PROPERTY MARKET REPORT HANNOVER 2016 - BUSINESS PROMOTION - Hannover.de

 
PROPERTY MARKET REPORT HANNOVER 2016 - BUSINESS PROMOTION - Hannover.de
PROPERTY MARKET REPORT
  HANNOVER 2016

BUSINESS PROMOTION

                           3
PROPERTY MARKET REPORT HANNOVER 2016 - BUSINESS PROMOTION - Hannover.de
THE MOST IMPORTANT FIGURES AT A GLANCE

 1.13 million         14.80 €/m2            € 372 million
 Inhabitants in the   Prime rent for        Transaction
 Hannover Region      office space in the   volume in office
                      city centre 2016      market 2015

 125,000 m2           200 €/m2              € 213 million
 Office space         Prime retail          Transaction
 turnover 2015        rent 2016             volume retail
                                            trade 2015

                      Twice in
 € 96 million         TOP 10                4.50 €/m2
 Transaction          Most attractive       Prime rent
 volume in            German shopping       logistics 2016
 logistics            streets 2016
 market 2015

 € 91 million         175,000 m2            14.50 €/m2
 Transaction          Logistic space        Prime rent
 volume in the        turnover 2015         residential new
 hotel market                               builds 2016
 2015
PROPERTY MARKET REPORT HANNOVER 2016 - BUSINESS PROMOTION - Hannover.de
HANNOVER: PROPERTY SUBMARKETS AT A GLANCE 1

               Offices                                                                                Office space turnover 2010 to 2015*
                                                                                                                             150
               	The location includes approx. 5.06 million m2 office

                                                                                                    In thousand m2 MF-G
                space (of which 4.59 million m2 in Hannover city).
                                                                                                                            100
               	Hannover therefore has the largest office property
                inventory after Germany’s seven A-locations.
               	Since 2010, an average of 790,000 m2 office turnover                                                         50
                has been achieved in Hannover, Langenhagen, Laatzen
                 and Garbsen.
                                                                                                                                0
               	An average turnover of around 130,000 m2 has been
                achieved every year – a figure more than double that of

                                                                                                                                           10

                                                                                                                                                              11

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                                                                                                                                                                                                  13

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                                                                                                                                                                                                                                      15
                                                                                                                                                           20

                                                                                                                                                                             20

                                                                                                                                                                                               20

                                                                                                                                                                                                                                    20
                                                                                                                                                                                                                 20
                                                                                                                                         20
                the average of B-cities.
               	Because of the relatively low vacancy rates (2015: 5.2 %                                                 ■ Rental SCH                                        ■ Rental surrounding towns
                vacancy rate in Hannover, 6.1 % for A-cities) and the                                                     ■ Owner-occupied SCH                                ■ Owner-occupied surrounding towns
                higher market transparency, the investment risk is lower.                             *	F igures for 2016 based on details provided by market players on developments in first 6 months 2016.
                                                                                                      Source: bulwiengesa AG; Hannover Region surveys; details provided by market players
               	The investment transaction volume in the office proper-
                ty market amounted to approx. € 372 million in 2015.

                                                                                                       Office vacant space 2010 to 2015*
           Lettable space office portfolio 2015                                                                             300
           In m² MF-G                                                                  5.06 mil.
                                                                                                                            250
                                                                                                    In thousand m2 MF-G

                of which Hannover city                                                  4.59 mil.
                                                                                                                            200
                of which surrounding towns of Garbsen,                                  0.46 mil.
                Laatzen and Langenhagen                                                                                      150

           Office space turnover 2014 in m² MF-G                                       125,000                              100
                City of Hannover                                                        120,000
                                                                                                                              50
                Surrounding towns of Garbsen,                                             5,000
                                                                                                                                0
                Laatzen and Langenhagen
           Vacant space 2014 in m2 MF-G                                                261,000
                                                                                                                                           10

                                                                                                                                                              11

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                                                                                                                                         20

                City of Hannover                                                        237,000
                Surrounding towns of Garbsen,                                            24,000                           ■ City of Hannover                                  ■ Surrounding towns**

                Laatzen and Langenhagen                                                                *	The vacant space figure is based on the office space full surveys in 2008, 2012 and 2015 in the city of Hannover. For
                                                                                                                 the surrounding towns a vacancy survey took place in 2015. The survey confirmed that the vacancy rate for Hannover
           Vacancy rate 2015*                                                             5.2 %                  may also be assumed for the inventories in the surrounding towns and reported as such in the market report.
                                                                                                       ** Value for surrounding communities (Garbsen, Laatzen, Langenhagen)
           Prime office rent city centre 2016 in €/m² MF-G                                14.80        Source: bulwiengesa AG; Hannover Region surveys; details provided by market players

           Prime office rent, city centre periphery 2016 in €/m² MF-G                     10.40
           Net initial yield in prime locations city centre 2016                          4.7 %

                                                                                                      1
 MF-G = Standard method for calculating commercial rental space                                                       The source for all further details (unless explicitly stated) bulwiengesa AG: calculations for Hannover Region by
 * Figure for Hannover and surrounding towns (Garbsen, Laatzen, Langenhagen)                                          Hannover Region; verified details of market participants from the property market report group Region Hannover.
                                                                                                      2
 Source: bulwiengesa AG; Hannover Region surveys; details provided by market players                                  According to GfK, centrality metric is 126.8 (city) and 110 (region) in 2016 (D = 100).
                                                                                                      3
                                                                                                           	Estimate based on hall area full survey at end 2015/early 2016 by bulwiengesa. Only those properties greater than
                                                                                                                      1,000 m2 utility space were considered. An estimate to represent smaller areas was not added. The office space share
 Office rents in Hannover 2010 to 2016*                                                                               of the overall logistics space also represents an additional 5 % or 130,000 m 2.
                                                                                                      4
                                                                                                           	A comparison with 2014 (number of completions 674 housing units) and 2015 (number of completions 1,116 housing units).
                 16
                                                                                                                      Source: bulwiengesa AG calculation based on Lower Saxony state statistical office figures (statistics for apartments
                 14
In €/qm MF-G

                                                                                                                      in residential and non-residential buildings in total), not including building activities on existing buildings and without
                 12
                                                                                                                      residential homes.
                 10                                                                                   5
                                                                                                           	With respect to the total property movements in the residential and partial ownership submarkets, detached single
                  8                                                                                                   and double occupancy houses, terraced houses and semi-detached houses and apartment blocks (old and new
                  6                                                                                                   buildings). Expert panel for property values Hameln-Hannover, 2016.
                  4
                  2
                  0
                   10

                            11

                                         12

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                                                                                   15

                                                                                              16
                           20

                                       20

                                                     20

                                                                                 20
                                                                  20

                                                                                             20
                 20

                 Prime rent city                            Prime rent office centres
                 Prime rent city centre periphery
PROPERTY MARKET REPORT HANNOVER 2016 - BUSINESS PROMOTION - Hannover.de
HANNOVER: PROPERTY SUBMARKETS AT A GLANCE
                                                                           Retail centrality index 2016 (Germany = 100, GfK)
 Retail                                                                    Hannover city                                               126.8
                                                                           Region (including Hannover city)                              110
  	Hannover’s Georgstraße and the Bahnhofstraße have for many             Purchasing power 2016 (in € per resident, GfK)
   years now been amongst Germany’s Top 10 most attractive
                                                                           Hannover city                                              22,406
   shopping streets and rank in the nation’s prime locations in
                                                                           Region (including Hannover city)                           22,732
   terms of pedestrian flow and prime rent.
                                                                           Retail turnover 2016 (in € per resident, GfK)
  	The centrality of the city and the region is high 2, with the
   catchment area extending westwards over the Lower Saxony                Hannover city                                               6,680
   border into North Rhine-Westphalia.                                     Region (including Hannover ciy)                             5,851
  	Within the region there are strong shopping centres of                 Prime rent city prime location 2016 in €/m *    2
                                                                                                                                        200
   supra-regional importance as well as retail market centres              Average rent city prime loction 2016 in €/m *       2
                                                                                                                                         145
   (Laatzen, Langenhagen, Isernhagen-Altwarmbüchen) as                     Net initial yield in prime locations 2015*                 4.5 %
   well as a number of attractive smaller town centres in the
                                                                           Net initial yield specialist retail centres 2015           6.3 %
   region and district centres which customers also find attractive.
  	In 2015, turnover in retail properties in the region amounted to
   € 213 million.
                                                                       * Bahnhofstraße, Große Packhofstraße, Georgstraße

