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Property Prices Continue to Rise
Property prices in Germany’s major cities continue to rise. This was reported by DIE WELT and BÖRSEN ZEITUNG on 04.05.2016, and the HANDELSBLATT on 06.05.2016. According to a survey carried out by regional building societies (Landesbausparkassen), price growth has been maintained into 2016. The survey points to the construction of new apartments, which may have increased, but is still running behind demand, as one of the major drivers of continued price rises. In some parts of Munich prices have risen to around €800,000 for an 80-square-metre apartment. In particular, demand for housing is being fuelled by low interest rates, high employment and increased migration.
Housing Market Trends Upwards
As revealed by the IMMOBILIEN ZEITUNG on 06.05.2016, the number of rental apartments sold across Germany rose dramatically during 2015, reaching 333,000 according to figures released by the Federal Institute for Building, Urban Affairs and Spatial Research. This is more than 10% above the figure for 2014, and the highest volume reported since 2005. The figures cover all portfolio transactions and housing company acquisitions involving a minimum of 800 rental units.
Paradigm Shift for Project Developers
The new bulwiengesa “Project Development Market in German A Cities” study reveals that the amount of land being developed for residential and commercial developments during 2015 was almost unchanged against the previous year, wrote the IMMOBILIEN ZEITUNG on 06.05.2016. At the same time, project prices have increased by 9%. This is a result of the shortage of development land, and the higher prices for the land that is available, along with rising construction costs and ever-stricter legislative requirements. The methodology behind the study needs to be revised, admitted bulwiengesa. Until now, the study has concentrated on so-called trader developers. According to bulwiengesa. a new group, christened “investor developers” needs to be added. These are developers who become involved, via equity investments, at the early stages of projects in order to secure the early acquisition of the real estate. In doing so, they assume some of the development risks. This represents a paradigm shift for the industry. Whereas traditional developers only managed to generate moderate year-on-year growth, investor developers were responsible for the development of an additional 10 million square metres. The largest developments, in terms of square metre volumes, were recorded in Berlin, with 1.1 million square metres of office and 1.2 million square metres of residential space. In the newbuild office segment, investor developers are responsible for almost 50% of all new developments, except in Hamburg where they accounted for a good third of developments. Residential development continues to be dominated by trader developers. Germany’s biggest rental housing developer is the CG Gruppe.
Property is Crucial for Trusts and Foundations
A survey carried out by the specialist magazine Die Stiftung in collaboration with the fund company Wertgrund reveals that only 39% of the 288 surveyed trusts and foundations have so far directly invested their funds in real estate. These direct investments are primarily in rental housing, followed by office properties and care facilities. The study was the subject of a report appearing in the IMMOBILIEN ZEITUNG on 06.05.2016. Financial assets (77%), investment funds (48%), shares (43%) and bonds (42%) are all more common investment classes. However, the study covers a disproportionate number of newer trusts and foundations, many of which have only existed since 2001. Real estate is a particularly central asset class for an overwhelming number of older trusts and foundations. The picture is very different when indirect real estate investments are included. When calculated in this way, real estate plays a role for 60% of the survey’s respondents. Indirect investments are mainly targeted at public AIFs and closed-end funds, direct investments focus on apartment buildings and complexes, followed by offices and care facilities.
Bundesrat Demands Changes to new Building Contract Law
The Bundesrat, Germany’s Upper House, has demanded a raft of changes to Germany’s new Building Contracts Act, revealed the IMMOBILIEN ZEITUNG on 06.05.2016. Representatives of Germany’s federal states want to strengthen consumer protections to create a better balance between the interests of consumers and the construction industry. According to the new draft legislation, construction companies will have to provide a detailed description of the building project before any contracts are actually signed. In addition, both parties shall be required to agree on a binding completion date for the project. The Bundesrat was of the opinion that the draft allowed too much scope for construction companies to unilaterally amend project details. The Upper House has suggested that, in such cases, both parties should have a 30-day grace period to negotiate any changes and the apportionment of additional costs. Th Bundesrat also suggested that the warranty periods specified in project contracts were in need of clarification.
Special Depreciation Off the Agenda for Now
As reported by the IMMOBILIEN ZEITUNG on 06.05.2016, the German parliament’s Council of Elders unexpectedly removed the topic of special tax depreciation from its agenda on the previous Tuesday. Two days later, on Thursday, the Bundestag had been scheduled to decide upon the new legislation in support of housing construction that was intended to enable new special depreciations. No exact reasons were given for this turnaround. Supposedly, a finance committee expert hearing on Monday played a decisive role. Doubts were expressed regarding the effectiveness of special depreciations as a tool for promoting the construction of new and affordable housing. In addition, shortcomings in the draft legal text were criticised. The German Confederation of Skilled Crafts (Zentralverband des Deutschen Handwerks) and the German Property Foundation ZIA continue to support the new legislation and believe it can deliver a much-needed boost to housing construction. It is now not known when a new draft of the legislation will be available. As the topic of special depreciation is also missing from the agenda for next week’s parliamentary sessions, it will be early June before discussions can be resumed.
