PROPERTY MARKET REPORT 2018 - BUSINESS PROMOTION - Wirtschaftsförderung Hannover

PROPERTY MARKET REPORT 2018 - BUSINESS PROMOTION - Wirtschaftsförderung Hannover

PROPERTY MARKET REPORT 2018 - BUSINESS PROMOTION - Wirtschaftsförderung Hannover

     OFFICES                                                                           RETAIL

      The number of office employees in the city of Hannover rose in
      2018 to some 150,000. As a result, over the last five years the
      number of office jobs has risen by around 15,000, a plus of 11 %.
      The growing demand for office space is very visible in the office
      property market. In 2017 turnover of office space amounted to                     Hannover Region stands out as one of Germany’s highest
      around 145,000 m2.                                                                turnover retail locations. Estimates for 2018 see retail turnover
                                                                                        reaching some €7.85 billion. Hannover’s city centre, with its
    Office   1                                                                          prime locations in the Georgstraße and the Bahnhofstraße,
                                                                                        is complemented by retail market centres, shopping centres,
    Office space portfolio 2017 in m 2 MF-G*                             4.95 m
                                                                                        district centres and attractive inner cities in the Region.
     Of which Hannover city                                              4.48 m

     Of which surrounding towns of Garbsen, Laatzen
                                                                         0.47 m
     and Langenhagen                                                                  Retail 2
    Office space turnover 2017 in m 2 MF-G*                             145,000       Sales floor Hannover Region in m 2                                          2.1 m
     City of Hannover                                                   130,000
                                                                                       Surrounding area                                                           1.15 m
     Surrounding towns of Garbsen, Laatzen and
                                                                         15,000        Hannover city                                                            0.84 m
                                                                                         Of which Hannover city centre (Mitte)                                 285,000
    Vacancy rate 2017 in m 2 MF-G*                                      180,000

     City of Hannover                                                   150,000       Retail centrality index 2018 (Germany = 100)

     Surrounding towns of Garbsen, Laatzen and                                         Hannover city                                                                   122
                                                                                       Region                                                                      107.1
    Vacancy rate 2017 in %                                                3.6 %
                                                                                      Purchasing power 2018 in €                                                8.29 bn
     City of Hannover                                                     3.3 %
                                                                                       Hannover city                                                            3.84 bn
     Surrounding towns of Garbsen, Laatzen and
                                                                          6.4 %        Region                                                                   4.45 bn

    Prime office rent 2018 in €/m MF-G*
                                   2                                                  Retail turnover 2018 in €                                                 7.85 bn

     City centre                                                          15.50        Hannover city                                                            4.14 bn

     City centre periphery                                                13.50        Region (including Hannover city)                                          3.71 bn

    Average rent 2018 in €/m MF-G*
                              2                                                       Rents 2018

     City centre                                                          10.60        Prime rent city, prime location in €/m 2*                                       185

     City centre periphery                                                 8.60        Average rent city prime location in €/m *   2

    Net initial yield in prime locations, city centre 2018                4.3 %       Returns 2018

                                                                                       Net initial yield in prime locations                                            4%
* MF-G: Standard method for calculating commercial rental space
                                                                                       Net initial yield, specialist retail centres                               5.8 %
    Source: bulwiengesa AG, Hannover Region surveys; details provided
    by market players
                                                                                      Bahnhofstraße, Große Packhofstraße, Georgstraße
                                                                                      Source: retail portfolio surveys on behalf of Hannover Region (data status end
                                                                                      2016); MB research 2018: detail estimates provided by market players.
PROPERTY MARKET REPORT 2018 - BUSINESS PROMOTION - Wirtschaftsförderung Hannover

     HOTEL                                                                               LOGISTICS

      Tourism is growing in Hannover. The number of overnight
      stays climbed in 2017 to more than 4 million in the city and the
      Region. In addition to business and fair guests, the number of
      city tourists visiting tourist attractions such as the Adventure
      Zoo and the international fireworks competition in the Royal
      Gardens of Herrenhausen is also up. This dynamism is reflected
      in hotel property projects. Today’s figures indicate that by 2021
      the ten hotels currently being planned and under construction                       Hannover Region is a European logistics hub and a vital,
      will inject an additional 1,800 new rooms to the market. Another                    expandable seaport hinterland hub for North German
      five hotel projects are in the planning phase.                                      seaports. The regional logistics economy is dominated above
                                                                                          all by the demand from trading and industrial enterprises.
    Hotel   3                                                                             Recent years have seen many contract logistics providers
                                                                                          move to the location, providing logistics services to other
    Number of accommodation establishments 2017                           341
                                                                                          companies and demonstrating high levels of in-house added
     Hannover                                                              103
                                                                                          value. Hall space turnover rose significantly during 2017, to
     Region                                                               238
                                                                                          around 260,000 m 2.
    Hotels 2017                                                           158

     Hannover                                                               43
                                                                                       Logistics 4
     Region                                                                115
                                                                                       Logistics area portfolio 2018 in m 2                                          3.0 m
    Number of beds (all accommodation types) 2017                   30,871
                                                                                         Of which built after 2009                                                  0.97 m
     Hannover                                                        13,755
                                                                                       Logistics space turnover 2017 in m 2                                      260,000
     Region                                                              17,116
                                                                                       Prime rent 2018
    Beds in hotels 2017                                             14,533
                                                                                         Prime rent in €/m 2                                                          4.70
     Hannover                                                        8,806
                                                                                         Average rent in €/m   2
     Region                                                              5,727
                                                                                       Net initial yield logistics centres in prime sites 2018                         5%
    Arrivals 2017                                                   2.20 m

     Hannover                                                        1.36 m       4
                                                                                      	All values with respect to Hannover Region, area portfolio is an extrapolation of the
     Region                                                         0.84 m              survey of 2016, data as of mid-2018.
                                                                                        Source: bulwiengesa AG; Details from market players
    Overnights in hotels 2017                                       2.27 m

     Hannover                                                        1.47 m

     Region                                                          0.8 m

    Average duration in days (all types)                                   1.7

    Key indexes, chain hotels Hannover (Fairmas)

     Occupancy rate, average 2017                                   64.8 %

     Room price, average 2017 in €                                   102.10

     RevPAR (revenue per room) average 2017 in €                     66.20

     Average initial yield, hotels in 2017                          4.80 %

    Values are annual average
    Source: Lower Saxony state statistical office.
PROPERTY MARKET REPORT 2018 - BUSINESS PROMOTION - Wirtschaftsförderung Hannover

      The residential property market is dominated by regional pro­
      viders and the demand for private homes. The population growth
      in the State Capital Hannover and its neighbouring communities
      is generating high demand for residential properties. Over the last
      five years (since 2013 to end 2017) the population of Hannover has
      climbed by approx. 17,300 (plus 3.3 %) to around 541,800. In the
      same period only some 3,855 new apartments were completed in
      Hannover such that at the present time there is and will continue
      to be a considerable demand for new homes. Working together
      with the housing industry, Hannover city plans to create building
      rights for 500 to 700 new apartments.

    Residential 5

    Rents 2018

     Newbuilds, prime rent in €/m 2                                    15.50

     Newbuilds, average rent in €/m   2

     Re-let property, prime rent in €/m   2

     Re-let property, average rent in €/m 2                            9.00

    Home buying 2018

     Owner-occupied apartments, newbuilds, prime group in €/m 2        5,650

     Owner-occupied apartments, newbuilds, average in €/m 2            3,950

    Multipliers 2018

     Apartment blocks/investment properties, newbuilds,
     prime group 2018

     Apartment blocks/investment properties, newbuilds, average 2018    22.5

     Apartment blocks/investment properties, stock, prime group 2018    23.5

     Apartment blocks/investment properties, stock, average 2018        18.0

    All values refer to State Capital Hannover.
    Source: bulwiengesa AG; Details from market players

         6       PROPERTY
PROPERTY MARKET REPORT 2018 - BUSINESS PROMOTION - Wirtschaftsförderung Hannover


Page 5

Page 6            Page 16           Page 32

Page 44           Page 54           Page 70

                  IMPRINT           MAPS

                  Page 90           Pages 15, 29, 43, 53, 67, 87

PROPERTY MARKET REPORT 2018 - BUSINESS PROMOTION - Wirtschaftsförderung Hannover
LIVIN is a residential and commercial building providing 25 apartments in the upper floors and two business units for catering on the ground floor. The building, designed
by architects BKSP for developer HOCHTIEF Infrastructure GmbH Building Hannover, is situated directly adjacent to the "new" Leineufer river bank featuring a tree-lined
avenue and wide, open stairs down to the river. On the city side is the redesigned Platz am Marstall.

