apartments is developing at a slower pace than the rise in the numbers of households. Market vacancy in Berlin has decreased significantly in the last few years as a result of the high demand and the low level of new-build completion volume, and is currently at below 2% according to estimates by Jones Lang LaSalle.

Source: State Statistical Institute Berlin-Brandenburg

Stock data 2012 Residential buildings

Housing units

Housing completions*

District

Total

Multi-family buildings (%)

Total

Development since 2011 (%)

Total

thereof in multifamily dwellings

Mitte

12,939

93.9

188,883

0.2

391

385

9,406

95.9

146,356

0.2

66

66

Friedrichshain-Kreuzberg Pankow

35,394

45.2

208,185

0.7

1,164

798

Charlottenburg-Wilmersdorf

17,634

74.8

187,890

0.1

245

219

Spandau

27,169

33.4

118,958

0.3

365

96

Steglitz-Zehlendorf

39,732

38.1

157,250

0.2

243

127

Tempelhof-Schöneberg

28,329

49.6

183,038

0.1

165

78

Neukölln

27,479

39.3

164,019

0.1

102

24

Treptow-Köpenick

35,990

31.6

133,224

0.5

487

221

Marzahn-Hellersdorf

29,814

23.5

133,226

0.4

424

80

Lichtenberg

15,553

59.6

147,849

0.5

368

90

Reinickendorf

35,162

29.0

130,457

0.1

185

35

314,601

43.6

1,899,335

0.3

4,205

2,219

Berlin

*Completions of units through new buildings Source: State Statistical Institute Berlin-Brandenburg



On Point • Residential City Profile Berlin • Update 2nd half of 2013 5

Highest prices now for new-build projects The rise in construction activity still falls well short of the current demand. The Federal Institute for Research on Building, Urban Affairs and Spatial Development (BBSR) has estimated a current requirement for more than 16,000 new apartments per annum. However, this estimate is still based on a lower level of population growth, which means that the current demand for new residential space could actually be significantly greater. Based on the 35,000 new households in 2012 and the insufficient construction activity in the past few years, the requirement for apartments must be assumed to be much higher. It is unlikely that the level of housing construction will increase sufficiently in the next few years, which means that the volume of residential space available in Berlin will be increasingly scarce. The trend for project developments to be increasingly scattered around the city’s built-up area and in different price categories is continuing in 2013, and has resulted in a generally moderate price development in the new-build sector. A number of highly priced new-build projects are however testing new price limits in the Ber-

Housing supply and demand for new buildings

Sources: State Statistical Institute Berlin-Brandenburg, Federal Institute for Research on Building, Urban Affairs and Spatial Development (BBSR)

lin market for condominiums with sale prices close to € 15,000 per sqm such as the Palais Varnhagen designed by Chipperfield. Whether the trend towards greater numbers of new-build rental apartments will continue in the New Year remains to be seen in view of the future regulations.

Project developments Number of housing units

Sales price for condominiums/ Rents for rental flats in €/sqm

1000

n/a

Integrator Berlin, NCC, First Home Wohnbau, Studentendorf Schlachtensee eG et al.

2013-2016

Location

Project name

Adlershof

Wohnen am Campus

Mitte, Europacity

StadthafenquartierSüd

650

Condo: 3,000; R: 9.50-13.00

CA Immo & Hamburg Team

until 2016

Friedrichshain

Anschutz-Areal

500

Condo: 3,000-4,500; R: 7.00-15.00

Wohnkompanie Berlin GmbH

starting in 2016

Lichtenberg, Frankfurter Allee

Quartier216

448

R: 7.00-9.00

Gesellschaft für Projektentwicklung und Unternehmensberatung

spring 2013

Friedrichshain

Max und Moritz

420

Condo: 3,950 R: 9.00-14.00;