Berlin’s Property Market Remains Tense
Berlin is growing at a rate of 40,000 new inhabitants per year, revealed DIE WELT on 30.04.2016. By 2030, the number of people living within the city’s limits will total four million, according to official estimates released by Berlin’s Senate. Within a short period of time, the housing vacancy rate has tumbled to 1.5% and Berlin has descended into a housing shortage. Even the 15,000 new apartments completed last year have failed to make a dent in this development. And market regulation, in the form of the Mietpreisbremse rental price brake, has proved moderately successful at best. In the period between 2010 and 2015, bulwiengesa has recorded a rise in average advertised rents equivalent to almost 40%. Property prices in Berlin have risen by 41% since 2010. The average square metre price for a condominium in Berlin has now climbed to €4,100. As price growth is outpacing rental growth, investors have had to accept tightening yields. Despite this, construction is still underway on a massive scale, in particular the development of new, high-rise apartment buildings. By 2020 there will be 2,700 new apartments in high-rise buildings on the market. The German capital’s economic potential is the major factor in drawing and keeping people in the region. According to the City Index complied by the economic institute HWWI and the Berenberg Bank, Berlin is ranked second for 2016, just behind Munich. Berlin’s economic growth is having a growing impact on the price of office space in the city. “There aren’t that many options for anyone looking for more than 1,000 square metres of office space in Berlin-Mitte today,” said Steffen Pulvermacher of Savills.
Berlin Restricts Holiday Apartment Lettings
As reported by the FAZ on 02.05.2016, Berlin’s more stringent misuse of property regulations (Zweckentfremdungsverbot) came into force on May 1, 2016. This represents the Berlin Senate’s attempt to restrict the repeated letting of rental housing to tourists in order to return these apartments to the regular long-term housing market. Vacancy rates should also be reduced as a result, and the amount of space available for housing should be increased and overall rental price increases reduced as a result. The Zweckentfremdungsverbot legislation in Berlin is the strictest regulation of the provision of holiday apartments in any Germany city. The continued operation of rental apartments as holiday apartments will only now be possible in exceptional cases, reported the IMMOBILIEN ZEITUNG on 06.05.2016. According to research carried out by the regional broadcaster rbb, 1,000 apartments have already been converted back from holiday apartments to long-term rental apartments. Half of the former holiday apartments are situated in Berlin-Mitte, followed by Friedrichshain-Kreuzberg (400) and Pankow (100).
More Building Permits to be Issued in Hamburg
Authorities in Hamburg have announced that they will soon be able to issue 10,000 building permits per year, reported the IMMOBILIEN ZEITUNG on 06.05.2016. Hamburg’s Senator for Urban Development, Dorothee Stapelfeldt, unveiled the new target during the specialised “Housing in Hamburg 2030″ conference. The target for apartment building permits will thereby be lifted from 6,000 to 10,000 per year. The number of publicly funded apartments is also being increased, from 2,000 to 3,000. The conference saw 200 specially-invited experts hold four panel discussions on topics covering the potential for expanding housing developments from the 1950s, 1960s and 1970s, inner-city densification, the more effective connection of the city’s eastern districts and the plans to expand housing provision on the outskirts of the city.
Western Munich Becomes Attractive for Logistics
As the IMMOBILIEN ZEITUNG reported in its 06.05.2016 edition, a review of the logistic market in Munich during Q1 2016 published by BNPPRE shows take-up of almost 60,000 square metres. This is the highest figure since Q1 2010 and represents an increase of 60% in relation to the same preceding year quarter. For the first time since Q4 2014, two large-scale leases were signed, totalling more than 12,000 square metres. JLL reports that warehouse and logistic real estate worth €70 million was traded in and around Munich during Q1 2016. The prime yield held steady at 5.25%. Logistic space is in desperately short supply. For the best objects in the 5,000 square metre range and above, tenants in Munich-East are now required to €6.75 per square. Over the last few years, both users and investors have discovered the city’s western districts, which offer better value than eastern districts, as an attractive warehouse and logistics location. Beos also forecasts increased westwards relocation. Katja Rüdiger from Beos is convinced that the shortage of space will continue to extend further across the region.