        4      PROPERTY MARKET REPORT 2018
PROPERTY MARKET REPORT 2018 - BUSINESS PROMOTION - Wirtschaftsförderung Hannover

                  Dear Readers,

                  The property market in Hannover and the Region is moving forward, the cranes are turning, the
                  order books are full with new and innovative projects.

                  The commercial property market in Hannover stands for robust yields on investments with
                  development potential. Hannover city is one of Germany’s top shopping addresses. Logistics
                  areas in the Region are enjoying a high level of demand; the office market in the state capital is
                  Germany’s largest after the country’s seven A-locations. In the city, the number of hotel beds on
                  offer will continue to grow while the city and its environs are seeing strong demand for housing.

                  The same applies to all submarkets: Hannover offers attractive, interesting investment
                  ­o pportunities and is attracting investors seeking to invest in top quality locations.

                  Together with 20 prominent partners from the property industry, the regional business promotion
                  organisation has been collecting core data since 2003 from all relevant submarkets, presenting
                  them in a transparent and interesting fashion while ensuring compliance with the standards of
                  the Gesellschaft für immobilienwirtschaftliche Forschung e.V. (gif – property industry research
                  corporation). The results of these collaborative efforts have been reviewed and supplemented by
                  the well-known consultancy firm bulwiengesa AG.

                  Hannover is appreciated as a strong property location within Germany. The property market
                  report provides impressive documentation of the committed and trusting atmosphere of
                  cooperation existing within Hannover’s property business community.

                  Ulf-Birger Franz                                   Sabine Tegtmeyer-Dette

                  Head of Business,                                  Head of Business and Environment
                  Transport and Education                            Department, First Town Councillor
                  Department                                         State Capital Hannover
                  Hannover Region

                                                                                                          FOREWORD     5
PROPERTY MARKET REPORT 2018 - BUSINESS PROMOTION - Wirtschaftsförderung Hannover
Over the rooftops of Hannover: the terrace on top of the multi-storey car park in the Osterstraße provides panoramic views over Hannover’s city
centre. The GASTFREUNDSCHAFT creative workshop has been offering 600 m 2 of space for workshops and seminars since early 2018.

                                        1.177 m                                                             500,000
                                             Population mid 2018                                                Employees paying social security
                                                                                                                     contributions, mid 2017

        6     PROPERTY MARKET REPORT 2018
PROPERTY MARKET REPORT 2018 - BUSINESS PROMOTION - Wirtschaftsförderung Hannover
                                  Hannover Region is an innovative industrial
                                  location, service metropolis and logistics hub
                                  for national and international markets. The
                                  positive development enjoyed by the regional
                                  economy over recent years has created long-
€698 m                            term demand for properties in all submarkets.
                                  The commercial property market in Hannover
Investment volume in commercial
     property market 2017
                                  has consolidated its position as the top
                                  location outside of Germany’s seven major

                                              INVESTMENT MARKET HANNOVER   7
PROPERTY MARKET REPORT 2018 - BUSINESS PROMOTION - Wirtschaftsförderung Hannover

                                                          	Famous brands, a strong business community char-                 	The central jobs location in the Region is State Capital
                                                           acterised by strong SMEs and exceptional research                          Hannover, with around 320,000 employees, while a
                                                           organisations are all at home in Lower Saxony State                        further 180,000 are employed in its surrounding areas.
                                                           Capital Hannover and the Hannover Region.
                                                                                                                             	The regional unemployment rate in June 2018 was a
                                                          	Some 49,000 business enterprises help make                                relatively low 7.5 % (down 0.1 % on June 2017).
                                                           Hannover into Lower Saxony’s key economic area.

                                                          	Almost 500,000 people had jobs in Hannover Region
                                                           in mid-2017.

                                                    Investment summary
                                                    The current market continues to be characterised by an                  Above all, Germany’s top 7 locations have experienced
                                                    ongoing super-cycle within the property sector, primarily               extreme price rises. For some time now the B-locations
                                                    pushed by the extended period of low interest. With initial             have become an interesting investment alternative
                                                    signs of a turnaround now apparent, the ­question is basi-              for a number of investors – such that prices have also
                                                    cally when will the interest structure U-turn happen, what              risen significantly here as well. Foreign investors have
                                                    will it look like and what will its impact be. At the same              now gained confidence in activities outside of the top 7,
                                                    time, the global economy is presenting increasing signs of              reflected in continuing demand and the expectation of
                                                    protectionism and an upturn in barriers to trade. None­                 corresponding impacts on price structures.
                                                    theless in the last few years, the chain of events such as
                                                    Brexit or the financial crises within Europe have only had a
                                                    limited impact on the mood within the property invest-
                                                    ment markets. A forecast of how long the current dynamic
                                                    development will continue is, of course, extremely difficult.

                                       Transaction volume commercial property market, distribution across
                                       submarkets 2013 to 2017

                                       100                                                                          1.000

                                       90                                                                            900
    Share of transaction volume in %

                                                                                                                             Transaction volume in million €

                                       80                                                                            800

                                       70                                                                            700

                                       60                                                                            600

                                       50                                                                            500

                                       40                                                                            400

                                       30                                                                            300

                                       20                                                                            200

                                       10                                                                            100

                                       0                                                                               0





                                             Office         Logistics and industry               Volume in million €
                                             Retail         Hotel           Other
                                       Source: bulwiengesa AG, data for Hannover Region

8                                  PROPERTY MARKET REPORT 2018
Selected transactions 2017/2018

 No.      Property name and/or address     Quarter   Year   Vendor                   Purchaser                  Investor type            Area

   1      Office and commercial building   Q3        2018   LIST Develop             RREEF Investment GmbH      Special fund              25,000 m2
          (Vahrenwalder Straße 11)                          Commercial
   2      Office building 1-2-fly          Q2        2018   Goldman Sachs            Swiss Life AG              Special fund               8,050 m2
          (Im Heidekamp 9-11)                               International
   3      Former Postscheckamt             Q2        2018   Postbank                 BAUM Unternehmens-         Project developer/        45,000 m2
          (Goseriede)                                                                gruppe/meravis             Principal
                                                                                     Bauträger GmbH
  4       Solvay Pharma Office Centre      Q3        2017   Peakside Capital         Intown Property            Asset/fund manager/       26,300 m2
          (SPOC)/Landwirtschaftskam-                        Advisors GmbH            Management GmbH            private equity
          mer Niedersachsen (LWK)
  5       Tower 31 (Lange Laube)           Q3        2017   Apollo Global            Intown Property            Asset/fund manager/       23,000 m2
                                                            Management               Management GmbH            private equity

  6       Commercial building              Q3        2018   Kristensen Properties    Projekt Brühlstraße        Project developer/          3,100 m2
          (Hildesheimer Straße 41-43)                       A/S                      GmbH                       Principal
   7      Shopping centre Zuckerfabrik     Q2        2018   Rockspring Property      Warburg-HIH Invest Real    Special fund              14,500 m2
          Lehrte                                            Investment Managers      Estate GmbH
  8       Commercial building              Q2        2017   Private Investor         Private Investor           Private investor                500 m2
          (Georgstraße 7)

  9       Intercity Hotel                  Q3        2018   bauwo Grundstücks-       Instutional Investor       Institutional investor    228 rooms
                                                            gesellschaft mbH
  10      Arcadia Hotel                    Q1        2018   n/a                      HR Group                   Owner-occupier             120 rooms
  11      Sheraton Pelikan Hotel           Q3        2017   Peakside Capital         Intown Property            Asset/fund manager/       147 rooms
                                                            Advisors GmbH            Management GmbH            private equity
  12      Star-Inn Hotel                   Q1        2017   Hirotani Projekt­        Bavaria Investments        Closed fund                179 rooms
                                                            gesellschaft mbH         GmbH

  13      Former Lidl central              Q2        2018   Lidl Stiftung & Co. KG   Garbe Industrial           Project developer         24,000 m2
          warehouse Wunstorf                                                         Real Estate
  14      Sonepar Hannover                 Q2        2018   Ernst Russ AG            n/a                        Asset/fund manager/       13,000 m2
                                                                                                                private equity
  15      Delticom/Gourmondo               Q1        2018   n/a                      Union Investment           Open fund                 28,400 m2
  16      FIEGE/Rossmann Burgwedel         Q3        2017   FIEGE Gruppe             Union Investment           Open fund                 48,650 m2

  17      Weatherford Continental          Q2        2017   Logicor (Blackstone)     CIC China Investment       Asset/fund manager/       37,000 m2
          Europe Center Langenhagen                                                  Corporation                private equity
  18      Krauss Maffei Berstorff          Q2        2017   Hansteen Holdings PLC    Blackstone Group (90 %)/   Asset/fund manager/       38,900 m2
          (An der Breiten Wiese 3-5)                                                 M7 Real Estate (10 %)      private equity

All numbers refer to the map on page 15.