Die Wohnkompagnie Berlin (Zech Gruppe)

starting in 2016

Lichtenberg, Karlshorst

n/a

400

R: 7.00-10.50

Hochtief Solutions/Howoge

autumn 2015

Kreuzberg

Möckernkiez

385

R: 8.50

Bauherrengen. Initiative Möckernkiez

end of 2013

Mitte

Markgrafenkarree

365

n/a

Gold.Stein real estate, Aberdeen Immobilien

starting in 2014

Zehlendorf

Cedelia

280

Condo: 3,000, R: 9.70

Hochtief & Kondor Wessels

end of 2015

Kreuzberg

Flottwell Living

270

Condo: 3,200-5,500; R: 12.00-15.00

Groth Gruppe & Reggeborgh

end of 2015

Source: Jones Lang LaSalle GmbH

Project developer

Projected completion date



On Point • Residential City Profile Berlin • Update 2nd half of 2013 6

Rental housing market in Berlin in the second half of 2013 Rental price bands for offered apartments

Sources: IDN ImmoDaten GmbH, Jones Lang LaSalle GmbH

Spandau and Marzahn-Hellersdorf enjoying an upswing In the second half of 2013, rental prices for new leases reached € 8.20 per sqm. In Berlin’s city centre locations such as Friedrichshain-Kreuzberg, Mitte and Charlottenburg-Wilmersdorf, asking rents are up to almost € 10.00 per sqm, but even in the urban districts outside the SBahn (urban railway) ring, apartments are scarcely offered for less than € 8.00 per sqm. However the price range between districts in Berlin is wide, at around 70% between for example Marzahn-Hellersdorf, the most reasonably priced district, and the expensive FriedrichshainKreuzberg. As in previous half years, the already highly priced loca-

tions have shown above-average price increases. Reasonably priced locations are increasingly breaking out of this trend and are in catchup mode. This trend is currently most evident in Lichtenberg, in which its central districts are developing increasingly into a popular residential location. But also, the more reasonably priced fringe districts Marzahn-Hellersdorf and Spandau are exhibiting higher than average price increases, even if prices here are still significantly below the median in the city. The district Treptow-Köpenick in the southeast of Berlin has long been in the slipstream of Berlin’s price increases, and has shown the lowest rental price increases again in the second half of the year.

Rental price bands for offered apartments (2nd half of 2013 in €/sqm/month) District

10%

25%

Median rent* (50%)

Development since H2 2012 (%)

75%

90%

Mitte

6.50

7.55

9.85

15.8

13.05

15.65

Friedrichshain-Kreuzberg

7.75

8.75

10.00

11.1

11.50

13.55

Pankow

6.50

7.30

8.65

6.4

10.60

12.50

Charlottenburg-Wilmersdorf

7.25

8.40

9.90

8.6

12.00

14.85

Spandau

5.15

5.75

6.60

9.5

7.50

8.50

Steglitz-Zehlendorf

6.70

7.50

8.60

6.4

9.95

11.50

Tempelhof-Schöneberg

6.15

7.00

8.05

4.9

9.50

11.65

Neukölln

5.95

6.55

7.50

8.1

8.85

10.15

Treptow-Köpenick

5.85

6.40

7.10

3.5

8.30

9.55

Marzahn-Hellersdorf

4.80

5.15

5.90

10.2

7.05

8.10

Lichtenberg

5.55

6.45

7.40

12.5

8.30

9.45

Reinickendorf

5.50

6.05

6.90

5.9

8.05

9.15

Berlin

5.95

6.85

8.20

7.9

10.05

12.70

*Median rent: 50 per cent of the listings are above 50 per cent below this figure Sources: IDN ImmoDaten GmbH, Jones Lang LaSalle GmbH



On Point • Residential City Profile Berlin • Update 2nd half of 2013 7

Development of rental prices (Median in €/sqm/month)