                                                                           Logistics space turnover 2016 in m²                       175,000
 Logistics                                                                 Prime rent (new builds with excellent building              4.50
                                                                           services and optimal transport connections)
  	The Hannover Region is a key logistics hub within Europe and is        2016 in €/m²
   also a seaport hinterland hub.                                          Average rent 2016 in €/m²                                    3.65
  	Hannover is second only to Hamburg as the most important
                                                                           Net initial yield logistics centres in prime sites 2016    5.9 %
   logistics location in North Germany.
  	Early in 2016, the Hannover Region boasted some 2.5 million m2
   of hall space in 265 properties suitable for logistics, of which
   alone 1.7 million m2 – 130 buildings – were erected after 2000. 3
   Turnover in logistics properties in the region achieved a total
   value of around € 96 million in 2015.
                                                                       All figures refer to Hannover Region

                                                                           Residential rent, new builds 2016,                          14.50
 Residential                                                               prime rent in €/m²
                                                                           Residential rent, re-let property 2016,                     11.30
   The increasing population of both the state capital Hannover            prime rent in €/m²
   and several neighbouring communities is lifting demand for              Purchase price for owner-occupied apartments,               5,100
   residential properties.                                                 new builds, prime group 2016 in €/m²
   Since 2010, the population in the state capital Hannover alone          Purchase price for owner-occupied apartments,              3,600
   has climbed by 27,800 people, a plus of 5.5 %.                          new builds, average 2016 in €/m²
   In the same period, however, only some 4,690 new apartments             Multiplier for apartment blocks/investment                   17.0
   were completed in Hannover such that there is and will                  properties, average 2016
   continue to be considerable demand for new homes.
                                                                           Multiplier for apartment blocks/investment                   20.7
   Nonetheless, the number of completions rose in 2015
                                                                           properties inventory, prime group 2016
   year-on-year by almost 65 %. 4
                                                                           Multiplier for apartment blocks/investment                  24.0
   In 2015 turnover in apartments and houses in the Hannover
                                                                           properties in new builds, prime group 2016
   Region had a total value of around € 1.95 billion. 5
                                                                       All figures refer to state capital Hannover

            PROPERTY MARKET REPORT 2016
PROPERTY MARKET REPORT HANNOVER 2016 - BUSINESS PROMOTION - Hannover.de
Picture acknowledgements   Architekten Spengler & Wiescholek, Hamburg: Page 71
                           bauwo Grundstücksgesellschaft mbH: Page 54
                           Blocher Blocher Partners, Stuttgart: Page 16
                           Carpus + Partner: Page 14 top
                           Christoph Mäckler Architekten: Page 13
                           DELTA BAU AG/Birgit Streicher: Page 67
                           DELTA BAU AG: Page 75
                           Deutsche Reihenhaus AG: Page 81 centre
                           FIEGE Logistik Stiftung & Co. KG: Page 57
                           GlaserProjektInvest GmbH: Page 75
                           Gundlach GmbH & Co. KG: Page 64, 74
                           HELMA Wohnungsbau GmbH: Page 69, 72, 73 top and centre
                           Kitzig Interior Design: Page 12
                           ksw architekten + stadtplaner, Hannover: Page 22/23
                           HMTG: Page 82
                           KÖLBL KRUSE GmbH: Page 20
                           Landeshauptstadt Hannover: Page 5 bottom , Page 10 right
                           léonwohlhage Architekten: Page 26
                           Mensing Timofticiuc Architekten: Page 8
                           meravis Bautraeger GmbH/MACINA digital film GmbH & CO KG: Page 69
                           Projektentwicklung HRG & Delta Bau GmbH & Co. KG/studio architec: Page 29
                           Region Hannover: Page 29 bottom
                           Region Hannover/Olaf Mahlstedt: Page 4, 9, 10 left, 11, 13 left,
                           14 bottom, 16 top, 24, 28, 30, 36/37, 38, 40, 41 right, 42, 43, 44,
                           46, 48/49, 50, 53, 65, 70, 73 bottom, 81 top
                           Region Hannover/Peter Hiltmann: Page 5 top
                           Region Hannover/Frank Aussieker: Page 6/7, 15
                           Schramm & Schoen Immobilien AG: Page 18
                           STRABAG Real Estate GmbH/bloomimages: Page 41 left, 62/63
                           Weber Massivhaus GmbH: Page 81 bottom
PROPERTY MARKET REPORT HANNOVER 2016 - BUSINESS PROMOTION - Hannover.de
CONTENTS

FOREWORD          LOCATION          OFFICE
                  HANNOVER REGION   PROPERTY MARKET
Page 5            Page 6 – 21       Page 22 – 35

RETAIL            LOGISTICS         RESIDENTIAL
PROPERTY MARKET   PROPERTY MARKET   PROPERTY MARKET
Page 36 – 47      Page 48 – 61      Page 62 – 81

HANNOVER IN       IMPRINT           MAPS
COMPARISON
Page 82 – 83      Page 84           Pages 21, 34/35, 47, 60–61, 80

                                                                     3
PROPERTY MARKET REPORT HANNOVER 2016 - BUSINESS PROMOTION - Hannover.de
Room for everyone: The inclusive Café “anna leine” in the refurbished building of the Ada- und Theodor-Lessing-Volkshochschule looks across the banks of the River Leine.

       4      PROPERTY MARKET REPORT 2016
PROPERTY MARKET REPORT HANNOVER 2016 - BUSINESS PROMOTION - Hannover.de
THE PROPERTY MARKET IN THE HANNOVER REGION

                 Dear Readers,

                 The Hannover Region is one of Germany’s locations with the best prospects for the future,
                 with the Prognos-Future-Atlas confirming the location’s very high dynamism and strength.
                 Ideal preconditions to successfully implement projects in Hannover.

                 Hannover’s commercial property market stands for robust yields on investments with
                 development potential – which also applies to all submarkets. Hannover city is one of
                 Germany’s top shopping addresses, there is a very high demand for logistics areas in the
                 region, the office market in the state capital has established itself as the largest B-location
                 in Germany. Other factors such as attractive rents with low levels of volatility and good yields
                 make both Hannover city and the Hannover Region interesting options for institutional
                 players seeking to invest in core properties outside of A-locations. Furthermore, the state
                 capital Hannover is currently experiencing a building boom for residential housing.

                 The open and honest exchange of information amongst locally active market players has
                 also helped raise trust in the Hannover location to its high present-day level. The regional
                 business development organisation has been collaborating with partners from the property
                 sector since 2003 to collect key metrics on all relevant submarkets across the region and
                 has prepared them for perusal in an attractive, informative fashion.

                 This present issue is the result of joint efforts with 17 partners. The regional business develop-
                 ment promotion experts sit down with regional property market players at a round table to
                 ensure compliance with the high standards of the Gesellschaft für immobilienwirtschaftliche
                 Forschung e.V. (gif) (Property Industry Research Corporation). The results of these collaborative
                 efforts are reviewed and supplemented by bulwiengesa AG, the well-known consultant firm.

                 This report is not least documentary proof of the lively and committed
                 cooperation present in Hannover’s property business community.

                 Ulf-Birger Franz                                   Sabine Tegtmeyer-Dette
                 Head of Business, Transport and                    Head of the Business and Environment Department,
                 Education Department                               First Town Councillor
                 Hannover Region                                    State Capital Hannover

                                                                                                          FOREWORD     5
PROPERTY MARKET REPORT HANNOVER 2016 - BUSINESS PROMOTION - Hannover.de
HANNOVER REGION
                             LOCATION
                              	T he Hannover Region is a dynamic centre of growth in North
                                Germany. The positive economic development experienced
                                by the regional economy over recent years has generated a
                                sustainable demand for properties in all submarkets. The
                                commercial property market in Hannover has consolidated its
                                position as a key location after Germany’s seven major A-cities.

Eye-catchers in the newly renovated Kuppelsaal at the Hannover Congress Centre: ceiling mounted acoustic reflectors to optimise the sound in the circular hall.