Hessen Demands Cut to Property Acquisition Tax
The IMMOBILIEN ZEITUNG reported on 06.05.2016 that Haus & Grund Hessen called for cuts to land acquisition taxes at its annual congress. Hesse’s land acquisition tax, the German equivalent of stamp duty, is currently set at 6%, whereas Bavaria only charges 3.5%. According to Haus & Grund. Such a high property tax is damaging to home-buyers, tenants and the attractiveness of the state of Hesse. In comparison, more properties were bought and sold in Bavaria last year than in any other federal state. One of the major reasons for this is Bavaria’s comparably low property acquisition tax rate. Haus & Grund also believes that a tax cut would provide substantial relief to the construction of new housing in the state’s big metropolitan regions and university towns.
Offices and Sopping Centres in Demand Even Before Completion
The HANDELSBLATT on 06.05.2016 reported that an ever-growing number of office and retail properties are being bought before they are even completed. The newspaper identifies a clear trend since 2013 in the readiness of investors, included more conservative funds and insurers, to accept a greater share of the risks of real estate development. This is driven by a massive shortage of supply. CBRE’s Jan Linsin confirms, “a growing interest in project developments.” The only negative consequence of this trend is that the prices for development land will be pushed ever higher.
More Retail Leases
According to JLL, 254 leases were agreed for inner-city retail properties during Q1 2016, reported the IMMOBILIEN ZEITUNG on 06.05.2016. These deals involved a total of 121,200 square metres. This was 10% more than in the same quarter of the prior year. JLL’s results contradict the feeling among many market observers that the year had got off to a slow start. This impression could well have been the result of a noticeably weak start to the year in a number of Germany ten biggest cities. Compared with the previous year’s first quarter, their share accounted for three percent less space, falling to 30% of all leases.
Strong Q1 for Frankfurt’s Logistic Market
According to the IMMOBILIEN ZEITUNG on 06.05.2106, Frankfurt’s market for warehouse and logistic space delivered 50% higher take-up in Q1 2016 than in the first quarter of last year. CBRE reported that 170,500 square metres were taken up by tenants and owner-occupiers, NAI apollo published a higher assessment, of 198,000 square metres. CBRE’s figures are 39% above the five-year average. A number of large-scale leases were responsible for the big jump in take-up, accounting for 85% of leases. According to CBRE, half of the individual deals involved spaces larger than 5,000 square metres. CBRE’s figures reported an unchanged peak rent of €6.20 per square metre. Frankfurt is Germany’s second-largest logistic centre, behind Munich.
German Logistic Real Estate Experiences Unprecedented Demand
As the FAZ revealed on 12.05.2016, German warehouse and logistic space is currently subject to an unprecedented level of demand. According to figures published by CBRE, around €4 billion was pumped into the sector by overseas investors in 2015, an almost eightfold increase over 2009. 13% of all commercial property transactions now involve logistic real estate. Although increased demand has led to yield compression in the sector, logistic real estate still generates returns of around 5%, which is higher than the yields available for office or shopping centres. Demand is underpinned by sustainably high domestic consumer demand. Experts such as CBRE’s Rainer Koepke are optimistically cautious, forecasting that demand for logistic space will remain high. Koepke that 2016 will see a similar volume of transactions, although this is largely due to a lack of supply limiting the market. The FAZ continues its report by highlighting an evolution within the logistic industry. Logistic providers need to move closer to city centres in order to speed up distribution and deliveries if they are to satisfy increasing demand. The latest generation of logistic facilities have to be centrally located. This poses problems as many cities, especially those with over-heated housing markets, are reluctant to make land available for new logistic developments when it is so desperately needed for housing.
Rent Restrictions are Useless
It is almost a full year since the Mietpreisbremse was introduced and it has proven to be all but useless, wrote DIE WELT on 11.05.2016. Irrespective of caps and restrictions, rental prices are still rising. In many localities, asking rents are already breaching legal limits. As a result, Berlin’s Senate has announced that it intends to tighten its rental price brake. Not enough tenants are exercising their legal rights to lower rents. A number of landlords have also been identified as having arbitrarily setting rents to formally remain within the limits set by the Mietpreisbremse. Because housing supply is running so short, many tenants feel forced to reluctantly accept these over-priced rents. According to Germany’s Tenant’s Union, this is also a direct result of legal uncertainties. As long as tenants do not know how much a previous tenant was paying, the rental price brake is going to remain ineffective, said the Tenant’s Union. Haus & Grund doesn’t think much of any tightening of rent controls. A rental price brake should not be used to provide housing in sough-after neighbourhoods for lower-income households. Haus & Grund emphasises the fact that affordable housing can pnly be provided by lowering construction costs, not via rent restrictions.