Rise in rental prices a little subdued The steady increase in rents since 2008, which has intensified since 2011, continued unabated in the second half of 2013. Following a downturn in rents between 2004 and 2006, rents returned to their 2004 level for the first time in 2009. The most significant price rises have taken place in the last two years. Since 2011, rents on re-letting have risen by around one quarter and are approx. 50% higher than they were at their lowest point in the first half of 2006. However, over the entire observation period, rents in the capital city have risen by just 1.7% p.a., which is at around the same level as the inflation rate. The above-average dynamic of the last few years is likely to continue as a result of high demand, despite the fact that income, as a limiting factor on the demand side, is expected to increase at a slower rate in future. In the second half of 2013, new-build apartments in Berlin let for around € 10.45 per sqm, which is almost one third more expensive than existing apartments. The most expensive new apartments are being constructed in the Mitte district, where average asking prices are € 13.50 per sqm, as in the previous six months. The high rents are due to a small number of luxury projects which continue to be developed almost exclusively in Berlin’s Mitte district. In the remaining city centre districts, asking rents for new apartments are between € 10.00 and € 12.00 per sqm. In peripheral locations around the capital, there are also lower priced new-build apartments being developed, which are offered at rents ranging from € 8.00 to € 9.50 per sqm.

Sources: IDN ImmoDaten GmbH, Jones Lang LaSalle GmbH

Rental price by unit size (Median in €/sqm/month)* District

< 45 sqm 45-65 sqm 66-90 sqm > 90 sqm

Mitte

9.85

9.00

9.00

11.20

Friedrichshain-Kreuzberg

10.00

9.85

9.65

10.10

Pankow

10.00

8.15

8.00

9.55

Charlottenburg-Wilmersdorf

10.85

9.25

9.05

10.20

Spandau

7.75

6.65

6.25

6.75

Steglitz-Zehlendorf

9.10

8.10

8.45

9.00

Tempelhof-Schöneberg

9.45

8.00

7.50

8.55

Neukölln

8.65

7.45

7.10

7.65

Treptow-Köpenick

8.00

6.95

7.00

7.60

Marzahn-Hellersdorf

7.65

6.30

5.35

6.55

Lichtenberg

8.30

7.40

6.85

7.60

Reinickendorf

8.10

6.75

6.70

7.00

Berlin

9.20

7.85

7.55

9.05

*Median rent: 50 per cent of the listings are above 50 per cent below this figure Sources: IDN ImmoDaten GmbH, Jones Lang LaSalle GmbH

Rental price by building age (Median in €/sqm/month)* District

< 1919

1920-1945

1946-1960

1961-1975

1976-1990

1991-2008

> 2009

Mitte

8.85

7.30

8.75

9.00

6.75

12.05

13.50

Friedrichshain-Kreuzberg

9.85

k. A.

9.25

9.05

8.55

9.60

11.95

Pankow

9.20

8.10

6.95

k. A.

7.00

7.40

10.00

Charlottenburg-Wilmersdorf

9.70

9.00

8.80

8.80

8.95

11.00

12.00

Spandau

6.40

7.25

6.20

5.85

6.55

7.00

8.30

Steglitz-Zehlendorf

8.70

9.00

8.00

7.90

7.90

9.20

9.50

Tempelhof-Schöneberg

8.90

7.50

8.30

7.05

6.80

7.60

10.00

Neukölln

8.55

7.60

7.30

6.35

6.55

7.30

8.15

Treptow-Köpenick

7.05

6.85

6.55

6.35

6.25

7.50

9.00

Marzahn-Hellersdorf

7.40

k. A.

k. A.

k. A.

5.45

7.05

6.70

Lichtenberg

8.00

7.50

k. A.

6.35

5.90

7.50

8.35

Reinickendorf

7.05

6.35

6.60

5.85

6.95

7.70

8.95

Berlin

8.85

7.60

7.80

6.95

6.55

7.80

10.45

*Median rent: 50 per cent of the listings are above 50 per cent below this figure Sources: IDN ImmoDaten GmbH, Jones Lang LaSalle GmbH



On Point • Residential City Profile Berlin • Update 2nd half of 2013 8

Condominium market in Berlin in the second half of 2013 Purchase price bands for condominiums

Sources: IDN ImmoDaten GmbH, Jones Lang LaSalle GmbH

Differentiated price development for condominiums Prices for condominiums have risen by 8.7% over the past year and are now offered at an average price of € 2,570 per sqm. The price development in the second half of 2013 differs significantly from district to district. Whilst the city centre districts such as Mitte and Friedrichshain-Kreuzberg are exhibiting a moderate upward trend, asking prices in Neukölln and Reinickendorf are rising dynamically. The comparatively modest price level for locations which are developing attractively such as Schillerkiez in Neukölln or the district of Tegel in

