Market survey. 2018/Q1-2 Hamburg. Commercial Investment. Hamburg Sylt Berlin

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1 Market survey Commercial Investment 2018/Q1-2 Hamburg Hamburg Sylt Berlin

2 Key Facts Investment 2.3bn 19 % Office: 60 % Office: 2.9 % Commercial: 2.9 % Logistics: 4.6 % +70 % year-on-year change -16 pp year-on-year change +7 pp year-on-year change -0.4 pp year-on-year change -0.4 pp year-on-year change -0.3 pp year-on-year change pp = percentage point Share of foreign investors Strongest asset class (Net) Prime yield Once again, Hamburg has produced a record result. In the first half of the year not only were four properties traded for more than 100m each, but seven commercial properties costing over 50m a piece also changed hands. For Hamburg that is an unusually large number of big-ticket trades. Axel Steinbrinker Managing director Half year ends with a record 2.3bn 56 transactions on the market for commercial properties were reported in Hamburg totalling 2.3bn at the close of the 1st half of Year on year, the result has soared by 70 %. Adding to the two sales for over 100m each in the 1st quarter, two more big transactions followed in the 2nd quarter. The first quarter sale of the Springer Quartier (Kaiser-Wilhelm-Strasse, City) was the biggest transaction in the 1st half year; a joint venture comprising the MOMENI Group and Black Horse Investments sold the property for some 400m to a company that manages professionals pensions. And in the 2nd quarter Blackstone sold the Sumatrakontor (Überseeallee 1-3, HafenCity) for around 190m to REAL I.S. The nextbiggest transaction in the 100m plus bracket was the sale of the mixed use property LaHoMa (Langenhorner Markt 1-18, Hamburg East) that was announced in the first quarter. Single transactions for over 100m thus comprised 43% of the total volume traded. Seven sales were noted in the 50 to 100m price category with a total value of 520m and 23% of the market. These transactions included the Courtyard by Marriott hotel, part of the Konrad development (Adenauerallee 52-56, St. Georg), which was purchased by the Zurich Group from the developer ABG. Office buildings were the most traded asset class, accounting for 60% of the trading volume and a total of 1.4bn. The biggest transactions, Springer Quartier and Sumatrakontor fell into this group. Hotel properties, which accounted for a share of 12 % ( 280m) were the second most popular type of asset. Four hotels were traded in the 1st quarter and an additional five changed hands in the 2nd quarter. Apart from the biggest trade, as already mentioned, the Courtyard by Marriott in the Konrad development, the hotel called Bridge Inn Hamburg /Q1-2 in bn 10-year average ( ): ca. 2.8bn Q /Q1-2 Page 2

3 Selected transactions 2018/Q1-2 Springer Quartier Kaiser-Wilhelm-Strasse City Office Investor: Pension funds Purchase price: ca. 400m Sumatrakontor Überseeallee 1-3 HafenCity Office Investor: REAL I.S. Purchase price: ca. 190m LaHoMa Langenhorner Markt 1-18 Hamburg East Mixed use Investor: confidential Purchase price: > 100m Deichtorcenter Oberbaumbrücke 1 City Office Investor: Westbrook Partners Purchase price: ca. 90m Courtyard by Marriott (in Konrad ) Adenauerallee St. Georg Hotel Investor: Zurich Purchase price: confidential Sumatrakontor Office Überseeallee 1-3 HafenCity ca. 190m 2018/Q1-2 in millions by size No. of transactions 2018/Q1-2 by asset class Retail % Industrial/ logistics Mixed use Hotel 14% % 18% % % 43% 978 over 100 Office (Billwerder Neuer Deich 2-4, Hamburg East) passed into new ownership. As part of a corporate purchase, the Bavarian hotel operator GS Star bought the hotel from BI Hamburg for a seven-figure amount. Although office blocks remain the favourite asset, investors are taking an increasing interest in Hamburg s hotel properties. That is partly due to the growing tourist trade, but also to the large number of interesting hotel developments. Mixed use properties squeezed into third place in the asset rankings, posting sales of 170m () and just ahead of retail properties with total sales of 150m (likewise ). In the first half year eight properties in the City sub-market changed hands for a total of 670m. This translates into a share of 29% of the market, allowing City to retain its status as most sought-after location. City South followed in second place with seven commercial properties sold and a 1 market share ( 400m). Trades here included Dieter Becken s sale of the firm s shareholding in the Berliner Bogen (Anckelmannsplatz 1) to the Körber Stiftung, a foundation, which is now the sole owner of this office building. The third-ranked sub-market was Hamburg East with a share of 15% ( 350m). 14 transactions in the east of Hamburg illustrate that very few owners of core properties in central locations are willing to sell their assets. Apart from one office property, all the commercial real estate traded in the Hamburg East sub-market belongs to other asset classes. 2nd quarter sales in Hamburg East included: Heidhorst 4 (Lohbrügge) specialist fund set up by Schroeders Real Estate, sold to Hahn Gruppe retail size category 11m to 25m Hammer Landstrasse 220 (Hamm) non-disclosure of parties involved mixed use size category 10m or less Neuer Höltigbaum 1-3 (Rahlstedt) sold to private investor by Goldbeck industrial/logistics property size category 10m or less Page 3