       6      PROPERTY MARKET REPORT 2016
PROPERTY MARKET REPORT HANNOVER 2016 - BUSINESS PROMOTION - Hannover.de
7
One of the largest co-working and Maker Spaces in Germany opens at the end of September. The “Hafven”
now houses the Lindener Coworking Space “Edelstall” and the north Hanoverian Maker Space “Die Werke”.

       8      PROPERTY MARKET REPORT 2016
Lower Saxony’s vital economic area                                       Employment growth is dynamic and sustainable
              Brands famous throughout the world, a business community                 Levels of employment have been growing since 2010;
              characterised by strong SMEs and outstanding research                    in 2015 a new record level was reached. Almost 490,000
              organisations are all features of Lower Saxony’s state capital           people work and pay social security contributions in the
              Hannover and the Hannover Region. Around 50,000 business                 Hannover Region – representing a 60,000 plus compared
              enterprises make Hannover Lower Saxony’s most vital                      with 2010. A central role in the region is played by the
              economic area.                                                           state capital Hannover, hosting approx. 310,000 jobs, with
                                                                                       a further 170,000 plus working in the surrounding areas.
                                                                                       Regional unemployment in June 2016 was relatively
                                                                                       low at 7.5 % (down 0.1 % compared with June 2015).

AROUND 50,000 BUSINESS
ENTERPRISES WITH APPROX.
490,000 EMPLOYEES MAKE
HANNOVER LOWER SAXONY’S
MOST VITAL ECONOMIC AREA.

The Deutsche Rentenversicherung has invested around € 67 million in its new headquarters in Laatzen. At approx. 18,500 m 2 MF-G,
the building is the largest office building outside of the state capital Hannover in the Hannover Region.

                                                                                                                   HANNOVER REGION LOCATION         9
The new justice centre behind Hannover main station opened in mid 2015 providing around   The arvato AG logistics centre on the Kronsberg handles the internet
12,000 m 2 of space for five courts under one roof.                                       trading operations for well-known fashion labels including Esprit, C&A,
                                                                                          Hugo Boss and Tommy Hilfiger. The facility is one of the most up-to-
                                                                                          date of its kind in Germany.

                            All regional property submarkets benefit sustainably from     Logistics: Hannover Region is a European logistics hub
                            the positive economic developments.                           and vital hinterland hub for seaports in North Germany,
                                                                                          Benelux and the inland ports of the Ruhr area with
                            Offices: The number of people employed in offices in          a great potential for growth. Every sixth job in Lower
                            Hannover city rose during 2016 to a figure of around          Saxony’s logistics industry is located in the Hannover
                            175,000. The number of office employees has risen             Region. Overall some 43,800 employees work directly in
                            by around 17,600 since 2010, equivalent to 11.2 %. The        the logistics industry, with a further 28,000 jobs being
                            growing demand for office space is reflected in the           secured indirectly by the logistics sector 6. It is above all
                            office property market figures. New contracts for rental      trade and manufacturing enterprises which are raising
                            office space totalled approx. 125,000 m 2 in 2015.            the region’s demand for logistics services, or opera­t ing
                                                                                          their own logistics centres in the region. In recent years
                                                                                          many contract service providers have settled in the area,
                                                                                          rendering services for other businesses and generating
                                                                                          their own high value chains. As a result of ongoing bottle-
                                                                                          necks in the provision of space for new builds in the
                                                                                          logistics sector, turnover in logistics hall space settled
                                                                                          at a figure of around 175,000 m 2 in 2015.

                                                                                          6
                                                                                              Comparison of Hannover Region (2016): Labour market monitor

POSITIVE ECONOMIC DEVELOPMENT                                                                 logistics sector (location information 1/2016)

IS INFLUENCING ALL SUBMARKETS
OF THE PROPERTY LOCATION OVER
THE LONG TERM.

       10     PROPERTY MARKET REPORT 2016
The Spanish Inditex Group (including ZARA, ZARA Home, Massimo Dutti) has            The former grounds of the Hanomag factory in Linden, including listed industrial
opened or refurbished several outlets belonging to its various labels in Hannover   buildings, is now host to offices, retailers as well as homes.
in recent months.

               Retail: Despite the competition of the internet, retail sales        Residential: The residential property market is char­
               in Germany have experienced stable to light growth thus              acterised by regional providers and the demand from
               far in 2016. The Hannover Region is one of Germany’s five            private households. In 2015, apartments and houses
               highest turnover retail locations. In 2016, over the counter         with a total value of around € 1.95 billion were traded
               sales are expected to reach around € 6.6 billion. This is            in 2015 in the region.
               also thanks to the region’s retailers making best use of the
               advantages of excellent market presence, strong demand               Population growth in the state capital Hannover and a
               and high sales volumes, with the region’s large hinterland           number of adjacent communities has created a growing
               as a contributory factor. In Hannover city demand for                demand which is affecting the residential property market.
               suitable retail properties continues at a high level but there       Since 2010 the population of state capital Hannover
               is a lack of space in prime locations. The development of            alone has risen by 27,800, a plus of 5.5 %. Over the same
               rents and yields has been excellent overall. Additional              period, only around 4,690 new homes were completed
               demand for sales floor is also being driven by expanding             in Hannover city, such that considerable demand for new
               international chains and investors. These developments               housing exists both currently and in the future. Acting
               are also impacting specialist retail parks and shopping              together with the housing industry, Hannover intends
               centres in the area surrounding Hannover city.                       to create permits for a minimum 1,000 housing units
                                                                                    annually. 2015 saw the number of completions rise year-
                                                                                    on-year by almost 65 % (to 1,116 housing units).

THE COMMERCIAL PROPERTY                                                             The municipalities and with them the housing market are

MARKET IN THE HANNOVER REGION                                                       also facing up to the major challenge represented by the
                                                                                    long-term housing requirements for refugees. At the start of
STANDS FOR SECURE YIELDS ON                                                         2016, around 4,900 refugees were living in accommodation
INVESTMENTS WITH LONG-TERM                                                          provided by the state capital Hannover. It is not yet clear

DEVELOPMENT POTENTIAL.                                                              how many of these refugees will be housed over the long
                                                                                    term in Hannover and its surrounding areas.

                                                                                                                HANNOVER REGION LOCATION                       11
HANNOVER HAS PLENTY OF POTENTIAL
FOR NEW HOTEL PROJECTS – AROUND
1,050 NEW HOTEL ROOMS CONTAINING
OVER 2,000 BEDS WILL BE ADDED BY 2018.                                                       Rates of bed occupancy climb in Hannover city
                                                                                             Thanks to city and cultural tourism which is independent
                                                                                             of season, and a constant number of business travellers,
                                                                                             bed occupancy has been good, evenly spread throughout
                                                                                             the year, especially in Hannover city. With an average
                                                                                             bed occupancy of 45.2 % of beds available in 2015, the
                        Tourism: more overnight stays                                        rate is actually 2.3 % higher than the result for 2014.
                        Tourism in the Hannover Region hit a new record in 2015.             Overall the number of beds available, of around 13,600,
                        With the number of overnight stays reaching around                   is significantly higher than the level during the World
                        2.23 million, the previous record from the years 2000                Exposition in the year 2000 (a plus of 2,000 beds).
                        and 2011 were overtaken. The Lower Saxony state
                        office for statistics recorded well over 150,000 more                Rising demand for hotel projects –
                        overnight stays in the state capital Hannover during                 1,000 additional beds by 2017
                        2015 than in the previous year – representing a plus                 The fact that there is adequate potential for new hotel
                        of 7.2 % compared with 2014. For the 21 towns and                    project developments in Hannover is demonstrated
                        municipalities of the Hannover Region, the figure rose by            by a number of current developments and projects in
                        more than 170,000 overnights, up 4.6 % year-on-year.                 the pipeline on Hannover’s hotel property market.

                                                           A former office building with a
                                                        listed late 19th century facade at
                                                          Aegidientorplatz in Hannover is
                                                          currently being converted into a
                                                        design hotel of the new Lindener
                                                                 brand me and all hotels.