                                                                                                   INVESTMENT MARKET HANNOVER                   9
Transaction volume commercial property market
                                            Distribution across size classes 2013 to 2017
                                                                                                                          VOLUME IN THE
                                                                                                                          REGION ROSE
                                                                                                                          DURING 2017 BY
 Share of transaction volume in million €

                                                                                                                          €220 MILLION
                                            600                                                                           TO ALMOST
                                                                                                                          €700 MILLION.


                                                                                                                          More than 85 % of registered investment volume to date
                                                                                                                          in the current year covers transactions with an order of size
                                            100                                                                           between €10 and 50 million. As has been typical in recent
                                                                                                                          years, the start of the year was slow. This also applies to
                                            0                                                                             2018, with investments to date of almost €190 million.
                                                                                                                          Based on experience, however, the second six months will





                                                                                                                          be more dynamic and further transactions from the first half
                                                  over €100 m               €50-100 m                 €20-50 m            of the year will become known, such that within Hannover
                                                  €10-20 m                  €5-10 m                   up to €5 m          Region a transaction result of above €500 million for the

                                            Source: bulwiengesa AG, data for Hannover Region
                                                                                                                          commercial property market is also considered realistic
                                                                                                                          for 2018. For example, a transaction was reported at the
                                                                                                                          start of Q3 of the sale of an office and retail complex of the
                                                                                                                          LIST Gruppe even before building work had started, with a
                                                                                                                          volume in the region of €50-60 million.

                                                                                                                          Logistics and production properties compete with
                                                          Significant rise in investment volume                           office properties on the transaction markets
                                                          During 2017 approaching €700 million investments                Hannover is a crucial office location and this asset class
                                                          were registered in Hannover Region for commercial               has a long tradition in dominating the Region’s investment
                                                          properties. The transaction result is higher by some €220       ­activities. Having said that, some shifts have been identified:
                                                          million compared with 2016. Once again, the majority of
                                                          the investments, with a share of almost 73 %, was for           During 2017:
                                                          transactions in the medium volume categories of between           The transaction result for office and commercial
                                                          €10 and 50 million. A transaction volume above €50                ­p roperties achieved a figure of some €270 million,
                                                          million was only registered in two cases, both within the         a clear increase year-on-year.
                                                          Hannover city area: one concerned the sale of a portfolio         Industrial and logistics properties registered
                                                          of residential and commercial properties while the second         investments of over €210 million last year, and
                                                          was a change of ownership of an office complex as part of         hence represented 31 % of the overall transaction
                                                          a portfolio transaction.                                          volume, coming second. The run on logistics
                                                                                                                            properties observed during the first two quarters of
                                                          During the first half of 2018, the importance of transactions     the year continued during the second six months.
                                                          in the medium size categories again rose for the Region’s         Almost a quarter of all investments in the Region
                                                          commercial property market:                                       during the past year, at just over €125 million, was in

10                                          PROPERTY MARKET REPORT 2018
other property categories, in particular residential                            The transaction result for retail properties to date in
  portfolios.                                                                     the year is almost €32 million, about even with last
  Hotels achieved a transaction result of almost €60                             year’s figure.
  million.                                                                        The hotel sector has also reported activity in the
  Retail properties recorded an overall investment of                            transaction market.
  just over €33 million, representing a relatively weak                           In year-on-year terms, the investment activities for the
  transaction result.                                                             other property categories are quite low at almost €30
                                                                                  million. Trading with major residential portfolios could,
The first six months of 2018                                                      however, quickly change this picture.
  Industry and logistics properties reached a regis-
  tered €61 million, making this the category with the                          International investors up their presence in the
  highest transaction volume, followed by office and                            Region’s core markets
  commercial properties in which almost €52 million                             While international buyers were still reticent during 2016
  has been invested thus far.                                                   within Hannover city, interest picked up in 2017. Some 18 %
                                                                                of the registered transaction volume of greater than €500
                                                                                million, around €88 million, was invested by international

                        Origin of capital in the commercial property market 2017

                    Assets/fund management/private equity

                                              Special funds

                                                Open funds

                              Project development/principal

                                    Insurance/pension fund
                Buyer type

                                      Immobilien AG/REITT

                                               Closed funds





                                  Of which foreign investors







                                                                                 Transaction volumes in €million

                                                                   Buyer          Vendor
                                                               Source: bulwiengesa AG/data for Hannover Region

                                                                                                          INVESTMENT MARKET HANNOVER          11
investors. In the Region, the share of foreign capital was just           Outlook: yields still under pressure
                                                  over 25 % (around €44 million), down on 2016.                             The current market situation is one dominated by a dearth
                                                                                                                            of offers. Many potential buyers are faced with just a
                                                  The share of international vendors in State Capital Hannover              limited number of possible properties for sale – assuming
                                                  was very low during 2017 at some 2 %. In the surrounding                  the market has any at all. Under these conditions there
                                                  areas, the figure was actually 30 %, above that of buyers.                are no reasons why the buoyant investment market in
                                                  Irrespective of nationality, the main players amongst both                Hannover won’t continue.
                                                  buyers and vendors were asset and fund managers as well
                                                  as private equity, whereby the share of overall transaction               With respect to the interest rate changes announced by
                                                  volume in the Region for both buyers and vendors was of                   the European Central Bank, and reflecting the already very
                                                  the order of 40 %.                                                        low levels of net initial yield, plus the multipliers in almost
                                                                                                                            all asset classes, a further significant compression of
                                                                                                                            yields is considered to be most unlikely. As a consequence,
                                                                                                                            yields in Hannover, and also on most other markets, are
                                                                                                                            expected only to soften marginally up until the end of
                                                                                                                            2018. Levels of around 4.3 % in central office locations
                                                                                                                            and 4 % in the retail sector are thought to be the lowest
                                                                                                                            threshold. Logistics projects will trend towards 5.1 %,
                                                                                                                            whereby – bearing in mind the massive market ­dynamism
                                                                                                                            in this sector – even lower levels with a 4 before the
                                                                                                                            decimal point are considered possible.

                                                                                                                            2019 and the years thereafter are forecast to continue at
                                                                                                                            a similar level. The yield might also possibly climb slightly
                                                                                                                            without any major changes compared with today’s level.

                         Net initial yields in prime locations in 2013 to 2018
                         Commercial property market Hannover



Net initial yield in %












                                  Logistics                 Hotel                  Office                 Retail          Residential
                         Source: bulwiengesa AG: in the case of yield spreads the respective lower end is given.

                             12   PROPERTY MARKET REPORT 2018
The new Campus of the SAE institute opened for the start of the 2017 semester at the MARQ (a STRABAG Real Estate property development). The private college
boasts some 1,500 m 2 of space to offer ideal conditions for further and continuing education in the audio-visual media sector. The facilities include five control
rooms and three recording studios as well as a green screen studio for professional creation of picture, music, voice and sound recordings.

                                                                                                                     INVESTMENT MARKET HANNOVER                       13
The end of October 2017 saw the re-opening of the Lower Saxony Landtag parliament building complex after a three-year conversion and refurbishment phase. The
plenary hall building, built in 1962 on plans by architect Dieter Oesterlen, was reconfigured. The characteristic listed concrete facade was retained for the most part.