Reinickendorf, is driving prices there. The negative price trend in Marzahn is due to a number of properties offered at expensive asking prices in 2012. Compared to the previous half year, prices are also now rising here at double digit levels. In fashionable locations in the city centre, there are still a few apartments on offer for under € 3,000 per sqm. The price differential between districts is more than three times as high in the case of condominiums as in the rented sector. In the Mitte district, apartments cost almost 2.6 times as much as in Marzahn-Hellersdorf.

Purchase price bands for condominiums (2nd half of 2013 in €/sqm)

10%

25%

Median price* (50%)

Mitte

1,550

2,400

3,530

3.4

4,500

5,860

Friedrichshain-Kreuzberg

1,950

2,410

3,010

4.6

3,580

4,150

District

Development since H2 2012 (%)

75%

90%

Pankow

1,590

2,000

2,670

3.4

3,260

3,950

Charlottenburg-Wilmersdorf

1,670

2,320

3,150

14.2

4,000

5,030

970

1,130

1,370

10.3

1,880

2,610

Steglitz-Zehlendorf

1,380

1,730

2,400

10.1

3,250

4,350

Spandau Tempelhof-Schöneberg

1,250

1,560

2,050

5.4

2,780

3,540

Neukölln

1,110

1,440

1,930

22.7

2,600

2,990

Treptow-Köpenick

1,200

1,560

2,260

7.5

2,850

3,550

710

1,010

1,350

-14.2

1,730

2,140

Marzahn-Hellersdorf Lichtenberg

1,210

1,650

2,320

8.6

2,820

3,290

Reinickendorf

1,120

1,340

1,770

18.7

2,280

2,690

Berlin

1,320

1,790

2,570

8.7

3,450

4,360

*Median price: 50 per cent of the listings are above 50 per cent below this figure Sources: IDN ImmoDaten GmbH, Jones Lang LaSalle GmbH



On Point • Residential City Profile Berlin • Update 2nd half of 2013 9

Reduced price increases for new-build apartments The development in sale prices for condominiums is around 40% higher than the rental price increase since 2004. The main reason is that in the last few years there has been very high demand from both investors and owner-occupiers for this asset class in Berlin. Whilst during the first few years of the new millennium there was still negative development in sale prices at around € 1,600 per sqm, prices jumped noticeably from this level for the first time in 2010. Asking prices have risen by more than half since 2010 alone. For the entire observation period since the start of 2004, prices have risen by around 58%, which equates to an annual rise of 2.4%. Unlike the rental price trend, there is no end in sight for the development of prices for condominiums. Apartment prices have risen by almost 5% compared to the first half of the year. In the second half of 2013, new-build apartments in Berlin were offered at an average price of € 3,540 per sqm, which is a significant rise compared with the previous six months (+3.5%). On the one hand, rising construction and development costs are being passed on and, on the other, developers are taking advantage of the high demand in this segment at a time of continuing scarce supply. In the highly sought-after locations of Mitte and Charlottenburg-Wilmersdorf, asking prices are often around € 4,000 per sqm. The prime new-build segment with sale prices of up to € 13,000 per sqm remains small in Berlin although it is this segment which is attracting the focus of increasing numbers of investors. Around 95% of all apartments offered for sale are priced at under € 5,000 per sqm. In addition to the new-build segment, it is apartments in period buildings which are the most sought-after apartment type. Prices in popular locations are regularly in excess of € 3,000 per sqm.

Sources: IDN ImmoDaten GmbH, Jones Lang LaSalle GmbH

Development of purchase prices (Median in €/sqm)

Sources: IDN ImmoDaten GmbH, Jones Lang LaSalle GmbH

Purchase price by unit size (Median in €/sqm)* District

< 45 sqm 45-65 sqm 66-90 sqm > 90 sqm

Mitte

2,130

2,460

3,100

3,910

Friedrichshain-Kreuzberg

2,540

2,530

3,000

3,380

Pankow

2,210

2,130

2,630

3,020

Charlottenburg-Wilmersdorf

2,420

2,340

2,680

3,660

Spandau

1,140

1,190

1,510

2,020

Steglitz-Zehlendorf

1,670

1,750

2,180

3,120

Tempelhof-Schöneberg

1,630

1,700

1,900

2,770

Neukölln

1,400

1,530

1,840

2,390

Treptow-Köpenick

1,840

1,760

2,360

2,500

k. A.