Hotel projects

                                                                                                                                  Completion/
 Hotel                                      Location                                Rooms               Category
                                                                                                                                  opening

 prizeotel                                  Hamburger Allee                        212                                            Q4/2015

 Holiday Inn Express                        Raschplatz/Hamburger Allee              172                                          2017

 Star inn Hotel, by Comfort                 Hamburger Allee 65                      179                                           Q1/2017

 Cookotel                                   Gradestraße 22                          395                                          2017

 me and all hotels                          Aegidientorplatz 2 a                    143                                          2018

 Hotel am Friedrichswall
                                            Friedrichswall 11                      280                                           2019
 (former Maritim)

      12     PROPERTY MARKET REPORT 2016
Playful interior designs in pop-art colours reminiscent of 1960s and 1970s pop culture:   The exposed concrete facade dating from the 1960s is to get a make-over: the former
this is the design concept of the Hannover prizeotel. The budget-design hotel chain       Maritim Grand Hotel on the Friedrichswall is scheduled for refurbishment from
opened its new 212-room hotel on the Hamburger Allee, just around the corner from         2019: around € 10 million are earmarked for the facade redesign.
Hannover main station in September 2015.

               Hotel project developments                                                 Large-scale hotel refurbishment
               A number of budget and designer hotel concepts are work                    planned on Friedrichswall
               in progress at various sites. In September 2015, prizeotel                 A large-scale refurbishment project is planned over
               opened its doors at Hamburger Allee 50. The operation                      the medium term opposite Hannover’s Neue Rathaus:
               offers 212 rooms in the two-star-plus sector with designed                 The Maritim Grand Hotel, built in 1965 as the “Hotel
               interiors. This development is complemented by the newly                   Intercontinental”, discontinued its hotel operations at
               built Star Inn Hotel by Comfort in the immediate vicinity                  the end of 2015. The new owner plans a full refurbishment,
               at Hamburger Allee 65 – 75. This 3-star hotel is scheduled to              creating the opportunity to enhance and reposition this
               open in mid 2017 with 179 new rooms. The Lindner Hotels AG                 central location on Hannover’s Friedrichswall. The first
               also plans to open its new hotel operation in 2017 in a listed             designs for the new facade were presented in October 2015.
               building located at the central Aegidientorplatz site; the                 Plans include an additional storey to create a Sky Bar with
               143-room me and all hotel. In 2017 the Foremost Hospitality                an undulating roof. At present the hotel building itself will
               Group plans to open a Holiday Inn Express with 127 rooms                   be used for a two-year period by Hannover city to provide
               on the Hamburger Allee (in the lower floors of the Bredero                 refugee accommodation for around 550 people, before
               high-rise). Furthermore the Dobler Group intends to use                    refurbishment starts from 2019.
               a former office high-rise in the Gradestraße to develop a
               combined design-budget hotel with boarding house. The
               Cookotel is planned with approx. 395 rooms. These projects
               alone mean that by 2017, within a short two-year period, a
               further 1,050 hotel rooms will be available in Hannover.

                                                                                                                      HANNOVER REGION LOCATION                     13
Science & Research:
                                                                                     work going ahead on Garbsen campus
                                                                                     The ground-breaking ceremony for the new Campus
                                                                                     Maschinenbau (mechanical engineering) took place in
                                                                                     Garbsen in December 2015. Located on Hannover city’s
                                                                                     north-western border, in Hannover Region’s second largest
                                                                                     municipality, eight buildings are planned for teaching and
                                                                                     research with premises for 11 institutes of the mechanical
                                                                                     engineering faculty and the DEW Dynamics in Energy
                                                                                     Conversion research centre. The state of Lower Saxony has
                                                                                     earmarked € 143 million for investment over the next four
                                                                                     years. Around 5,000 employees and students of Leibniz
                                                                                     University will teach, research and learn on the Campus.
                                                                                     Seven institutes have been relocated to the site in the
                                                                                     production technical centre (PZH). Areas are available in
                                                                                     the direct neighbourhood, both in Garbsen as well as at the
                                                                                     science & technology park in Hannover-Marienwerder, for
                                                                                     business enterprises seeking to be close to the Campus.

                                                                                     Another future-forward-looking research centre is under
A unique research centre is currently under construction in Hannover: the Hannover   construction on the Callinstraße for the Hannover
Institut für Technologie (HITec, artist’s impression) is planned by the Leibniz      Institute for Technology (HITec). Leibniz University
University Hannover as an interdisciplinary research infrastructure for quantum
technologies. Involving the physics, geodesic and engineering faculties, it is to    Hannover intends to create a research infrastructure
organise basic and applied research as well as technological developments in the     such that for the first time in Europe basic research,
fields of quantum physics and geodesics. HiTec will provide space for between 100
                                                                                     applied research and technological developments in
and 120 staff.
                                                                                     the fields of quantum phy­s ics and geodesics can take
                                                                                     place under one single roof. The € 30 million building
                                                                                     celebrated its topping out ceremony in mid June 2016,
                                                                                     with completion of HITec scheduled for the end of 2017.

                                                                                     The Lower Saxony Centre for Biomedical Engineering,
                                                                                     Implant Research and Development (NIFE), close to the
                                                                                     Hannover Medical School (MHH) was completed at the end
                                                                                     of 2015 and inaugurated in June 2016. The 7,000 m2 space
                                                                                     will be home to some 280 scientists deployed from the MHH,
                                                                                     Leibniz University and the University of Veterinary Medicine
                                                                                     Hannover. In the new build costing € 60 million scientists
                                                                                     will focus on innovative implants in the fields of the heart,
                                                                                     hearing, dentistry and in orthopaedics as well as developing
                                                                                     strategies against infection.

NIFE, the Lower Saxony Centre for Biomedical Engineering, Implant Research and
Development. NIFE bundles transdisciplinary research and developments in the field
of implant research in Lower Saxony.

        14     PROPERTY MARKET REPORT 2016
The Kuppelsaal concert hall was constructed in 1913 with approximately 3,600 seats: it is one of Germany’s largest classic concert halls. In 2015 the historic
building was refurbished at a cost of around € 7 million and forms the centrepiece of the Hannover Congress Centre.

Other striking property projects
In February 2016, a concert given by the London Symphony
Orchestra marked the occasion of the reopening of the
refurbished historic Kuppelsaal at the Hannover Congress
Centre (HCC). With a capacity of 3,600 seats this is one of
Germany’s largest classic concert halls. At a cost of around
€ 7 million the interior and the acoustics of the Kuppelsaal
were revamped and part of the building’s historic facade
totally refurbished.

                                                                                            For many decades, on the Kuppelsaal was dominated by an acoustic
                                                                                            improvement object hanging from the ceiling, lovingly referred to by
                                                                                            many visitors as “The potato”.

                                                             The Goddess of Light is
                                                             back: removing wooden
                                                             panelling put up in a
                                                             1962 modernisation has
                                                             revealed the “Goddess
                                                             of Light” standing in the
                                                             Kuppelsaal. The stucco
                                                             relief played a key visual
                                                             role when the hall was
                                                             originally built in 1914.

                                                                                                          HANNOVER REGION LOCATION                        15
The site of the Eilenriede stadium was host to the topping
                                                                                   out ceremony in September 2015 of Hannover 96 football
                                                                                   team’s new sports centre for up and coming talents. The
                                                                                   team’s professional division is investing a total of € 17 million
                                                                                   in the new sports centre for its young football talents. Part
                                                                                   of the project involves the restructuring of existing sports
                                                                                   facilities and refurbishing the southern part of the main
Go to Hannover Adventure Zoo and you can touch Africa: in summer, the zoo’s        stadium, a listed structure built in 1928.
new 2,000 m2 “Zambezi Kraal” animal petting area opened, an African village
with straw-roofed mud huts and round animal pens, the Kraals.

Based on designs prepared by Hannover architects agsta, Hannover Zoo’s new
community building is directly on the Adenauerallee. The building provides space
not only for administration but also e.g. the zoo’s animal hospital.
                                                                                   Hannover Adventure Zoo intends to invest around
                                                                                   € 71 million over the coming 10 years as part of its master
                                                                                   plan 2025+, with the money being spent on the zoo’s
                                                                                   worlds of adventure as well as infrastructure. The new
                                                                                   community building and the Zambezi Kraal, an African
                                                                                   animal petting area, were completed in summer 2016. The
                                                                                   design of the new zoo entrance building evokes a giant,
                                                                                   stylised giraffe. Work is scheduled to start in February 2017
KUPPELSAAL, ZOO, REGIONAL                                                          after the zoo’s admin offices have completed their move

PARLIAMENT BUILDING –                                                              into the space created in the new community building.