        14     PROPERTY MARKET REPORT 2018
                Selected investment market projects

                                                                          A 352


EN                                                                        B 522

                                                                                                                                                                                              A 37

                                                                                                                                                                                                                                   B 443

         E 30                         A2


                                                                                               M it
                                                                                                      te lla ndkanal

                           B 441                                                          12
                                                                                                             HANNOVER                          18                             A7

                                                                                          3      9

                                                                                  5       8
                                                         14                                                                                                       15

                                                                                                                                                                                       B 65

                                                                                                                                                                                                                               B 443
                                                                   B 65


EHRDEN                                           B 217                                                                              10

                                                                                                                                                                                   B 443

                                                                                                                                    e                A 37

                                                                                                                                                                                                0           1           2   3 km


                    Office                                                                        Hotel                     B 443                                       Key

  WENNIGSEN          1
                           Office and commercial building/                                            9
                                                                                                           	Intercity Hotel                                            * outside of map area
                           Vahrenwalder Straße
                                                                                    Arcadia Hotel Hannover-Laatzen
                           Office building 1-2-fly
                                                                                                                Sheraton Pelikan Hotel                                        Airport
                           Former Postscheckamt

                             B 217
                                                                                                                Star-Inn Hotel                                         SARSTEDT
                                                                                                                                                                          Exhibition grounds
                           Solvay Pharma Office Centre/
                           Landwirtschaftskammer Niedersachsen                                                                                                                Main station/main line trains
                                                                                                                                                                                                                                   B 494
                           Tower 31                                                                  Logistics                                                                      Tram

                                                                                                                                                                                                          E 45

                                                                                                            Former Lidl central warehouse Wunstorf*                                 S-train

                    Commerce                                                                      14
                                                                                                                Sonepar Hannover                                                    City boundary
                     6                                                                            15
                           Commercial building/Hildesheimer Straße                                         	Delticom/Gourmondo Hannover
                     7                                                                            16
                         	Shopping centre Zuckerfabrik Lehrte                                                  FIEGE/Rossmann Burgwedel*

                     8                                                                            17
                           Commercial building/Georgstraße                                                 	Weatherford Continental Europe Center

                                                                                                           	Krauss Maffei Berstorff
                                                                                                                                                                                                                B 243

                                                                                                                                                                 INVESTMENT MARKET HANNOVER                                                15
Glazed facade: Hannover’s power utility enercity is planning a newbuild directly on the River Ihme. Based on designs by Stuttgart architect’s office
haascookzemmrich Studio 2050, an office building for around 550 persons is planned for completion by 2021. The scheme includes a large atrium and
a covered inner courtyard with connecting bridges to the various parts of the building.

                               €15.50/m2                                                                 145,000 m2
                                                 Prime rent 2018                                                           Space turnover 2017

        16     PROPERTY MARKET REPORT 2018
                            Hannover is the largest and also
                            one of the most dynamic locations
                            in ­Germany’s property market after
                            the country’s seven A-locations. In
                            the last five years some 190,000 m2
4.3 %                       office space has been built new and
                            a further 170,000 m2 refurbished. A
Net initial yield 2018
                            further minimum 190,000 m2 will
                            come online by 2020 (of which
                            50,000 m2 after refurbishment).


                                                        	Includes Hannover city, Garbsen, Laatzen and            	Average annual turnover has been 122,000 m2
                                                          Langenhagen.                                             since 2013.

                                                        	4.95 million m2 office space (of which some             	The investment risk is low due to the relatively low
                                                          4.48 million m2 in Hannover)                             vacancy rates as well as thanks to the high level of
                                                                                                                   market transparency: the net initial yield was 4.3 %
                                                        	Largest portfolio after Germany’s seven A-locations.     in 2018.

                                                        	150,000 office employees in Hannover (2018)             	In 2017 the vacancy rate in Hannover was a low 3.3 %,
                                                                                                                   whereas the average for Germany’s A-locations was
                                                        	Over the last five years the number of office jobs       4.5 % and for B-locations 4.6 %.
                                                          has risen by around 15,000, or 11 %.
                                                                                                                  	Investment transaction volume reached approx.
                                                        	Since 2013, the office property market in Hannover       €270 million (2017).
                                                          has seen a total of 610,000 m office space turnover.

                                          Office space turnover 2013 to 2017

                                                                                                                 Office property turnover increased noticeably in 2017
                                                                                                                 The property report project group Hannover identified
                                          140                                                                    some 145,000 m 2 newly rented owner-occupied office
                                                                                                                 areas in Hannover, Garbsen, Laatzen and Langenhagen
                                                                                                                 during 2017. Turnover climbed year-on-year by 25,000 m2
     Space turnover in thousand m2 MF-G

                                                                                                                 to 145,000 m2 (plus 21 %) and is approx. 20 % above the
                                                                                                                 average for the years 2013 through 2017 (122,000 m2).

                                                                                                                 City periphery and arterial roads report strong turnovers
                                          80                                                                     Most new contracts for office properties during 2017 were
                                                                                                                 in Hannover city: at just under 50,000 m2, this figure repre-
                                                                                                                 sents one third of office space turnover.

                                                                                                                 Prime rent climbs in city and on arterial roads
                                                                                                                 Prime rent climbed slightly and reached €15.30/m2 at the
                                                                                                                 end of 2017. Noticeable here is the development of rents
                                          20                                                                     on the city periphery and the main arterial roads. Over
                                                                                                                 the last two years prime rent climbed up to €13.50, in the
                                                                                                                 years to date the rent was considerably lower at €11.





                                                Rent, Region                       Owner-occupied, Region
                                                Rent, Hannover                     Owner-occupied, Hannover
                                          Source: Hannover Region surveys, details provided by market players.

The "Anna" office building forms, together with the "Dreiklang" residential project opposite, the gateway into the completely transformed
grounds of the former Südbahnhof goods station. The developer, Aurelis Real Estate, plans to install a day-care centre on the ground floor.

                                                                                                                        Directly opposite the planned newbuild for the
                                                                                                                        Siemens subsidiary, another large new office building
                                                                                                                        is being erected in Laatzen. Valentin Klein Immobilien
                                                                                                                        of Hannover is working with architects F+R BDA, also
                                                                                                                        of Hannover, to construct an office building offering
                                                                                                                        approx. 6,500 m 2 space on the site directly adjacent
                                                                                                                        to the Park der Sinne.

                                                                                                                        OFFICE MARKETS
                                                                                                                        IN NEIGHBOURING
                                                                                                                        TOWNS BENEFIT
                                                                                                                        FROM HANNOVER’S
                                                                                                                        HIGH LEVEL OF

                                                                                                                           OFFICE PROPERTY MARKET                     19
The Lower Saxony Ärztekammer (medical association) is planning a representative newbuild for its Lower Saxony state offices designed by Berlin architects
­G rüntuch Ernst (nonbinding draft). The building of up to 10 storeys is planned with a staggered roof line forming greened terraces along the Berliner Allee road,
 and glazing to create a transparent frontage. The old structure is currently being demolished with building work scheduled to commence in January 2019.

        20     PROPERTY MARKET REPORT 2018
Office space turnover based on size categories 2017



                    12 %                                                                                                               52 %

                             18 %

   Up to 300 m2                     301-500 m2                      501-1000 m2
   1001-2000 m2                     2001-3000 m2                    3001 and more m2
Source: Hannover Region surveys, details provided by market players, with respect to number of rental contracts (n = 145)

Public sector and industry dominate deals in 2017                               Positive prospects for 2018
The biggest deal of the last 12 months comprised some                           In mid-2018, space turnover had already reached some
22,000 m2 space in a rental contract for an office complex                      85,000 m 2. Special highlights here are two major rental
on the Joachimstraße: in a property previously used by the                      contracts at the EXPO Park/Kattenbookstrift in Hannover’s
Deutsche Bahn AG, the building is to be refurbished and used                    south (a 10,000 m 2 rental by the state of Lower Saxony
by Hannover city’s department for juvenile and family affairs                   and 14,000 m 2 by FinanzIT). Hannover market players
on a long-term lease.                                                           anticipate, based on projects either under construction or
                                                                                subject to completion, that prime rents in the city will climb
Second in the ranking is a project in the Lindener Hafen                        during 2018 to €15.50/m2. The fact that significantly higher
area: automotive supplier WABCO is building the approx.                         prime rents not were achieved in the past was due to a lack
11,500 m2 WABCO Engineering Innovation Centre for its                           of offers of high-quality areas in central office locations.
own use. Work started in Laatzen on the newbuild of the                         Prime rents6 were actually in part significantly higher during
Siemens subsidiary. By 2020 the company will re-locate                          2017 and also until mid-2018 in the city centre area, with up
approx. 750 jobs from its old site on the Hildesheimer                          to €18/m2 for exceptional newbuilds and high-quality refur-
Straße to a new, modern office complex offering around                          bishments. Exceptional properties can also achieve rents of
10,000 m2 of space on the Karlsruher Straße.                                    up to €14/m2 at the city periphery and on arterial rods.

