Market survey - 2019/Q1 Hamburg - German Property Partners

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Market survey - 2019/Q1 Hamburg - German Property Partners
Market survey
Commercial | Investment

2019/Q1
Hamburg

Hamburg | Sylt | Berlin
Market survey - 2019/Q1 Hamburg - German Property Partners
Commercial | Investment
                                                                                                          Hamburg 2019/Q1

                                                                          Key Facts Investment
                                                                           €0.5bn                         |   -65% year-on-year change
                                                                           18%                            |   -9 pp year-on-year change
                                                                           Office:                 47%    |    -4pp year-on-year change
                                                                           Office:                2.8%    | -0.1 pp year-on-year change
                                                                         Commercial:              2.7%    | -0.2 pp year-on-year change
                                                                         Logistics:               4.5%    | +0.3 pp year-on-year change
                                                                                                                                pp = percentage point
                                                  Transaction volume    Share of foreign investors     Strongest asset class         (Net) Prime yield

“The rather slow start to 2019 is the consequence of last              Six properties, traded at between €25m and €50m, made up
year’s record result. A large number of big-ticket sales were          the largest share of the market, taking some 44% of the total
made in 2018, leaving a much-reduced choice of properties              volume. Only one property, the “Arne-Jacobsen-Haus” (Überse-
and depressing the volume traded in the first quarter.” ”              ering 12) in City North, sold by Vattenfall Europe to Matrix Im-
Axel Steinbrinker | Managing director                                  mobilien, commanded a price over €50m. Vattenfall sold the
                                                                       building it has so far occupied itself for around €60m. When
Transaction volume                                                     Vattenfall has moved out of the building, which is under a pres-
A rather slow start to 2019                                            ervation order, the new owners plan to refurbish the property
                                                                       and erect a new building on the part of the site available for re-
Investment trading in commercial properties in Hamburg was             development. Vattenfall will be moving into the “EDGE Elbside”
rather sluggish at the beginning of 2019. Whereas the volume           a development project located on Amerigo-Vespucci-Platz,
traded during the same quarter of 2018 was €1.3bn (28 trans-           HafenCity, in 2023.
actions), the totals at the end of the 1st quarter of 2019 stood
at €460m and 21 transactions. Year on year, therefore, the
volume traded fell by around 65%. Whereas numerous trades
with price tags of more than €100m were characteristic of the          Transaction volume
prior year’s market, such transactions were in short supply in         2015-2019/Q1 | in € bn
the first three months of 2019. Only one trade in this price cat-
egory was initiated in the 1st quarter.
                                                                                         10-year average (2009–2018):
                                                                                                            ca. €3.2bn
The biggest single known transaction was the sale of the building
site at Großer Burstah 3, for which Gator paid Commerz Real                                                                             Forecast
over €100m. At the end of 2018 it was already apparent that
the owner of the development site, a Commerzbank subsidiary,
was planning to sell it to the Hamburg property firm Gator. Al-
though this trade alone accounted for more than a fifth of the
total volume, the bulk of the overall result for the 1st quarter of
2019 was comprised of transactions costing up to €50m. The                                                                                  Q1
                                                                            4,0             4,5           3,6               6,0             0.5
majority of transactions, eleven, were priced at €10m or less,
but they contributed only 13% or some €59m to the total result.            2015            2016          2017              2018          2019/Q1
                                                                                                                         Source: Grossmann & Berger GmbH
                                                                                                           www.grossmann-berger.de | Page 2
Market survey - 2019/Q1 Hamburg - German Property Partners
Commercial | Investment
                                                                                                             Hamburg 2019/Q1

Selected transactions
2019/Q1

Redevelopment site Großer Burstah | Großer Burstah 3 | City
Plot | Investor: Gator | Purchase price: over €100m

Arne-Jacobsen-Haus | Überseering 12 | City North
Office | Investor: Matrix Immobilien |Purchase price: ca. €60m

Redevelopment site City-Hochhäuser | Klosterwall 6-8 | City
Plot | Investor: Aug. Prien | Purchase price: ca. €60m

Lindner Hotel Am Michel | Neanderstraße 20 | City
Hotel | Investor: Institutional investors | Purchase price: ca. €34m

Office building | Süderstraße 63 | City South
Office | Investor: DEKA Immobilien | Purchase price: over €30m
                                                                                     Arne-Jacobsen-Haus | Office | Überseering 12 | City North

Transaction volume                                                             As in previous years, office properties were the biggest-selling
2019/Q1 | in € millions | by size                                              category, accounting for 47% of the volume traded (€219m).
                                                                               About half of the properties sold in the 1st quarter of 2019
   Transaction volume
                                                                               were office blocks. In addition to the sale of the “Arne-Jacob-
   No. of transactions
                                                                               sen-Haus” that was already mentioned, an especially note-
                                                                               worthy transaction in this asset class was the office block at
                                                                               Süderstrasse 63, City South, which Warburg HIH sold to Deka
                                                                               Immobilien. Completed in 1999, this property changed hands for
                                                                               over €30m.