1,030

1,250

1,840

Lichtenberg

1,570

1,860

2,220

2,560

Reinickendorf

1,390

1,510

1,620

2,260

Berlin

1,980

1,970

2,350

3,100

Marzahn-Hellersdorf

*Median price: 50 per cent of the listings are above 50 per cent below this figure Sources: IDN ImmoDaten GmbH, Jones Lang LaSalle GmbH

Purchase price by building age (Median in €/sqm)* District

< 1919

1920-1945

1946-1960

1961-1975

1976-1990

1991-2008

> 2009

Mitte

2,610

1,490

1,930

2,070

2,400

3,720

4,160

Friedrichshain-Kreuzberg

2,800

2,850

2,300

1,880

1,550

2,440

3,500

Pankow

2,670

1,750

1,590

1,320

k. A.

1,950

3,130

Charlottenburg-Wilmersdorf

3,140

2,650

1,950

2,250

2,930

3,410

3,950

Spandau

1,960

1,230

1,180

1,190

1,650

1,780

2,180

Steglitz-Zehlendorf

2,430

1,760

1,550

1,780

2,490

2,760

3,840

Tempelhof-Schöneberg

2,600

1,420

1,540

1,710

1,720

2,070

3,240

Neukölln

2,180

2,530

1,520

1,310

1,960

2,100

2,800

Treptow-Köpenick

2,190

1,420

1,570

1,240

1,110

1,910

2,900

k. A.

k. A.

k. A.

k. A.

950

1,570

2,090

Lichtenberg

1,820

2,140

k. A.

1,160

1,000

1,920

2,710

Reinickendorf

1,580

1,360

1,460

1,460

2,250

2,030

2,380

Berlin

2,650

1,670

1,630

1,680

2,100

2,140

3,540

Marzahn-Hellersdorf

*Median price: 50 per cent of the listings are above 50 per cent below this figure Sources: IDN ImmoDaten GmbH, Jones Lang LaSalle GmbH



On Point • Residential City Profile Berlin • Update 2nd half of 2013 10

Transaction market for residential property in 2013 in the second half of 2013 Highest transaction volume since 2005 – € 15.8 billion in 2013 In 2013, residential portfolios with a total volume of € 15.8 billion were transacted in Germany. This means that not only was the previous year’s total exceeded by more than 40%, but this was also the highest volume achieved since 2005. A total of around 240,000 apartments changed hands in more than 440 different transactions. The average portfolio size in 2013 was approx. 550 apartments. Whilst transaction activity in the previous year was driven by four major portfolios with more than 15,000 apartments, there were only two portfolio sales of a similar size traded in 2013. The Bavarian housing company GBW AG with approx. 31,000 residential units was sold for around € 2.5 billion to a consortium managed by Patrizia AG. At year-end, the takeover of Berlin-based GSW AG by Deutsche Wohnen AG for a price of € 3.3 billion was completed, meaning a new majority shareholder for around 60,000 apartments. Together with other transactions, Deutsche Wohnen AG invested € 4.4 billion in German residential property and was by far the most active investor. Other purchasers included the Israeli investor Grand City, Adler Real Estate AG and the French company Wohn-REIT Foncière Dévelopment Logements. 2013 was dominated by domestic players: only 17% of invested capital came from abroad, compared to almost 40% in 2012. This is partly due to the profitable sales of high volume portfolios purchased over the past decade by a number of international investors. In addition to the increasing interest of investors, there was a rise in prices for portfolios of existing apartments. Whereas a price of around € 860 per sqm could be achieved in 2012, this had risen to almost € 1,000 per sqm by the end of 2013. In addition to the aforementioned high volume GBW AG and GSW AG residential portfolios, another price driver was the increasing number of pre-sold project developments in major German cities. At € 1.6 billion, 80% more was