                                                                                    The prime rent achieved refers to the highest registered nominal net basic
                                                                                    rent for a rental contract concluded during the respective report period,
                                                                                    irrespective of the local submarket, the quality or size of the rented area.
                                                                                    In this case the data refers not only to rental contracts but also rental
                                                                                    contract extensions which are not included in the rental turnover.

                                                                                                                     OFFICE PROPERTY MARKET                        21
Office area turnover according to location 2017

                                                                                                                                       Office property investments in demand
                                  11 %                                                                                                 In recent years Hannover has evolved into one of the most
              2%                                                                                                                       sought-after German locations after the Top 7. Factors
                                                                                                                                       including the low market risk, stable developments
              5%                                                                                                                       and good growth prospects mean Hannover is now an
                                                                                                                                       interesting option for investors from both Germany and
                                                                                                                         32 %          abroad. 2017 saw office market transactions in Hannover
       7%                                                                                                                              Region achieve a volume of approx. €270 million. The net
                                                                                                                                       initial yield fell to 4.3 %.

           14 %

                                                                                                   29 %

                   City                                                    City periphery/arterial roads
                   Hannover, other locations                               Expo-Park
                   Roderbruch/Karl-Wiechert-Allee                          Lahe
                   Surrounding area
              Source: Hannover Region surveys, data provided by market players, with respect to total areas in m 2

       Net initial yield in prime locations 2013 to 2018                                                            Office rents in Hannover 2013 to 2018*

       6                                                                                                            16

       5,6                                                                                                          15

       5,3                                                                                                          14

       5                                                                                                            13
                                                                                                     in €/m2 MF-G

       4,6                                                                                                          12
in %

       4,3                                                                                                          11

       4                                                                                                            10

       3,6                                                                                                          9

       3,3                                                                                                          8

       3                                                                                                            7












                  Net initial yield, prime location, office                                                                 Prime rent, city                                  Prime rent, city periphery
       Source: bulwiengesa AG, in the case of yield spreads the respective lower end is given.
                                                                                                                            Average rent, city                                Average rent, city periphery
                                                                                                                    Source: bulwiengesa AG, Hannover Region surveys, data provided by market players

                                                                                                                    * T he values given for 2018 are based on data provided by market players on developments
                                                                                                                      in the first two quarters 2018

                  22      PROPERTY MARKET REPORT 2018
Moving within Laatzen: the Siemens subsidiary, with approx. 750 employees, is scheduled to move into a newbuild on Erich-Parnitz-Straße by mid-2020.
The building has an H-floor plan with two five-storey office tracts connected by a narrow bridge section. The floor plan is basically square, the total floor
area is some 10,000 m 2.

Gateway to the town: the first building phase of the "City Gate Nord" on the Vahrenwalder Straße was completed in
June 2018, and handed over to Vodafone Deutschland as main tenant. The building provides around 9,000 m 2 space
and facilities for more than 600 employees. The modern DGNB-Gold-certified office building features an elegant brick
facade typical of North Germany’s brick architecture.

                                                                                                                           OFFICE PROPERTY MARKET               23
The last parts of the historic Hall 96 on the Hanomag grounds have been gutted and converted into loft flats and offices, without the
building losing its industrial look/feel.

                                                                                                                        The bauwo Grundstücksgesellschaft is planning to
                                                                                                                        erect an approx. 20,000 m 2 total floor space office
                                                                                                                        building on the Vahrenwalder Straße. The project is
                                                                                                                        on a former car sales showroom site, directly adjacent
                                                                                                                        to the Brinkhafen business park.

                                                                                                                        VACANCY RATE IN
                                                                                                                        HANNOVER DURING
                                                                                                                        2017 WAS 3.3 %,
                                                                                                                        CONSIDERABLY LOWER
                                                                                                                        THAN THE AVERAGE OF
                                                                                                                        A-LOCATIONS AT 5.5 %.

        24     PROPERTY MARKET REPORT 2018
Vacancies continue to fall
                                       Despite many completions during the last five years, the                                                          Office vacancy rate 2013 to 2018*
                                       vacancy rate has not increased; new areas entering the
                                                                                                                                                         300                                                     7%
                                       market are being fully absorbed. The vacancy rate7 closed
                                       2017 at 3.5 %, 100 base points lower than 2016. Taken
                                                                                                                                                         250                                                     6%
                                       absolutely, vacancies available for rent in Hannover have

                                                                                                                        Vacancies in thousand m 2 MF-G
                                       reduced by 55,000 m 2 to 150,000 m 2. Market players
                                       anticipate that the vacancy rate will continue to fall during                                                     200                                                     5%

                                                                                                                                                                                                                          Vacancy rate in %
                                       2018 and settle at a level just above 3 %. This is the lowest
                                       vacancy rate experienced by Hannover since market                                                                 150                                                     4%
                                       reporting began.

                                                                                                                                                         100                                                     3%
                                       Dynamic completion volumes
                                       During the last five years, around 190,000 m2 office space
                                                                                                                                                         50                                                      2%
                                       has been erected new and a further 170,000 m2 thoroughly
                                       refurbished. By 2020 a further 190,000 m2 are anticipated
                                                                                                                                                         0                                                           1%
                                       (of which 50,000 m2 via refurbishments).






                                           	Estimate is based on an updated extrapolation of a full survey of office
                                             space inventory and vacancies by bulwiengesa AG, end 2015/early 2016.
                                             The forecast and model calculations of bulwiengesa AG are based on the                                      Vacancies, Hannover           Vacancy rate, Hannover
                                             total inventory surveys of 2009, 2012 and 2015.
                                                                                                                                                         Vacancies, Region*            Vacancy rate, Region
                                                                                                                                       * Value for Region (Garbsen, Laatzen, Langenhagen)

                                                                                                                                       The vacancy figures are based on office space full surveys in 2008, 2012
                                                                                                                                       and 2015 for the Hannover market area and extrapolated in the following
                                                                                                                                       years. For the surrounding towns, the survey is based on a specific vacancy
                                                                                                                                       rate for 2015.

                                                                                                                                       Source: bulwiengesa AG, Hannover Region surveys: details provided
                                                                                                                                       by market players.

                      Completions in office market 2013 to 2020




in thousand m2 MF-G

                                                                                                                                                               A FURTHER 190,000 M 2
                                                                                                                                                               OFFICE SPACE FROM
                                                                                                                                                               NEWBUILDS OR
                                                                                                                                                               WILL ENTER THE

                                                                                                                                                               MARKET BY 2020.





                            Newbuild completions Hannover                            Refurbishments Hannover
                            Newbuild completions Region
                        ased on the spring forecast of bulwiengesa AG; Hannover Region survey, details provided
                       by market players; data status Q3/2018

                                                                                                                                                                               OFFICE PROPERTY MARKET                 25
Selected office property projects

                                                                 Investor,                                                  Status
 No.     Property                   Address                                                  Area in m2 MF-G
                                                                 developer or user                                          completion
 New builds


   1     WABCO Engineering          Am Lindener Hafen 21         WABCO Fahrzeugsysteme       11,500 m2 office/laboratory    Q3/2018
         Innovation Center                                       GmbH                        Owner-occupation
         (2. BA)
   2     City Gate Nord             Vahrenwalder Straße 236      Projektentwicklung HRG &    9,000 m2 office                Q2/2018
         (1. BA/Vodafone)                                        Delta Bau GmbH & Co. KG
   3     Pod BC                     Podbielskistraße 382         STRABAG Real Estate GmbH    6,500 m2 office                Q4/2018

   4     Prinzenareal               Prinzenstraße 19-23          VGH Projekt GmbH & Co.      6,330 m2 office                Q3/2017
                                                                 Prinzenareal KG
   5     Telekom AG                 Elfriede-Paul-Allee 15       DIBAG Industriebau AG       5,500 m2 office                Q3/2018

   6     MARQ Marstall Quarre       Am Marstall                  STRABAG Real Estate GmbH    3,020 m2 office                Q1/2018
                                                                                             520 m2 gastronomy
                                                                                             700 m2 residential
   7     Hüttenes-Albertus          Hansastraße 1                Hüttenes Albertus           2,500 m2 office/laboratory     Q4/2017
         (extension)                                             Chemische Werke GmbH        Owner-occupation
   8     Office project             Planetenring 39–41,          Rahlfs Immobiliengruppe     2,450 m2 office/surgery        Q4/2018
         Planetencenter             Garbsen
   9     Schindler                  Boulevard der EU 23          Nebel Immobilien            2,000 m2 office                Q3/2018