HANNOVER IS INVESTING IN KEY
IMAGE-DEFINING BUILDINGS.

        16    PROPERTY MARKET REPORT 2016
Symbol of open, transparent democracy                      Summary of investment market
Work started in summer 2014 on the redesign and total      The impact of today’s low interest situation on the
refurbishment of Lower Saxony’s state parliament           investment decisions of both domestic and international
plenary hall under the auspices of Blocher Blocher         investors is becoming more obvious. The higher demand
Partners. The total building area is around 11,200 m ,2
                                                           for safe investments has raised the price of core prop-
with the state investing around € 53 million in the        erties in established A-cities such that there is now a
refurbishment, scheduled for completion in summer          scarcity, which is forcing investors to increasingly seek
2017. While the original intention had been to erect a     alternative investment strategies away from classic
new building to replace the plenary hall built in 1962,    A-locations. As a result, core properties at B-locations,
the hall and other areas of the Leineschloss (a palace     such as Hannover, are increasingly shifting into focus.
building originating in the 17th century) are now being
refurbished compliant with their listed building status.

                                                                                                  The remit for the redesign of Lower
                                                                                                  Saxony’s state parliament plenary hall
                                                                                                  building involved making the interior
                                                                                                  space of the plenary hall fit for the
                                                                                                  future while keeping the original ideas
                                                                                                  of the building, designed in the 1950s by
                                                                                                  Oesterlen, intact. The original plenary
                                                                                                  hall, which was completely gutted, will
                                                                                                  in the future enjoy natural daylight.
                                                                                                  The building project on an overall area
                                                                                                  of 11,217 m 2 is scheduled for punctual
                                                                                                  completion in summer 2017.

                                                                                    HANNOVER REGION LOCATION                    17
Hannover Region investment market 2015                                      Market volume up in 2015
                                                                            From 2013 to 2014 investment volumes fell by around

                                            Volume in €                     38 %, while in 2015 the initial level of 2013 was significantly
 Type of building                                                  Share    exceeded by almost 11 %. In the opinion of market players,
                                                 million
                                                                            the reasons for the temporary weakness are more the lack
 Retail properties                                   213            27 %    of offers and less a decline of investors’ interest. Within
 Office and commercial                                                      the borders of the state capital Hannover, the market has
                                                    372             46 %    actually seen slightly reduced volatility (dip in transaction
 buildings
                                                                            volume from 2013 to 2014 of only some 3 %) while the
 Industry and logistics                              96             12 %
                                                                            investment volumes climbed here in 2015 by almost 30 %
 Hotels                                               91             11 %   to over € 550 million.
 Others                                               31             4%
                                                                            Office properties strongest asset class again
 Total                                              803            100 %
                                                                            During 2015 office properties proved to be the strongest
                                                                            asset class with a volume of € 372 million. They were
                                                                            responsible for just over 50 % of total transaction volume,
MOVING AWAY FROM CLASSIC                                                    while the share of retail properties was over 46 % (€ 213

A-LOCATIONS – DOMESTIC AND                                                  million). Industry and logistics properties (€ 96 million)
                                                                            and hotel properties (€ 91 million) were both relatively
INTERNATIONAL INVESTORS ARE                                                 constant with shares of 12 % and 11 % respectively. Hotels
INCREASINGLY FOCUSSING ON CORE                                              enjoyed particularly high levels of demand from investors

PROPERTIES IN HANNOVER.                                                     seeking alternative investments and options for portfolio
                                                                            diversification. In Hannover, a new record was reached in
                                                                            2015. Logistics properties also enjoyed high demand as
                                                                            alternative investment properties. Comparing 2015 with
                                                                            2014, transaction volumes in this asset class were again
                                                                            considerably higher (plus € 42 million, a rise of 77 %).
                                   4%
                        11 %

                                  4%                       27 %

                 11 %                                      27 %
          12 %
                               Investments in the
                                Hannover Region

                               Investments in der
         12 %                   Region Hannover

                                   46 %

                                          46 %
                                                                            This office building in the Gutenbergstraße 15 in Laatzen was sold in
                                                                            early 2016 by Schramm & Schoen Immobilien AG to the city of Laatzen.
                                                                            The building will be used temporarily to house refugees and then to
                                                                            provide quarters to the city administration during the planned city hall
■ Retail properties                     ■ Industry and logistics            refurbishment.
■ Office and                           ■ Hotels
   commercial buildings                 ■ O ther

      18        PROPERTY MARKET REPORT 2016
Selected transactions 2015/2016

 Property name and/or                                                                                                    Building area/
                                Quarter   Year   Vendor                     Purchaser                  Investor type
 address                                                                                                                 land area in m2

 Office
                                                                            GPI GlaserProjekt­
 B. Five (Brüderstraße 5)       Q4        2015   Deutsche Telekom AG                                   Family office     19,500 m 2
                                                                            Invest GmbH
 Lister Dreieck – Deutsche                                                                             Special real
                                Q4        2015   KÖBL KRUSE GMBH            Savills IM Real Invest 1                     25,500 m 2
 Bahn AG (Runddestraße)                                                                                estate fund
 Office building                                                                                       Public adminis-
                                                 Schramm & Schoen
 Gutenbergstraße 15,            Q1        2016                              City of Laatzen            tration/owner-    6,800 m2
                                                 Immobilien AG
 Laatzen                                                                                               occupation

 TriTower (Schiffgraben 30)     Q1        2016   Allianz AG                 Local investor             Private           10,500 m 2
                                                                            Gesellschaft für Bauen     Project devel-
 Office and commercial
                                Q2        2016   Meag                       und Wohnen Hannover        oper / Property   8,800 m2
 building (Klagesmarkt 17)
                                                                            mbH (GBH)                  developer
 Retail
 Galeria Kaufhof                                                            Simon Property Group/
                                                                                                       Owner-            30,000 m2 /
 Ernst-August-Platz and         Q2        2015   Metro AG                   Hudson’s Bay Company
                                                                                                       occupation        28,000 m2
 An der Marktkirche                                                         (HBC)
                                                                            Aachener                   Special real
 Neues Erdmann Haus             Q2        2015   Development Partner AG                                                  4,000 m2
                                                                            Grundvermögen              estate fund
                                                 Lüder Bauträger GmbH /
                                                                            Savills Investment
 Planetencenter Garbsen         Q3        2015   Unternehmensgruppe                                    Asset manager     16,400 m2
                                                                            Management
                                                 Lüder
 Logistics
 Project development
                                                                                                       Project
 logistics centre Krons-
                                                                                                       developer /
 berg (Expansion area on        Q2        2015   City of Hannover           Verdion                                      (70,000 m2)
                                                                                                       Property
 Weltausstellungsallee,
                                                                                                       developer
 Hannover)
 Logistics property                                                         Aurelis Real Estate
                                Q2        2015   Deutsche Messe AG                                     Asset manager     23,500 m2
 (Karlsruher Straße, Laatzen)                                               GmbH & Co. KG
 Hermes distribution centre
                                                                            RREEF INVESTMENT
 Nord-HUB (Airport Business     Q4        2015   CGi hausinvest europa                                 Asset manager     14,300 m 2
                                                                            Gmbh
 Park, Langenhagen)
 Indupark logistics centre                                                  TH Real Estate, Palmira
                                Q4        2015   Nibler Gruppe                                         Asset manager     37,500 m2
 (GVZ Lehrte)                                                               Capital Partners
 Krage logistics centre                                                     Schroder Real Estate
                                                                                                       Special real
 (Airport Business Park         Q2        2016   LHI Leasing GmbH           Kapitalverwaltungs-                          60,000 m2
                                                                                                       estate fund
 Langenhagen)                                                               gesellschaft mbH
 Hotel/Leisure
 Mercure Hotel Hannover                          Ebertz-Sachwertfonds 107   Internos Global            Special real
                                Q4        2015                                                                           170 rooms
 Mitte                                           Dorint-Hotel Hannover KG   Investors                  estate fund
 Leonardo Hotel Hannover                         Leopard Group and Fattal
                                Q4        2015                              Pandox AB                  Asset manager     178 rooms
 Tiergarten                                      Hotels
 Radisson Blu Hotel Expo                         HGA-Immobilienfonds        BNP Paribas REIM           Special real
                                Q1        2016                                                                           250 rooms
 Plaza                                           Hamburg-Hannover GmbH      Germany                    estate fund