invested in new apartments in 2013 compared with 2012. The average price for new-build apartments was just under € 3,000 per sqm, or 7% higher than the previous year. In addition to developers, professional asset and fund managers (€ 5.2 billion) dominated the sellside, followed by a group comprising banks, insurance companies and pension funds (€ 3.3 billion). On the buy-side, the market was dominated by listed housing companies (€ 6.5 billion), followed by the professional asset and fund managers (€ 3.5 billion). Regionally, Berlin is traditionally the largest German transaction market. The German capital outperformed the German portfolio transaction market with a total of € 6.7 billion (compared to € 6.2 billion in Germany as a whole) due to the takeover of GSW AG by the Deutsche Wohnen AG; but even without this merger, Berlin would have left other transaction markets well behind at € 3.5 billion. Second place in the rankings, but at a considerable distance behind, was Frankfurt and the Rhein/Main region: here, the transaction volume of around € 523 m more than doubled compared to 2012 (€ 200 m). At € 426 m, the transaction market in Hamburg took third place, with a 10% rise compared to 2012. There is a wide price variation between the individual markets. Whilst Munich was the most expensive German residential transaction market in 2012, it was pushed into second place by Frankfurt in 2013. The average price for commercially-traded residential properties and Portfolio transactions by vendor/purchaser in %

Investors origin (% of transaction volume)

Source: Jones Lang LaSalle GmbH

Source: Jones Lang LaSalle GmbH



On Point • Residential City Profile Berlin • Update 2nd half of 2013 11

portfolios was € 2,900 per sqm or € 220,000 per residential unit. In Hamburg, the price was around € 2,200 per sqm or € 150,000 per residential unit. Cologne’s residential market was the biggest surprise, moving into third place. Residential properties and portfolios were traded here at an average price of € 2,100 per sqm or € 150,000 per apartment. The average price in Munich fell to € 1,800 per sqm and thus somewhat less than € 110,000 per residential unit. By contrast, Berlin’s average of € 65,000 per residential unit or slightly less than € 1,100 per sqm is significantly less expensive. The gross yield range stretched from over 10% in less well-structured regions to below 5% in the city centres of Munich, Hamburg and even Berlin. The residential transaction market is also expected to perform well in 2014. Even if the number of high volume transactions reduces, portfolio break-ups, rationalisations of existing portfolios and other consolidations in the market are expected to produce a total transaction volume of at least € 11 billion. Record transaction volume in the German capital At around € 6.7 billion, investment in the Berlin housing market was more than four times as high in 2013 as in the previous year.

The deciding factor was the takeover of GSW AG by Deutsche Wohnen for around € 3.3 billion. Including this deal, there were a total of 107 transactions (2012: 67), in which more than 100,000 apartments changed hands. This means that the federal capital is increasingly (and by far) the most popular investment location for residential properties in Germany. Furthermore, many national portfolios included a high proportion of properties located in Berlin. In addition to Deutsche Wohnen AG and other mainly listed institutional investors, the public sector companies were more active on the buy-side than in 2012. They invested some € 400 m in almost 6,000 apartments in existing properties and project developments in order to fulfil the political requirement for more publicly subsidised residential space. Of note are the activities of private investors and family offices. They purchased more than 3,000 apartments for almost € 330 m at an average price of € 1,300 per sqm, which is almost 30% higher than the Berlin average (around € 1,100 per sqm). Investment focus is predominantly within the SBahn railway ring; however peripheral areas such as Spandau, Hellersdorf and Hohenschönhausen are still of interest, particularly to opportunistic investors.