  10     B6 Office                  Bremer Straße 29, Garbsen    Langwost Unternehmens-      1,700 m2 office                Q3/2018
                                                                 gruppe                      (in part owner-occupation)
   11    LIVIN                      Am Marstall/                 HOCHTIEF Infrastructure     2,600 m2 residential           Q2/2018
                                    Am Hohen Ufer 5 a/b          GmbH Building Hannover,     920 m2 gastronomy
                                                                 hanova                      750 m2 office

 Under construction/in preparation
  12     Continental AG             Hans-Böckler-Allee 30/49     Continental AG              44,400 m2 GFA office           2021
         Headquarters                                                                        Owner-occupation
  13     Deutsche Bahn AG           Rundestraße/Hamburger        Savills                     25,500 m2 office               Q2/2019
                                    Allee (ehem. ZOB)            KÖLBL KRUSE GmbH
  14     Office and commercial      Vahrenwalder/                LIST Develop Commercial     25,000 m2 GFA office/retail/   Q2/2020
         building Vahrenwald        Ecke Philipsbornstraße       GmbH & Co. KG               gastronomy/services/hotel
  15     Admin building Public      Schützenplatz 1              hanova                      19,000 m2 office               Q1/2019
  16     Siemens AG                 Erich-Panitz-Straße/         Siemens Real Estate         10,000 m2 GFA office           Q3/2020
                                    Karlsruher Straße, Laatzen                               Owner-occupation
  17     Office building at Park    Senefelderstraße, Laatzen    VALENTIN KLEIN Immobilien   6,500 m2 office                Q3/2019
         der Sinne                                               GmbH & Co. KG
  18     DB Netz AG (extension)     Lindemannallee 3             DB Netz AG                  2,500 m2 office                Q1/2019

  19     State office of health     Roesebeckstraße              Land Niedersachsen          1,100 m2 office/laboratory     Q2/2019
         (extension)                                                                         Owner-occupation

        26   PROPERTY MARKET REPORT 2018
Investor,                                                   Status
No.   Property                    Address                                                  Area in m2 MF-G
                                                               developer or user                                           completion
Detail planning
 20   Sky City Hannover Airport   Flughafenstraße              Flughafen Hannover-         25,000 m2 GFA office
                                                               Langenhagen GmbH
 21   Business Park               Vahrenwalder Straße 321      bauwo Grundstücks­          20,000 m2 GFA office            2020
      Hannover-Nord                                            gesellschaft mbH
 22   Enercity headquarters       Glockseestraße 33            enercity AG                 20,000 m2 GFA office            2021
 23   Office ensemble             B3/Ecke Weetzener            FIH Fürst Immobilien        18,000 m2 GFA office/surgery/   2021
      Hemmingen                   Landstraße, Hemmingen        Hannover                    retail gastronomy
 24   Forensic institute          Waterlooplatz 11             Land Niedersachsen          10,1000 m2 GFA office           2021
 25   Medical building            Berliner Allee 20            Ärztekammer Niedersachsen   10,000 m2 office                2021
 26   Immigration authority       Akazienstraße                Region Hannover             5,000 m2 office                 2020
 27   Businesspark                Kirchhorster Straße 33/      BBH Immobilien GmbH         3,700 m2 office                 2021
      Hannover-Lahe               Ecke Im Klingenkampe 46
 28   Office and residential      Willi-Blume-Allee            HOCHTIEF Infrastructure     4,800 m2 residential            Q4/2019
      building Steinbruchsfeld                                 GmbH Building Hannover      1,900 m office/surgery

                                                                                           790 m2 gastronomy/retail

Medium-term planning
 29   Office project WA27         Weltausstellungsallee        Delta HRG                   22,000 m2 office/hotel          2021/2022

 30   Office project former       Am Weidendamm                Aurelis Real Estate GmbH    12,000 m2 GFA                   2021/2022
      main goods station
 31   City Gate Nord (2nd BP)     Vahrenwalder Straße 236      Projektentwicklung HRG &    12,000 m2 office/retail
                                                               Delta Bau GmbH & Co. KG
 32   Office project VS319        Vahrenwalder Straße 319      Delta HRG                   15,000 m2 office/hotel

 33   Office project MS4          Mailänder Straße             Delta HRG                   11,000 m2 office/hotel

 34   Ratsquartier                Bruchmeisterallee            BAUM Unternehmensgruppe     12,000 m2 GFA office            2019/2020

 35   Office project KWA62        Karl-Wiechert-Allee 62       Delta HRG                   9,000 m2 office/hotel

 36   Office project Laatzen      Erich-Panitz-Straße/         phoenix Holding GmbH        10,000 m2 GFA office
                                  Karlsruher Straße, Laatzen
 37   Office project "Anna"       Anna-Zammert-Straße          Aurelis Real Estate GmbH    4,500 m2 GFA office             Q1/2010

 38   Office high-rise            Bischofsholer Damm 87        HELMA                       2,200 m2 GFA office/surgery

                                                                                                OFFICE PROPERTY MARKET               27
Investor,                                                  Status
No.    Property                Address                                              Area in m2 MF-G
                                                         developer or user                                          completion

 39    ÜSTRA headquarters      Am Hohen Ufer 6           ÜSTRA Hannoversche         5,700 m2 office                 Q3/2017
                                                         Verkehrsbetriebe AG        Owner-occupation
 40    Rathaus Kontor          Theodor-Lessing-Platz     BAUM Unternehmensgruppe    4,200 m2 office                 Q4/2018
                               1-2/Ebhardtstraße 1
 41    KRH Training academy    Schützenallee 5           meravis Bauträger GmbH     3,700 m2 office/seminar         Q1/2018

 42    Office and commercial   Osterstraße 63            privater Investor          3,000 m2 office                 Q1/2018
       building                                                                     500 m retail

 43    Office building         Siemensstraße 10          Schramm & Schön            2,500 m2 office                 Q3/2018

 44    Danish Pavillion        Boulevard der EU 7        Grobe architect’s office   2,000 m2 office                 Q3/2018
Under construction/in preparation
 45    Office lofts            Drostestraße 14/16        BAUM Unternehmensgruppe    4,000 m2 GFA office             2018

Detail planning
 46    Admin building          Joachimstraße 8           JP Morgan                  21,000 m2                       2020/2021
 47    State criminal          Waterlooplatz 11          State of Lower Saxony      19,500 m2 GFA office            2021
       police agency                                                                Owner-occupation
 48    Office/commercial       Am Klagesmarkt 12         BAUM Unternehmensgruppe    6,500 m2 GFA hotel/office/      Q2/2020
       building                                                                     gastronomy
Medium-term planning
 49    Former Postbank-Areal   Goseriede, Brüderstraße   BAUM Unternehmensgruppe,   45,000 m2 office ( currently)
                                                         meravis Bauträger GmbH     19,000 m2 plot
                                                                                    Including residential/
                                                                                    hotel planned

                                                                                       A 352
Selected office projects

                                                                                                                                                                                                                                                       Newbuilds                                          Refurbishments
                                                                                                                                                                                                                                                       1                                                  39
                                                                                                                                                                                                                                                            	WABCO Engineering Innovation Center               ÜSTRA headquarters

                                                                                                                                                                                                                                                       2                                                  40
                                                                                                                                                                                                                                                               City Gate Nord                                   Rathaus Kontor
                                                                      20                                                                                                                                                                               3                                                  41

                                                                                                                                                                                                                                                               Pod BC                                           KRH Bildungsakademie

                                                                                                                                                                                                                                                       4                                                  42
                                                                                                                                                                                                                                                               Prinzenareal                                     Office and commercial building Osterstraße

                                                                                                                                                                                                                                                       5                                                  43
                                                                                                                                                                                                                                                               Telekom AG                                       Office building Siemensstraße