                                                                                              HANNOVER REGION LOCATION           19
International investors much more active in 2015
                                During 2015 international investors were again much more
                                active in Hannover across all size and asset classes. On
                                the buyer side their share (in terms of capital invested)
                                touched almost touched 50 % in 2015, while only reaching
                                6 % on the vendor side. International investors prefer
                                larger scales and in addition to office properties, demon­
                                strated a preference for retail and hotel properties.
                                                                                               The Essen-based project developer KÖBL KRUSE is constructing
                                                                                               an office building for the Deutsche Bahn on the site of the former
                                Typical for B-locations: medium-sized investments, of
                                                                                               central bus station. Directly behind the main railway station it will
                                between € 20 and 100 million were again the strongest          provide 800 offices for 1,100 staff. During the project development
                                size category in 2015. It is indeed offers of this size        phase, Savills Investment Management acquired the building for a
                                                                                               special real estate fund.
                                category which are available in a B-location like Hannover.
                                No transactions in excess of € 100 million took place,
                                simply because there were no offers. Almost a third of         Hannover city as an investment target
                                all transactions were for values between € 50 and 100          When investments take place in Hannover, they are mainly
                                million, whereby only international buyers were active. For    in core properties in the city’s very centre. More than 75 %
                                example, a fund advised by J.P. Morgan Asset Management        of office investments during 2015 were in Hannover’s city
                                purchased an around 21,500 m 2 large office property in        centre, with more than 80 % of the investment volume in
                                Hannover’s Joachimstraße, still currently tenanted by          retail properties. Logistics properties, on the other hand, were
                                Deutsche Bahn, at the end of 2015. For its special real        transacted mainly in the state capital’s surrounding areas.
                                estate fund, Real Invest 1, Savills IM acquired the Lister
                                Dreieck office project for around € 90 million, a building     Slow start to 2016 – no major deals to date
                                for which Deutsche Bahn had already signed the rental          As an investment year, 2016 has had a somewhat slow
                                contract even before building work started. This is an         start: during the first six months of 2016 only around € 80
                                excellent example showing that there is the willingness to     million have been invested in the region and Hannover
                                buy where good offers are available; here again the buyer      city. The largest deals to date are the sale of the Radisson
                                is thought to be an international institution. In another      Blu Hotel by HGA Capital to a special BNP fund for more
                                portfolio transaction, the two Galeria-Kaufhof properties      than € 30 million and the TriTower by Allianz to a local
                                in Hannover’s city centre changed ownership – during the       investor for almost € 17 million. Latest news is that Meag
                                first half of 2015 Metro AG sold its share in the department   has sold two office and commercial buildings located on
                                store chain including properties to the Canadian Hudson’s      the Klagesmarkt to GBH (Klagesmarkt 17) and the BAUM
                                Bay retail group.                                              Unternehmensgruppe (Klagesmarkt 12) respectively.

  The GlaserProjektInvest
  GmbH acquired an office                                                                      No properties exceeding € 50 million in value have been
  and technology building                                                                      transacted thus far, while hotel properties, with a 40 %
     in the Brüderstraße in
                                                                                               share, are ahead of office and commercial properties. This
     Hannover’s city centre
   from Deutsche Telekom                                                                       is a situation being driven mainly by both a lack of offers
      AG at the end of 2015.                                                                   for larger properties in as-new condition as well as prices
       Parts of the building,
                                                                                               which have risen significantly – also in B-locations. With
including the facade, were
         totally refurbished.                                                                  a net initial yield of 4.7 % for offices and 4.5 % for retail
                                                                                               properties, prices in Hannover have reached historically
                                                                                               high levels.

         20     PROPERTY MARKET REPORT 2016
Selected transactions 2015/2016

                                                                                  17

            19                                                                                                                                         8

                                                                                                                   11

                                                                                                                                    21

                                                    12                                 20   18 3 2
                                                                                                                13
                                                                                             4     6
                                                                                            7                       16
                                                                                                              14
                                                                                               9
                                                                                            15     5
                                                                                                 1

                                                                                                                                                  10

               1 km              2 km   3 km   N

  Hotel                                            Retail                                              Public buildings, sports and culture            Research and science

   1                                                7                                                  13                                              19
       Hotel am Friedrichswall                           Building Steintorplatz                             Hannover Adventure Zoo                          Campus mechanical engineering
   2                                               8                                                   14                                                   Leibniz University
       prizeotel                                         Möbel Höffner/A2-Center                            Hannover Congress Centrum
                                                                                                                                                       20
   3                                               9                                                   15                                                   HITec
       Star Inn Hotel, by Comfort                        Neues Erdmann Haus/Reserved                        Lower Saxony parliament
                                                                                                                                                       21
                                                                                                       16                                                   NIFE
                                                                                                            Hannover 96 new sports centre

  Offices                                          Residential                                         Logistics
                                                                                                                                                            Airport

  4                                                10                                                  17                                                   Hannover Exhibition grounds
       GBH Klagesmarkt                                   Kronsberg-Süd                                      DB Schenker Logistics centre
   5                                               11                                                  18                                                   Main station/intercity
       Prinzenareal                                      VIER                                               DHL-distribution centre at
  6                                                12                                                       former goods station
       Sparkasse Hannover                                Wasserstadt Limmer

                                                                                                                                              HANNOVER REGION LOCATION                      21
OFFICE
                              PROPERTY MARKET
                                	H annover is and remains one of the largest locations in
                                 Germany’s property market after the Top 7. Overall in 2016,
                                 Hannover counted around 175,000 office employees (plus
                                 11.2% since 2010). The higher demand for office space is
                                 very apparent on the office property market. Although
                                 traditionally dominated by owner-occupiers, Hannover is
                                 enjoying the interest of German and international investors.

The administration building for public order to be built next to the Schützenplatz will house a number of offices currently spread around the city,
including the car registration office, the lost-and-found office and the industry and veterinary authority. The building designed by ksw architects of
Hannover on the site of the present day car registration office is set for completion by 2019.

        22     PROPERTY MARKET REPORT 2016
23
A declaration of faith in the location – Viscom, a Hannover-based SME, has invested over € 7 million in a new build,
creating space for production and customisation of its machinery.

        24     PROPERTY MARKET REPORT 2016
Strongest B-location in Germany                                  A point worthy of note here is that 2015 was not dominated
Since 2010, turnover in office space in Hannover, Langen­        by the traditionally strong owner-occupied properties. In the
hagen, Laatzen and Garbsen has totalled 790,000 m 2 –            past, Hannover’s best years have always been characterised
an average of approx. 130,000 m2 per annum, almost double        by large, owner-occupied properties, with such deals being
the average area of B-cities. The location includes approx.      absent in 2015. The first six months of 2016 were also lacking
5.06 million m2 office property space, of which alone around     in owner-occupied turnover.
4.59 million m is in the state capital Hannover.
              2

                                                                 Reflecting the projects in progress or projects recently
Office property turnover on sustainable growth                   completed in the city, Hannover market players agree
With around 125,000 m2 new lets of office space in Hannover,     that the prime rents will stay stable or climb slightly in all
Garbsen, Laatzen and Langenhagen, the overall turnover           locations up to the end of the year. The fact that in the
for 2015 was up almost 7 % in a year-on-year comparison          past higher prime rents were not achieved was due to the
with 2014, and a good 19 % compared with 2013. No owner-         fact that over the last few years there has been a dearth
occupied areas were built or bought in 2015. Total turnover      of offers of high quality space in central office locations.
in 2015 was only 4 % down on the average of the last five
years (130,000 m2).                                              7
                                                                     	The maximum rent achieved is the first maximum registered net rent excluding utility builds,
                                                                        independent of local submarkets, qualities and size of the let area, as concluded during the
                                                                        respective reported period. This not only takes into account letting contracts concluded, but

The major rental deals transacted over the last 12 months               also includes letting contract extensions which are not part of letting turnover.

were the project development by Kölbl Kruse of Essen for
the Deutsche Bahn at Raschplatz – known as the Lister
Dreieck, and covering around 25,500 m2 rentable office
space – and the leasing of the former Sparkassen HQ on
Aegidientorplatz (around 10,000 m2) to the state capital
Hannover by the Hannover-based BAUM Gruppe.