Selected residential portfolio transactions Housing units

Purchase price in € million

Deutsche Wohnen AG

52,557

Bayern LB

Consortium led by Patrizia Immobilien AG

Berlin

Blackstone

Berlin, Dresden

Location

Vendor

Purchaser

Date

Annotations

Berlin

Free float

3,321.7

Q4 2013

Takeover GSW AG

Munich, Nuremberg and others

32,000

2,453.0

Q2 2013

GBW portfolio

Deutsche Wohnen AG

6,900

369.0

Q2 2013

Remaining Level One portfolio

confidential 

Foncière Dévelopment Logements

4,000

351.0

Q4 2013

Berlin, Düsseldorf

confidential 

Private equity investors

8,500

confidential 

Q4 2013

Berlin, Frankfurt, Leipzig, Dresden and others

Corestate Capital AG several German institutional investors

3,700

250.0

Q1 2013

Berlin, Nürnberg, Essen, Dresden

confidential 

Grand City Properties

4,400

confidential 

Q3 2013

Berlin

Petrus Advisors

Deutsche Wohnen AG

5,210

230.0

Q1 2013

Petrus portfolios

Duisburg, Düsseldorf

Immeo Wohnen

Adler Real Estate AG

4,290

210.8

Q2 2013

e.g. former ThyssenKrupp portfolio

Berlin

Lincoln Equities

GSW Immobilien AG

2,800

201.0

Q3 2013

two portfolios

Source: Jones Lang LaSalle GmbH



On Point • Residential City Profile Berlin • Update 2nd half of 2013 12

The residential property market Berlin Offered rental prices in the second half of 2013 Page 1 of 16

ì

A 11

ì

A 10

ì

ì

A 10

A 111

ì

A 11

ì

A 111

ì

A 10

ì

A 114

Pankow

Reinickendorf

ì

A 10

ì

A 105

ì

A 111

ì

Lichtenberg

Mitte

A 100

Spandau

ì

A 10

MarzahnHellersdorf

FriedrichshainKreuzberg

CharlottenburgWilmersdorf

ì

A 10

ì ì

ì

A 104

A 115

SteglitzZehlendorf

A 103

TempelhofSchöneberg

ì ì

A 100 A 102

ì

Neukölln

A 113

TreptowKöpenick

ì

A 115

ì

A 113

ì

A 10

ì

A 12

ì

ì

A 10

ì

A 10

ì

A 115

A 10

ì

A 10

0

5

ì

10 Kilometers

A 13

Rent Level

Average in €/sqm/month on postcode level

Berlin

< 5.50 €/sqm

8.50 < 10.00 €/sqm

Water Area

5.50 < 7.00 €/sqm

> 10.00 €/sqm

Green Area

7.00 < 8.50 €/sqm Source: Jones Lang LaSalle, IDN Immodaten GmbH, Infas Geodaten GmbH

Industrial or Traffic Area Other Area



On Point • Residential City Profile Berlin • Update 2nd half of 2013 13

The residential property market Berlin Development of offered rental prices 2011-2013 Page 1 of 16

ì

A 11

ì

A 10

ì

ì

A 10

A 111

ì

A 11

ì

A 111

ì

A 10

ì

A 114

Pankow

Reinickendorf

ì

A 10

ì

A 105

ì

A 111

ì

Lichtenberg

Mitte

A 100

Spandau

ì

A 10

MarzahnHellersdorf

FriedrichshainKreuzberg

CharlottenburgWilmersdorf

ì

A 10

ì ì

ì

A 104

A 115

A 103

SteglitzZehlendorf

TempelhofSchöneberg

ì ì

A 100 A 102

ì

Neukölln

A 113

TreptowKöpenick

ì

A 115

ì

A 113

ì

A 10

ì

A 12

ì

ì

A 10

ì

A 10

ì

A 115

A 10

ì

A 10

0

5

ì

10 Kilometers

A 13

Development of Offered Rental Prices

in % 2nd half of 2011 - 2nd half of 2013 (on postcode level)

Berlin

20 %

Green Area

10 < 15 % Source: Jones Lang LaSalle, IDN Immodaten GmbH, Infas Geodaten GmbH

Industrial or Traffic Area Other Area



On Point • Residential City Profile Berlin • Update 2nd half of 2013 14

Glossary General information Rental/purchase prices

The average prices (median and arithmetic mean) compiled in this report are based on property advertisements that the IDN Immodaten portal retrieves and evaluates from 113 sources such as daily newspapers and online property sites. Jones Lang LaSalle validates the acquired primary data and verifies the results. The rental and purchase prices reported in the Residential City Profiles are advertised prices and rents. That means they could be slightly higher or lower by the time of the final contract, particularly in the case of condominiums.