4 Prime yields /Q2 (Net) initial yield in % 6.30 Industrial/logistics 5.40 Office and commercial buildings (Office) 3.60 (Commercial buildings) 2018/Q2 by investor groups /Q2 Yields Prime yields continue to slide Prime yields on all asset classes fell further below the levels seen a year before. The prime net yield on offices and commercial buildings in Hamburg was below the 3 per cent mark, dropping 0.4 percentage points to 2.90 %. On logistics properties the prime net yield slipped from 4.90 to 4.60 %. Investors and vendors Vendors: Developers strongly represented With a share of 30% ( 680m) professional pension schemes and pension funds were the biggest group of buyers on the market for commercial real estate investments in Hamburg during the 1st half of Specialist funds followed in second place with a share of some 15 % ( 340m ). International buyers were noticeably less active than in the prior year, accounting for a share of 19% of the total traded ( 440m). 30% 30% Pension insurers/ pension funds As a group, project developers were easily the most dominant vendors, accounting for 48% of the market ( 1.1bn). With shares of 16% ( 360m) and 15% ( 350m) respectively, private equity/opportunity funds and open-end property funds were the only other investors taking more than ten per cent of the market. National players also predominated on the selling side of the market, with a 69% share of the volume traded ( 1.6bn). investors Insurance 8% 2018/Q2 by vendor groups 10% 15% Specialist funds Non-listed property Outlook Trading remains brisk Although the market is practically sold out, no downturn in trading is anticipated. Investors are still very willing to buy and enough building developments that have not yet been sold remain on the market. Developers are, moreover, actively seeking to buy existing properties and plots of land in order to begin new projects. It is therefore highly likely this year s total will exceed the 3.6bn traded last year and that 2018 will close on more than 4.0bn. Non-listed property investors 6% 3% 12% Open-end retail funds (real estate) 15% 48% Project developers equity funds/ opportunity funds 16% Page 4

5 Skilled consultancy Services und contacts From left to right: Sonja Ebert Anna Martens Tatjana Merger What can we do for you? An analysis of the property markets is an important part of the wide-ranging consultancy services offered by Grossmann & Berger. We would be pleased to be of assistance in your decision-making process and can draft an offer that is tailored to your specific requirements. Sonja Ebert MBA Real Estate Management Research Phone: +49 (0)40 / Mail: Anna Martens Diplom-Ingenieur Master of Urban Planning Research Phone: +49 (0)40 / Mail: Tatjana Merger Master of Science Urban Planning Research Phone: +49 (0)40 / Mail: Glossary Definitions, investment market : The transaction volume is the sum of the purchase prices of all commercial property sold in Hamburg during the period under review. The date of signing determines when a transaction is included in the statistics. Buy to let investments in residential properties are not included in the transaction volume. Asset class: A property is allocated to an asset class according to the predominant way in which space is used (at least 75%) when the contract is signed. Individual properties and portfolio transactions: An individual property transaction means the purchase of a building used for commercial purposes or of a piece of land for development. Portfolio transactions involve the purchase of at least two separate properties in different locations. Prime yield: The prime yield is the initial return attainable on a property that has been let on normal market terms (tenants with good credit ratings), has top quality structure and fit-out and stands in one of the very best locations. It is stated as the net initial yield in per cent, i.e. the ratio between the annual rental income less nonapportionable ancillary costs and the gross purchase price (net purchase price plus land acquisition tax, notary s fees and agency commission.) Photo credits: Cover: Springer Quartier, Kaiser-Wilhelm-Strasse MOMENI Gruppe, Page 2: Mohlenhof, Burchardstrasse 17 Jenner Egberts Fotografie, Page 3: Sumatrakontor, Überseealllee 1-3 Carsten Leuzinger We draw your attention to the fact that all statements made here are non-binding. Most of the information is based on third-party reports. The sole intention of this market survey is to provide general infomation for our clients. Grossmann & Berger GmbH Bleichenbrücke 9 (Bleichenhof) D Hamburg Phone: +49 (0)40 / Fax: +49 (0)40 / Managing directors: Andreas Rehberg, Holger Michaelis, Lars Seidel, Axel Steinbrinker Chairman of the supervisory board: Frank Brockmann Registered office Hamburg Registered at Hamburg no. B Page 5