The main focus of activities was in the inner city area, where
market experts identified movements of approx. 65,000 m2,
a plus in turnover of almost 63 % compared with 2014 –
and around 25,000 m 2 up on the previous year. Along the
city periphery and major arterial roads, approx. 40,000 m2
turnover was reported, in neighbouring towns around
6,000 m2. Prime rents climbed significantly in 2015, reaching
a verifiable 14.80 €/m2 (compared with 14.20 €/m2 in 2014).
The highest rents7 were actually above this in the inner city
zone, reaching 15 to 18 €/m2 in top notch new build proper-
ties and high quality refurbished areas.

                                                                 “KING OF THE B-CITIES” –
                                                                  HANNOVER IS GERMANY’S
                                                                  EIGHTH LARGEST
                                                                  PROPERTY LOCATION.

                                                                                                                   OFFICE PROPERTY MARKET                               25
Office property investments                                    The city is benefiting from the global increase in investment
               Thanks to its low market risk and the good growth prospects,   pressure, which is forcing investors into German B-locations.
               Hannover is definitely an interesting option for investors     Whenever major scale core properties (of value between
               from both Germany and abroad seeking high quality core         € 50 and 100 million) come onto the market, these projects
               properties. 2015 saw registered office property transactions   are in part snapped up even during the project development
               reach a volume € 372 million in the region. The focus of       phase, above all by international investors. This is proof of
               office transactions was the state capital Hannover (€ 275      the potential inherent in Hannover’s market. An example of
               million) with above all investments taking place in core       such an investment was the purchase of an office building
               properties within the city ring (around € 235 million).        offering 21,500 m2 space previously rented exclusively by
                                                                              the Deutsche Bahn in Hannover’s Joachimstraße, purchased
                                                                              at the end of 2015 for a fund managed by J.P. Morgan Asset
                                                                              Management. The purchase of the Deutsche Bahn’s future
                                                                              HQ in Hannover was also reported at the end of 2015. Savills
                                                                              Investment Management KVG, acting for the Club Deal
                                                                              special real estate fund Savills IM Real Invest 1, purchased the
HANNOVER IS BENEFITING FROM                                                   Kölbl Kruse project development on the Lister Dreieck site.

GLOBAL INVESTMENT PRESSURE
PUSHING MORE INVESTORS INTO
GERMANY’S B-CITIES.

                                                                                                         At the start of Hannover’s Vahrenwalder
                                                                                                         Straße, the LIST Retail Development
                                                                                                         GmbH & Co. KG intends to construct
                                                                                                         an office and commercial building of
                                                                                                         approx. 25,000 m 2 in size. Building
                                                                                                         completion, located directly adjacent
                                                                                                         to the Continental AG HQ, is 2018.

  26   PROPERTY MARKET REPORT 2016
Hannover office market completions 2010 to 2019 in thousand m 2
100
 90
 80
 70
 60
 50
 40
 30
 20
  10
   0

                                                                                                                                                                                                                       2018*

                                                                                                                                                                                                                                          2019*
                                                                                                                                                                     2016*

                                                                                                                                                                                              2017*
                 2010

                                                                                                                  2014

                                                                                                                                            2015
                                                                    2012

                                                                                              2013
                                         2011

■ New build completions Hannover		                                                    ■ Refurbishments Hannover		                                             ■ New build completions Region
* Based on the spring forecast of bulwiengesa AG: Hannover Region survey; details provided by market players: data status Q3/2016

Office space portfolio 2009 to 2016* in thousand m² MF-G
5,000

4,000                                                                                                                        Vacancies continue to fall
                                                                                                                             New offices being built have a high pre-letting ratio, with
3,000                                                                                                                        speculative new build projects playing practically no role
                                                                                                                             at all. The data on completions in past years and in the
2,000                                                                                                                        pipeline and the continuing low vacancy rates provide hard
                                                                                                                             evidence of market observers’ opinions.8
1,000
                                                                                                                             Despite the high number of completions in 2014 and 2015,

       0
                                                                                                                             the vacancy rate has not increased; apparently the new
                                                                                                                             space was totally absorbed by the market. The vacancy
                                                                                                     2016 ***
                                                                                     2015 *
                                          2012 *
              2010

                                                                           2014
                                                          2013
                            2011

                                                                                                                             rate closed at 5.2 %, 50 base points lower than the previous
                                                                                                                             year. In absolute terms rentable vacancies in Hannover
■ Office market Hannover                             ■ of which Hannover city                                                city fell by some 17,500 m 2 to 237,000 m 2. In a comparison
* Year of a total office space survey by bulwiengesa AG and Baasner Stadtplaner GmbH                                         with A-locations (vacancies 2015 on average 6.1 %) and
** With Garbsen, Laatzen and Langenhagen             *** Forecast     Source: bulwiengesa AG
                                                                                                                             Germany’s largest regional locations (vacancies 2015 on
Total office employees 2010 to 2017 in thousands                                                                             average 5.7 %), this value may be considered to be low.

                                                                                                                             8
                                                                                                                                 	Based on updated full survey of office space inventory and vacancies by bulwiengasa AG end
                        Hannover                                           Hannover                                                 2015/early 2016.
  Year                                             Ratio**                                           Ratio**
                        City                                               Region***                                                The forecast and model calculations of bulwiengesa AG are based on the total inventory surveys
                                                                                                                                    of 2009, 2012 and 2015.

  2010                  157.5                      40.8                    63.1                      26.8

  2011                  159.4                      40.8                    64.8                      27.1

  2012                  163.4                      42.0                    65.8                      26.5

  2013                  165.6                      41.3                    67.2                      27.5

  2014*                 168.8                      41.8                    67.8                      27.4

  2015*                 171.7                      42.3                    68.0                      27.2

  2016*                 175.1                      42.7                    68.7                      27.1                    *      Estimate or forecast based on reports provided by the Lower Saxony state office for statistics
                                                                                                                             ** Ratio of office employees to total workforce in %

  2017*                 177.3                      42.9                    69.0                      27.0                    *** Region without state capital
                                                                                                                             Source: bulwiengesa AG

                                                                                                                                                                               OFFICE PROPERTY MARKET                                27
The Mecklenburgische Versicherungsgruppe has erected a new office building directly adjacent to its HQ in the
                             Berckhusenstraße. Since early 2016 approximately 170 staff work here; parts of the building are sublet.

                              Market dominated by state sector, finance                              The Prinzenareal project (6,330 m2), in which VGH insurance
                              and insurance industry                                                 is investing around € 33 million, is scheduled for completion
                             The finance and insurance industries and the state sector               in mid 2017. The three new buildings replace several existing
                              have traditionally generated the highest demand for office              buildings owned by VGH. The main tenant of the approx.
                              space in Hannover. The fully refurbished Sparkasse HQ                  3,500 m2 premises is the auditing firm KPMG.
                             (27,500 m2) was reoccupied at the end of 2015.
                                                                                                     The Gesellschaft für Bauen and Wohnen Hannover mbH
                              Early March saw the inauguration of the new building                    intends to complete its office and residential building
                              erected by the Mecklenburgische Versicherungen a.G. on                 project on the Klagesmarkt by the end of 2016. This organi-
                              the Karl-Wiechert-Allee (5,600 m2). The insurer has actually           sation is a subsidiary of the state capital Hannover and
                              sublet part (1,600 m 2) of the mainly owner-occupied                   will also be moving its HQ from the northern end of the
                              building to Endress+Hauser, an industry service provider.              Podbielskistraße to the Klagesmarkt, very close to the
                                                                                                     city centre.

Sparkasse Hannover recently completed the full refurbishment of its HQ built in the 1970s on
Raschplatz.