Basic statistical terms Average

Average value is a colloquial term used for a series of mean values. Arithmetic mean and median are more commonly used terms.

Arithmetic mean

The arithmetic mean is calculated based on the sum of all occurring values divided by the number of these values. Also called the standard average value, this measurement is particularly sensitive to outliers, as high values have a disproportionate influence on the average. In order to reduce this sensitivity, the arithmetic mean is frequently given a “weight”. For example, rents are each multiplied by the space. The sum of this weight is then divided by the total space.

Median

(Central value) – The numerical value separating the higher half of a sample from the lower half. In an ordered list (e.g. rent/purchase price lists in € per sqm) the median divides the list into two equal halves. 50% of the prices are above and 50% are below the median value. If there is an even number of prices, the median is defined as the mean of the two middle values. The advantage of the median is that it does not react to outliers in the list and is therefore a robust way of measuring the average.

Quartile

Quartiles divide an ordered list into quarters. The value that separates the first 25% of the list represents the first quartile. The middle 50% of an ordered list is located between the second and third quartiles.

Percentile

Along the lines of quartiles, percentiles divide ordered lists into 100 equal parts. In the Residential City Profile, the 10th and the 90th percentile are used in order to define the upper and lower 10% of the purchase prices and rents.

Box plot

A box plot can illustrate a total of five values to provide a detailed description and spread of rents and purchase prices. A line is also added to indicate the 10th and 90th percentile. The median value and the second and third quartiles are plotted as a box or a bar on the straight line.

Terms for settlement structure and population dynamics Wilhelmian building period

The Wilhelmian period relates to the era between 1850 and 1914. In the course of the increased industrialisation of cities at the time, large settlements were established on the former city outskirts to accommodate the rapidly growing city populations. Four- to six-storey building complexes or tenements were erected with richly decorated facades.

Large (residential) estate

Large residential estates were established between the 1950s and the end of the 1980s primarily on the outskirts of large European cities. The buildings were erected quickly due to their homogenous building structure and the use of industrial mass-production methods. The main characteristics of the buildings are that they contain many floors packed densely together and provide at least 1,000 residential units. The objective was to create plenty of modern and affordable housing in the fastest possible time. In Germany, the largest estates are located in Berlin (Marzahn, Hellersdorf and Lichtenberg with around 160,000 units); Halle-Neustadt (41,000), Leipzig-Grünau (40,000), Chemnitz (31,000), Munich-Neuperlach (24,000), Schwerin (20,700) and Cologne-Chorweiler (20,000).

Suburbanisation

The economic and demographic expansion of cities into their suburbs since the Second World War. Also associated with this is the intra-regional shift of settlements to the city outskirts. Typical suburban settlements are not built up and are dominated by one- and two-family houses and terrace houses built in similar styles.

Population change

Term to represent changes in the number of inhabitants in a region. The difference between immigration and emigration is described as net migration, and the difference between births and deaths is described as natural population development.

Singularisation

The singularisation of living forms, a concept that emerged from gerontology to describe the solitary living of people from an older age. People of advancing age live alone because of the death of their partner and the less frequent use of family networks. The term has also recently been applied to younger people who live alone. However, the growing number of single-person households in Germany is primarily due to the ageing of society.

Contact Andrew Groom Head of Valuation & Transaction Advisory Germany Frankfurt tel +49 (0) 69 2003 1241 [email protected]

Helge Scheunemann Head of Research Germany Hamburg tel +49 (0) 40 350011 225 [email protected]

Roman Heidrich Team Leader Residential Valuation Advisory Berlin Berlin tel +49 (0) 30 203980 106 [email protected]

Sebastian Grimm Team Leader Residential Valuation Advisory Frankfurt Frankfurt tel +49 (0) 69 2003 1196 [email protected]

Copyright © JONES LANG LASALLE GmbH, 2014. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them.

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