                                                                                                                                                                                                                                                       6                                                  44
                                                                                                                                                                                                                                                               MARQ Marstall Quarre                             Danish pavilion
                                                                                       B 522                                                                                                                                                           7
                                                                                                                                                                                                                                                            	Hüttenes-Albertus (extension)               45
                                                                                                                                                                                                                                                                                                                Office lofts Drostestraße
                                                                                                                                                                                                                                                                                A 37
                                                                                                                                                                                                                                                       8                                                  46
                                                                                                                                                                                                                                                               Office project Planetencenter                    Administration building Joachimstraße
                   Garbsen                                                                                                                                                                                                                             9
                                                                                                                                                                                                                                                               Schindler                                  47
                                                                                                                                                                                                                                                                                                                          B 443
                                                                                                                                                                                                                                                                                                                Lower Saxony State criminal police agency
                             10                                                                                                                                                                                                                        10                                                 48
                                                                                                                                                                                                                                                            	B6 Office                                         Office and Commercial building am
                                          A2                                                                                                                                                                                                                                                              49
            E 30                                            7                                                                                                                                        Lahe                                              12
                                                                                                                                                                                                                                                                                                                Former Postbank-Areal
                                                                                                                                                                                                                                                            	Continental AG HQ
                                                                                                                                   Vahrenwalder-Straße                                                      27
                                                                                                                                                                                                                                                            	Deutsche Bahn AG
                                                                                                             32                                                                                                                                                                                                 Completions
                                                                                                                     2                                                                                                                                 14
                                                                                                                                                                                                                                                            	Office and commercial building Vahrenwald

                                                                                                                                                 M ittellandkanal
                                                                                                                              31                                               3
                                                                                                                                                                                                                                                                                                                Under construction/in preparation
                                                                                                                                                                                                                                                            	Administration building Public Order
                                                                                                                                                                                                 Podbielskistraße                                                                                               Concrete Planning
                                                                                                                                                                                                                                                               Siemens AG
                                                                                                                                                                                                                                                                                                                Mid-term planning
                                                                                                                                                                                                B3                                                     17
                                                                                                                                                                                                                                                               Office building am Park der Sinne
                                                                                                                                                                                                                                                               DB Netz AG (extension)
                                                                                                                                                                                                                     28                                                                                   Key

                                  B 441                                                                                   45                                                                                                                                   Landesgesundheitsamt (extension)
                                                                                                                                                                                                                                                       20                                                       Airport
                                                                                                                                                                                                                                                               SkyCity Hannover Airport
                                                                                                   48                    13                                                                     Karl-Wiechert-Allee                                                                                             Exhibition grounds
                                                                                                             49                                                                                                                                                Business Park Hannover-Nord
                                                                                      City    39                                   46
                                                                                                            6                                25                                                                                                        22                                                       Main station main line trains
                                                                                                                                                                                                                                                               enercity headquarters
                                                                  1                                                      42             4
                                                                                                                                                                                                                                                       23                                                          Tram
                                                                                                                  13                                                                                                                                           Office ensemble Hemmingen
                                                            City centre periphery                      47
                                                                                                                               26                        37
                                                                                                                                                                                                                                                               Forensic Institute
                                                                                             19                                                                    18                                                                                  25                                                          City boundary
                                                                                                        24                                                                                                                                                     Ärztekammer Niedersachsen
                                                                                  5                                                         43                                                                                                         26
                                                                                                                                                                                                                                                               Immigration authority
                                                                                                                                                                                                                                                                           B 65
                                                                                                                                                                                                                                                               Business park Hannover-Lahe
                                                                                                                                                        Hildesheimer Straße                                                                                                                                         B 443
                                                                                                                                                                                                                                                            	Office and residential building
                                                                                B 65                                                                                                                                                                          Steinbruchsfeld

                                                                                                                                                                                                                                                               Office project WA 27
                                                                                                                                                   41                                      B6
                                                                                                                                                                                                            Expo-Park                                  30
                                                                                                                                                                                                                                                               Office project Hauptgüterbahnhof

                                                                                                                                                                                                                                                               City Gate Nord

                                                                                                                                                                                                                                                               Office project VS 319

                                                    B 217                                              23                                                                                                                                                      Office project MS4
                                                                                                                                                                           Laatzen                      33
                                                                                                                                                                            Centre                          29

                                                                                                                                                                                                        44       9                                     35           B 443
                                                                                                                                                                                                                                                               Office project KWA62
                                                                                                             B3                                                                            16   17
                                                                                                                                                                                                                                                               Office project Laatzen
                                                                                                                                                                                                       Laatzen                                         37

                                                                                                                                                                                                                                                               Office project "Anna"

                                                                                                                                                                                                                                                               Office high-rise Bischofshol
                                                                                                                                                                                                                          0   0,5   1   1,5 km

          PROPERTY MARKET REPORT 2018                                                        OFFICE PROPERTY MARKET                                                 1                                                                                                                                     OFFICE PROPERTY MARKET
Subzones of Hannover’s office property market (see also map of office projects on page 29):

 The Hannover office market, comprising approx. 4.95 million m2 office space (MF-G), comprises the city of
 Hannover and the neighbouring cities of Garbsen, Langenhagen and Laatzen which border the state capital
 directly to the north and south and to which it has close functional ties.

Map        Subzones location                                                                    Office        Number           Of which
                                                                                                space in      of office        > 10,000 m2
                                                                                                m2 MF-G       buildings

           City centre: bordered by the city ring road. This area comprises Georgstraße,             1,18 m          220              20
           Georgsplatz, Raschplatz, Friedrichswall, Aegidientorplatz and Schiffgraben.

           City centre peripheral locations and arterial roads: High-quality office                  1,88 m          323                  37
           locations are situated in the north and southeast of the city centre with the main
           traffic axes comprising Vahrenwalder Straße in the north, Podbielskistraße in the
           northeast, Marienstraße/Hans-Böckler-Allee in the east and Hildesheimer Straße
           in the south and extends west towards the HANOMAG area

                City periphery                                                                    584,000             145                 4

                Podbielskistraße                                                                  546,000              50                 17

                Vahrenwalder Straße                                                                343,000             59                  7

                Hildesheimer Straße                                                                238,000                42              4

                Hans-Böckler-Allee                                                                 165,000                27              5

           Office centre Karl-Wiechert-Allee: With direct access to the expressway this            322,000             36                 9
           location hosts the large sites and facilities of the Hannover Medical School and
           the adjacent Medical Park, and in particular owner-occupied office complexes
           for groups involved in the finance, insurance and tourism sectors.

           EXPO Park: High-quality office buildings oriented towards IT, design and media,         148,000                14              6
           partially comprising some of the original buildings and open spaces constructed
           for the EXPO 2000 World Exposition. The buildings constructed on the nearby
           Kronsberg (Kattenbrookstrift) are exceptional examples of modern architecture.

           Office centre Lahe: Location in the north-east of Hannover boasting excellent            95,000             20                 2
           transport connections to the A 2 and to the tram system. A number of rezoning
           and restructuring activities offer considerable scope for further developing the
           potential at this location.

           City of Langenhagen: Office buildings concentrated in the town centre                   217,000             44                 0
           and around the LRT station Langenhagen-Mitte. Also, excellent transport
           connections to the motorways and the airport. Additional office properties
           in Godshorn and Airport business parks.

           Stadt Garbsen: Office buildings concentrated around the centre of the city               121,000            36                 0
           and the new Mechanical Engineering Campus of Leibniz University. Excellent
           transport connections including light rail transit, and direct proximity to the A
           2 and B 6 roads.

           City of Laatzen: Office buildings concentrated around the centre of Laatzen.            128,000                22               1
           Directly adjacent to the Hannover Exhibition Grounds and the A 37/A 7 motor-
           ways, excellent local public transport connections.

                                                                                                 OFFICE PROPERTY MARKET              31
Weitz is one of Hannover’s traditional shops: it re-opened in October 2017 following a brief conversion phase. The family-run outlet offers "the experience of kitchen culture"
on 570 m2 of sales floor. The range of porcelain and household goods has been complemented by an event area on which customers can experience products in use.

                                           2.1 m m2                                                                €185/m2
                                                      Sales floor/retail                                                           Prime rent 2018

                            Hannover and its environs offer many
                            attractive retail opportunities. The
                            Georgstraße in Hannover is one of
                            Germany’s strongest retail locations.
                            Hannover Region itself also offers many
 4%                         attractive shopping opportunities,
                            attracting shoppers from beyond the
Net initial yield 2018
                            Region’s borders.