                                                                               As was to be expected, considering the 1st-quarter sales of
                                                                               the Großer Burstah and Klosterwall development sites, the
                                                                               second most popular asset class was building land (31% and
        11               2              6         1               1            €143m). Comprising 10% of the market, hotels were the third-
     13%             8%             44%        13%             22%             most-popular asset class. Apart from the sale of the “Lindner
      59             38             203         60             100             Hotel Am Michel” (Neanderstrasse 20), which institutional in-
    up to           up to           up to      up to            over           vestors acquired from Lloyd Funds, this result owed much to
     10              25              50         100             100            the sale of the “Hotel Heimhude” (Heimhuder Strasse 16) and
                                            Source: Grossmann & Berger GmbH    the “Berghotel Hamburg Blick” (Wulmsberg 12). The two last-
                                                                               named were bought by designer store Stilwerk in order to
                                                                               further the company’s hospitality business plans. A mixed use
                                                                               property sold in the Billstedt district lifted this asset class to
Transaction volume                                                             fourth place in the asset ranking (6%). Logistics properties,
2019/Q1 | by asset class                                                       which accounted for a share of 4% (€18m) came behind in fifth
                                                                               place. Unlike the prior year retail properties played only a minor
Other                               2%                                         role on the market in the first three months of 2019.
Industrial/
logistics                          4%
                                                                               Once more, the City proved to be the busiest sub-market. Some
Mixed use                      6%                                              45% (€205m) of the total volume traded was transacted in this
                                                                               top-ranking inner city district, followed by City South with a
Hotel                        10%                                               share of 16% (€75m) and City North with 13% (€60m). Unchar-
                                                  47%                 Office   acteristically, the usually strong HafenCity sub-market posted
                                                                               no transactions in the 1st quarter of 2019. Several trades took
                                                                               place in subordinate locations, reflecting the changing strategies
                                                                               of investors. Buyers are increasingly turning their attention to
Undeveloped
sites                    31%                                                   non-core locations with development potential. Accounting for
                                                                               12% of the volume traded (three transactions totalling €54m),
                                                                               Hamburg East was close behind in fourth place.

                                            Source:
                                            Quelle: Grossmann & Berger GmbH
                                                                                                               www.grossmann-berger.de | Page 3
Market survey - 2019/Q1 Hamburg - German Property Partners
Commercial | Investment
                                                                                                                 Hamburg 2019/Q1

Prime yields                                                                        Yields
2015-2019/Q1 | (Net) initial yield | in %                                           Prime yields low but stable
                                                                                    Compared with the prior quarter, prime yields on commercial
     5.40            Industrial/logistics                                           properties in Hamburg have stabilized at their low rate, thus
                       4.90                                                         halting the decline of the previous months. Year on year the
                                        4.60         4.50            4.50           prime yield on logistics properties has recovered from the low
                  Office                                                            point seen in that quarter and is now 4.50%. At the end of the
     3.70
                                                                                    first three months of the year, returns on both office properties
                       3.30
                                                                                    and commercial buildings stood at 2.80%.
     3.60                               2.90         2.80            2.80
                       3.30
         Commercial buildings           2.90
                                                     2.70            2.70           Investors and vendors
     2015             2016              2017         2018          2019/Q1          National buyers dominated the market
                                                  Source: Grossmann & Berger GmbH   National players were especially active on both the buying and
                                                                                    selling sides of the market. Accounting for 85% of vendors and
                                                                                    82% of buyers, German investors were almost alone on the
Transaction volume                                                                  market for commercial real estate investment in Hamburg.
2019/Q1 | by investor groups                                                        Year on year the share of foreign investors in the market fell
                                                                                    a further 9 percentage points to 18%. Developers were the
Other                                6%                                             biggest buyers in the 1st quarter; their spend of €265m rep-
Corporates/
                                                                                    resented more than half (58%) of the total volume of trans-
owner-occupiers                3%                                                   actions. Fund managers comprised the next biggest group of
Private equity/                                                                     buyers (13%) followed by open end property investment funds
opportunity
funds                         8%                                                    (12%).
Open-end
retail funds           12%                                                          Open end property investment funds were behind 24% of the
                                                                                    sales volume (€110m), and thus the biggest group of vendors.
                                                                        Project
                                                        58%          developers     This result stemmed primarily from the sale of the site at
                                                                                    Großer Burstah, which Commerz Real sold for its Hausinvest
Fondsmanager            13%                                                         fund. Owner-occupiers accounted for 21% of the volume traded
                                                                                    (second place), followed in third place by non-listed property
                                                                                    companies with a share of 10%.