        28    PROPERTY MARKET REPORT 2016
Vodafone moves into City Gate Nord
               The Hannover Region Grundstücksgesellschaften (HRG) and
               Delta Bau AG are constructing a new building for Vodafone
               on a site known as City Gate Nord. Building is scheduled
                to commence in 2016, and by 2018 staff at the company’s
               previous office locations on the Hans-Böckler-Allee (200
               employees of Vodafone Kabel Deutschland) and Langen-
               hagen (450 employees of Vodafone Deutschland) will move
               into the new premises on the Vahrenwalder Straße. The
               planned investment volume is in the medium double-digit
               million region.
                                                                                            As part of its integration of Kabel Deutschland, Vodafone will be bundling offices
                                                                                            previously spread around the city and the Hannover Region in a building of around
                                                                                            8,000 m 2 to be completed by end 2018 on the Vahrenwalder Straße. It is part of the
                                                                                            first building phase of the City Gate Nord project. The project is a joint development of
                                                                                            Delta Bau AG in cooperation with HRG Hannover Region Grundstücksgesellschaft mbH.

                                                                                            Continental to stay in Hannover
                                                                                            Tyre and technology group Continental AG is expanding
                                                                                            and simply does not have enough space for its growing
                                                                                            workforce at its HQ on the Vahrenwalder Straße in Hannover.
                                                                                            In mid-June 2016 Continental AG and the state capital
                                                                                            Hannover announced the start of negotiations for the site
                                                                                            at the Pferdeturm crossing. The site is divided into two
                                                                                            sections, respectively north and south of the Hans-Böckler-
                                                                                            Allee adjacent to the Messeschnellweg expressway. The
                                                                                            ContiCampus is to be finalised by 2020. The architectural
                                                                                            competition is also to include solutions for the intended
                                                                                            bridge across the Hans-Böckler-Allee as the link joining
                                                                                            the two plots of land. The automotive supplier is planning
                                                                                            an investment in the high double-digit million region.

                                                                                            The city of Garbsen, with a population of 60,000 Hannover
                                                                                            Region’s second largest municipality, also offered Continental
                                                                                            an option at the Neue Mitte Garbsen – a 25 hectare plot
                                                                                            to the west of the Europa-Allee. It intends to use this
                                                                                            site, located in the immediate vicinity of the Rathaus and
                                                                                            the town centre, to develop a new city neighbourhood.

The Continental AG, a Hannover-based Dax-listed company, plans to build its new
HQ in Hannover. The future corporate campus is to be constructed at the Pferdeturm
crossing, with a pedestrian bridge linking the two buildings to the right and left of the
Hans-Böckler-Allee. The initial capacity of the building complex will be 1,250 staff.
Occupancy is planned for latest 2021, the year in which Hannover’s biggest company          GROWING ALONG ARTERIAL
will be celebrating its 150th anniversary.
                                                                                            ROADS – VODAFONE AND
                                                                                            CONTINENTAL CHOSE INTEGRATED
                                                                                            SITES IN THE NORTH AND EAST
                                                                                            OF HANNOVER.

                                                                                                                               OFFICE PROPERTY MARKET                      29
2016: good prospects for turnover and
                                                                                                                 prime rents
                                                                                                                 The market players of the Hannover market
                                                                                                                 anticipate that 2015 will see turnover staying
                                                                                                                 either stable or increasing slightly compared
                                                                                                                 with the previous year. The office space turn­
                                                                                                                 over on the office property market already
                                                                                                                 reached around 55,000 m2 in rentals alone
                                                                                                                 in the first six months of 2016. As far as prime
                                                                                                                 rents are concerned the € 15 threshold is
                                                                                                                 considered to be on the cards by the end of
                                                                                                                 the year or in the first six months of 2017.
The centrepiece of the new Ada- und Theodor-Lessing Volkshochschule at Am Hohen Ufer is a
covered inner courtyard. The foyer opens out towards the city and also towards the banks of the
river Leine – the ground floor will include the “anna leine cafe”.

Selected office property projects

 No.      Property                           Address                                   Investor, developer        Space m2 MF-G                 Status
                                                                                       or user                                                  Completion
 New build
    1     Deutsche Renten-                   Laatzen, Lange Weihe 2                    Deutsche Renten-           18,500 m2 office,             Q1/2015
          versicherung Braun-                                                          versicherung Braun-        owner-occupation
          schweig-Hannover                                                             schweig-Hannover
   2      Justice centre                     Leonhardtstraße 15                        FUBOS Beteiligungs         11,900 m2 office              Q3/2015
                                                                                       GmbH
   3      Deloitte                           Aegidientorplatz 2a                       Quantum Immobilien AG      10,500 m2 office              Q2/2015

   4      Volkshochschule                    Am Hohen Ufer 3                           State capital Hannover     7,000 m2 office/              Q3/2015
                                                                                                                  seminars
   5      Mecklenburgische                   Berkhusenstraße 150                       Mecklenburgische Ver-      5,600 m2 office,              Q1/2016
          Versicherung                                                                 sicherungs-Gesellschaft    of which 4,000 m    2

                                                                                       a.G.                       owner-occupation
   6      Viscom AG                          Carl-Buderus-Straße 6                     Visom AG                   4,675 m2 office,              Q2&/2016
                                                                                                                  owner-occupation

        30     PROPERTY MARKET REPORT 2016
No.   Property                  Address                        Investor, developer       Space m2 MF-G            Status
                                                               or user                                            Completion
 7    Neues Erdmann Haus        Große Packhofstraße 34/35      Development Partner AG    2,600 m retail
                                                                                                  2
                                                                                                                  Q1/2016
                                                               Aachener Grundvermögen    1,500 m2 office
                                                               Kapitalverwaltungs-
                                                               gesellschaft mbH
 8    ZAG Zeitarbeits-          Leo-Sympher-promenade 65/      ZAG Zeitarbeits-          4,140 m2 office          Q1/2015
      Gesellschaft              Edgar-Scheibe-Straße 1         Gesellschaft mbH          owner-occupation
                                                                                         560 m2 retail
 9    Gesellschaft für Bauen    Klagesmarkt/                   Gesellschaft für Bauen    4,000 m2 office          Q4/2016
      und Wohnen Hannover       Otto-Brenner-Straße            und Wohnen Hannover       owner-occupation
      mbH (GBH)                                                mbH (GBH)
 10   Coworking und Maker       Sandstraße 5                   Die Werke GmbH & Co. KG   2,000 m2 office/         Q3/2016
      Space Hafven                                             Edelstall GmbH            workshop owner-
                                                                                         occupation
 11   Office projects at the    Garbsen, Planetenring/         Rahlfs Immobilien GmbH    2,000 m2 office          Q4/2016
      Planetencenter            Auf dem Horst
 12   WABCO Engineering         Am Lindener Hafen 22           Projekt Octava GmbH       4,000 m2 office          Q1/2016
      Innovation Center
      (1. building phase)
 13   Community building        Adenauer-Allee 3               Zoo Hannover GmbH         1,000 m2 office owner-   Q3/2016
      Hannover Zoo                                                                       occupation
 14   Deutsche Bahn AG          Rundestraße/                   Savills                   25,500 m2 office         Q1/2018
                                Hamburger Allee (former ZOB)   KÖLBL KRUSE GmbH
 15   WABCO Engineering         Am Lindener Hafen 21           WABCO                     10,000 m2 office/        Q4/2018
      Innovation Center                                        Fahrzeugsysteme GmbH      laboratory owner-
      (2nd building phase)                                                               occupation
 16   Pod/be                    Podbielskistraße 382           STRABAG                   6,500 m2 office          Q1/2018
                                                               Real Estate GmbH
 17   Prinzenareal              Prinzenstrape 19–23            VGH Projekt GmbH & Co.    6,330 m2 office          Q3/2017
                                                               Prinzenareal KG
 18   MARQ Marstall Quarree     Am Marstall                    STRABAG Real Estate       2,700 m2 office          Q2/2017
                                                                                         900 m2 gastronomy/
                                                                                         retail
 19   Marstall West             Am Marstall                    HOCHTIEF Hamburg          750 m2 office            Q2/2017
                                                               GmbH, Gesellschaft
                                                               für Bauen und Wohnen
                                                               Hannover mbH (GBH)
20    Office and commercial     Vahrenwalder Straße/           LIST Retail Development   25,000 m2 GFA            Q4/2018
      building                  corner Philipsbornstraße       GmbH & Co. KG             GFAoffice/retail/hotel
                                                                                         service provider and
                                                                                         gastronomy
 21   Admin building Public     Schützenplatz 1                Union-boden GmbH          20,000 m2 office         Q4/2018
      Order, city of Hannover

                                                                                         OFFICE PROPERTY MARKET             31
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