                                 	Hannover’s Georgstraße has been ranked amongst              	The sales floor total in Hannover Region is approx.
                                  Germany’s ten best shopping streets for many years                2.1 million m2, of which some 285,000 m2 are located
                                  now and is one of the nation’s top locations in terms             in Hannover’s city centre.
                                  of pedestrian frequency and prime rent.
                                                                                               	The communities of Laatzen, Langenhagen,
                                 	The centrality of the city of Hannover and the Region            Isernhagen-Altwarmbüchen and Garbsen all
                                  is high, with a catchment area stretching far beyond              offer strong shopping centres and retail centres
                                  Lower Saxony’s border in the west through to the state            and are successful at a supra-regional level.
                                  of North-Rhine Westphalia.
                                                                                               	In 2017 retail properties worth around €33 million
                                 	Many communities in the Region offer attractive                  were transacted in the Region.
                                  inner cities and district centres which customers find
                                  very attractive.

                             The Region is one of the country’s highest                      Exceptional centrality
                             turnover retail locations                                       Hannover is a retail location which is very much in
                             Despite the increasing share now enjoyed by e-commerce in       demand. Compared with cities of a similar size, such as
                             retail sales in Germany, local retail turnovers have remained   Bremen, Dortmund, Nuremberg, Essen and Leipzig, the
                             stable or have risen slightly. According to MB-Research,        rents achieved in Hannover’s inner-city shopping streets
                             retail sales in Hannover Region topped €7.85 billion during     are much higher. Hannover boasts excellent centrality and
                             2018. Hannover Region continues to rank amongst those           actually beats metropolises such as Berlin, Hamburg and
                             Germany’s municipalities and cities with the highest turn-      Munich in this regard.
                             over levels.

                Retail indexes 2013–2018


                125                                                                                               Turnover index, Hannover
                                                                                                                  Turnover index, Region
                                                                                                                  Centrality index, Hannover
                115                                                                                               Centrality index, Region
Germany = 100

                                                                                                                  Purchasing power index, Hannover
                                                                                                                  Purchasing power index, Region
                                                                                                           Source: MB-Research








34              PROPERTY MARKET REPORT 2018
Purchasing power and turnover 2013-2018


         8,000                                                                                                                         Turnover Hannover
         7,000                                                                                                                         Turnover Region
                                                                                                                                       Purchasing power relevant to retail, Hannover
                                                                                                                                       Purchasing power relevant to retail, Region
                                                                                                                                   Source: MB-Research
In € m










                    Region offers over 2.1 million m2 sales floor                                                         Area turnover in the city up again in 2018
                    The total sales floor for the Hannover Region as a whole is                                           Hannover’s prime locations continue to be very interesting
                    estimated at 2.1 million m2. The sales floor available in State                                       for many retailers vying for the few areas available in the
                    Capital Hannover is approx. 885,000 m2. Overall, the city                                             prime locations. Over the last five years (2013-2017) the
                    centre (district of Mitte) offers approx. 285,000 m sales                          2
                                                                                                                          average area turnover in Hannover city amounted to some
                    floor.8 The top four prime sites (Bahnhofstraße, Georg-                                               5,200 m2. During the course of 2015 the city of Hannover
                    straße, Große Packhofstraße and Karmarschstraße) have                                                 saw about 8,700 m2 sales floor marketed. In 2016 turnovers
                    a combined sales floor of approx. 190,000 m .                         2
                                                                                                                          fell to approx. 1000 m2, while in 2017 area turnover achieved
                                                                                                                          a figure of only approx. 1000 m2. During the first six months
                          Data for Hannover Region, acquired as part of the ­d evelopment                                 of 2018 area turnovers in prime locations have, however,
                          of the Regional Retail Concept. Data status 2016
                                                                                                                          started to climb again and reached approx. 1,600 m2, while
                                                                                                                          in the second half of the year there have already been
                                                                                                                          significant turnovers reported.

                    Pedestrian frequency (average per hour)

                          Road                                                                                    2018                ø 2014-2018           National ranking

                          Georgstraße                                                                           10,985                        11,718                        5

                          Bahnhofstraße                                                                           8,775                       8,390                         11

                          Karmarschstraße                                                                        5,540                        5,880                        50

                          Große Packhofstraße                                                                     5,185                       6,327                        44

                    Source: James Lang LaSalle survey on Saturday 14.04.2018, 13:00-16:00 hours. The national ranking
                    represents placings from a total of 174 surveyed shopping streets.

                                                                                                                                                         RETAIL PROPERTY MARKET           35
Rents and yields 2013-2018

                                         240                                                                                                                                    8


                                         200                                                                                                                                    7

                                                                                                                                                                                    Net initial yield, prime location in %
               Prime rent city in €/m2

                                         160                                                                                                                                    6


                                         120                                                                                                                                    5


                                         80                                                                                                                                     4


                                         40                                                                                                                                     3


                                         0                                                                                                                                      2





                                               Prime rent, city (prime location)                                  Net initial yield, retail parks, prime location
                                               Average rent, city (prime location)                                Net initial yield, prime location
                                         Source: bulwiengesa AG, market player estimates

                                         Prime rents dip slightly
                                         Prime rents in Germany’s top locations reached short-lived             During the course of 2018, Hannover market players expect,
                                         peaks in many locations during 2017, including Hannover.               despite the limited availability of high-quality space and the
                                         In part, prime rents hit the limits of that which retailers            attractions of Georgstraße, to see a stagnation or a dip of
                                         were able to generate in various locations. Only in isolated           realisable peak rent to €185. In the course of 2018 moderate
                                         cases are retailers still willing to accept higher rental levels,      rental price increases are possible in terms of average values
                                         and then only for exceptional locations, for example flag-             and also in places outside of the prime locations.
                                         ship stores.

     Retail sector structure of prime locations Hannover, share of sales floor

                                             17.8 %

      1.5 %                                                                                                    27.2 %                       Textile
                                                                                                                                            Shoes/leather goods
      0.9 %
      1.5 %                                                                                                                                 Jewellery/jewellers
      5.2 %                                                                                                                                 Telecommunications/electronics
                                                                                                                      7.0 %                 Sports/outdoor
              19.2 %                                                                                                                    Source: JLL, Retail city profile 2017

                                                                                                             12.2 %

                                                                                7.5 %

The Ace & Tate glasses brand of Amsterdam has moved away from pure e-commerce operations and now offers over the counter retail outlets.
In April 2018 the company opened its tenth German store in the Karmarschstraße.

                                                                                                                     RETAIL PROPERTY MARKET   37
A very safe investment – since April 2018 guests have enjoyed meals in the converted vaults of the former Dresdner and Commerzbank.
The Vince restaurant is situated directly behind the Opera house in Hannover’s Börsenviertel.

                                                                                                  THE SALES FLOOR IN
                                                                                                  HANNOVER REGION TOTALS
                                                                                                  APPROX. 2.1 MILLION M 2 ,
                                                                                                  AROUND 285,000 M 2 OF
                                                                                                  WHICH ARE IN HANNOVER’S
                                                                                                  CITY CENTRE.

Swiss glasses brand VIU is expanding in Hannover – in mid-June it opened an approx.
40 m 2 shop on the Georgstraße. The company has 17 stores in Germany.

        38    PROPERTY MARKET REPORT 2018
Transaction market:                                                    Locations around Hannover
              Prices reach peak level, yields fall                                   In Hannover’s environs, the total sales floor available is
              In Hannover’s inner city, the yields hardly differ between             approx. 1.15 million m2, with municipalities boasting in
              the various main shopping streets. More than 90 % of the               part excellent retail centrality. The centres of Isernhagen,
              investment volume in Hannover properties in recent years               Laatzen and Langenhagen have undergone in part major
              took place at prime locations. While the net initial return            refurbishments together with extensions in recent years.
              is only 4 % (down 15 base points), prices in Hannover have             Main investors in these cases also include foreign investors,
              again hit a new high. Here again the lack of properties                who have invested in the shopping and retail parks while
              available in attractive locations is helping drive prices up.          also acquiring properties for their portfolios. The "Neue
                                                                                     Mitte" project in Garbsen is set to start shortly (15,000 m2
              The net initial yield for decentralised locations is an average        sales floor), where the Röther Beteiligungsgesellschaft
              of 5.8 % (down 15 base points). Good retail centres in prime           is planning a retail centre anchored around one of the
              locations have, however, been traded at in part significantly          company’s own fashion parks.
              higher levels.

In early April 2018 the French Uniball-Rodamco company took over management of the Leine-Center Laatzen shopping mall.
The shopping centre at Laatzen’s city centre has approx. 40,000 m 2 sales floor and more than 100 shops.

                                                                                                                    RETAIL PROPERTY MARKET           39
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