                                                  Source: Grossmann & Berger GmbH   Outlook
                                                                                    Positive mood but shortage of supply
Transaction volume                                                                  There will still be demand for suitable investment properties in
2019/Q1 | by vendor groups                                                          Hamburg in 2019. The favourable market environment, ongoing
                                                                                    low interest rates and the stability of the German economy
                                                                                    are likely to ensure that business remains brisk in the year just
                                                                                    started. However, the year 2019 is not expected to repeat the
                                                                                    exceptional performance of 2018 and experts reckon with a
                                                                      Open-end
                                                   24%               retail funds   total transaction volume of between €4.0bn and €4.5bn. Prime
Other                   28%                                                         yields probably bottomed out at the end of 2018. It is to be ex-
                                                                                    pected that yields will now consolidate.

Public
sector                8%                                           Corporates/
                                                                       owner-
                                                      21%            occupiers

Project developers            9%                                     Non-listed
                                            10%                        property
                                                                     companies

                                                  Source: Grossmann & Berger GmbH
                                                                                                                  www.grossmann-berger.de | Page 4
Commercial | Investment
                                                                                                                                     Hamburg 2019/Q1

Skilled consultancy
Services und contacts
                                                                                           From left to right: Sonja Ebert | Anna Martens | Stephan Eckert

What can we do for you?                                                                     Sonja Ebert | MBA Real Estate Management
An analysis of the property markets is an important part of the                             Phone: +49 (0)40 / 350 80 2 - 641
wide-ranging consultancy services offered by Grossmann &                                    Mail: s.ebert@grossmann-berger.de
Berger. We would be pleased to be of assistance in your deci-
sion-making process and can draft an offer that is tailored to                              Stephan Eckert | Urban and Regional Development M. Sc.
your specific requirements.                                                                 Phone: +49 (0)40 / 350 80 2 - 231
                                                                                            Mail: s.eckert@grossmann-berger.de

                                                                                            Anna Martens | Diplom-Ingenieur Master of Urban Planning
                                                                                            Phone: +49 (0)40 / 350 80 2 - 615
                                                                                            Mail: a.martens@grossmann-berger.de

Glossary
Definitions, investment market
Transaction volume: The transaction volume is the sum of the purchase prices of             Photo credits:
                                                                                            Cover: Titel: “Kallmorgen-Tower“, Willy-Brandt-Straße, Page 2: Colonnaden 72 © Jenner Eg-
all commercial property sold in Hamburg during the period under review. The date            berts Fotografie, Page 3:“Arne-Jacobsen-Haus“, Überseering 12 © Friedel Luftbilder.
of signing determines when a transaction is included in the statistics. Buy to let
                                                                                            We draw your attention to the fact that all statements made here are non-binding. Most of
investments in residential properties are not included in the transaction volume.           the information is based on third-party reports. The sole intention of this market survey is to
Asset class: A property is allocated to an asset class according to the predominant         provide general infomation for our clients.

way in which space is used (at least 75%) when the contract is signed.                      Grossmann & Berger GmbH | Bleichenbrücke 9 (Stadthöfe) | D - 20354 Hamburg
Individual properties and portfolio transactions: An individual property trans-             Phone: +49 (0)40 / 350 80 2 - 0 | Fax: +49 (0)40 / 350 80 2 - 36
                                                                                            info@grossmann-berger.de | www.grossmann-berger.de
action means the purchase of a building used for commercial purposes or of a
piece of land for development. Portfolio transactions involve the purchase of at            Managing directors: Andreas Rehberg, Holger Michaelis, Lars Seidel, Axel Steinbrinker
                                                                                            Chairman of the supervisory board: Frank Brockmann
least two separate properties in different locations.                                       Registered office Hamburg • Registered at Hamburg no. B 25866
Prime yield: The prime yield is the initial return attainable on a property that has
been let on normal market terms (tenants with good credit ratings), has top quality
structure and fit-out and stands in one of the very best locations. It is stated as the
net initial yield in per cent, i.e. the ratio between the annual rental income less non-
apportionable ancillary costs and the gross purchase price (net purchase price plus
land acquisition tax, notary’s fees and agency commission.)

                                                                                                                                          www.grossmann-berger.de | Page 5
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