SPD Blocks Special Depreciation
On 13.05.2016, the SÜDDEUTSCHE ZEITUNG revealed that plans for special depreciations for newbuild rental apartments were blocked by the SPD before they could even be voted on by the parliamentary finance committee. The federal government had announced its intention to provide incentives for housing developers in order to boost the construction of new affordable housing in areas with housing shortages. However, the SPD was afraid that the new incentives would ultimately be of most benefit to more expensive developments. The SPD stressed that tax breaks should only apply if certain conditions are met. The German Institute for Economic Research (DIW) issued a pessimistic assessment, revealing that it hardly expects any significant boost to rental housing as a result, and next to no impact on the affordable housing sector. Other critics of special depreciation point to the fact that tax-exempt housing associations and municipal housing companies would be unable to take advantage of the tax breaks. The German Association of Cities and the GdW, along with Germany’s Bundesrat, have expressed a preference for direct investments, which they believe could be more effectively targeted.
Estate Agents Call for More Practical Due Diligence Laws
According to a study carried out by Universität Halle on behalf of the Federal Industry of Finance, Germany’s property industry is growing at between a minimum of €5 and €15 billion per year. This was reported by the IMMOBILIEN ZEITUNG on 12.05.2016. The figure is an extrapolation based on enquiries registered by estate agents during the course of their mandatory due diligence checks into the identities of their customers. According to the article, this involves an inordinate of work, while the intense questioning also has a negative impact on the relationship between agents and their customers. Agents feel overburdened and left alone to deal with mountains of official red tape. The burden is exacerbated by the fact estate agents and real estate brokers do not have access to the same type of technical systems used by banks to establish their customers’ identities. The IVD is therefore calling for new, and in particular more practical, due diligence legislation. The IVD believes that current legislation, requiring background checks into the identity of every single would-be landlord, buyer or tenant, are nonsensical and far-too time-consuming. In practice, agents and brokers are forced to establish the identify of people who are simply carrying out research and with whom no sale or lease will ever be agreed. Would-be customers who consult with a number of agents end up have their identities checked by every single one. “Estate agents and brokers incur substantial costs as a result, totalling up to €1 billion per year,” said Rudolf Koch from ZIA. Big international brokerages have things much easier as they have central legal departments and compliance officer to take care of everything. The importance of this issue is clearly demonstrated by the fact that, irrespective of regular competition, agents and brokers are joining together to deal with all of this red tape. This is why the six biggest commercial real estate brokers in Germany (JLL, CBRE, BNP Paribas Real Estate, Cushman & Wakefield, Colliers International and Savills) founded a working group, the AK Legal & Compliance Real Estate Initiative in 2014. This has produced joint guidelines and a questionnaire, both of which are designed to satisfy anti-money laundering requirements. “Customers who make no or insufficient disclosures are subject to deeper checks,” explained Anne Lindner of CBRE: “As a last resort, we will even refer cases to the public prosecutor’s office.” CBRE has comprehensive due diligence processes, which are not only applied by its own brokers as they advise on sales and acquisitions, but also to all business partners the company has dealings with. CBRE checks and determines the identity of any business partner on the basis of publicly available disclosures, such as those made in commercial or trade registers, along with those contained in privately-held databases. CBRE also requests that its potential partners provide copies of relevant documents, such as photographic IDs and their company’s structural outlines.
Number of Home-Owners Stagnates
As reported by the SÜDDEUTSCHE ZEITUNG on 13.05.2016, an analysis published by the German Institute for Economic Research (DIW) has shown that home-ownership rates stagnated between 2010 and 2014, holding steady at around 45%, despite record low interest rates and the growing importance of property as a retirement investment. The analysis is based on figures provided by Socio-Economic Panel (SOEP). The general stagnation does not apply equally to all age groups. The home-ownership ration for those in the 65-74 age group actually increased by 2.4% to 58.3%. Dividing buyers into five groups according to household income, the group with the highest income has seen home-ownership increase from 65.9% to 69.1%, whereas the other groups report almost no changes during the same period. The lowest income group finances 17.4% of the cost of a home with equity. As a lack of equity has been identified as the major factor holding back home-ownership, the IW has suggested that lower-income households could be targeted with support, for example by reducing, or even waiving, property acquisition taxes. The state could also provide loans to make up for equity shortfalls, or act as ultimate guarantor for loans taken out via banks and mortgage providers. As well as providing additional support, incentives that encourage speedy repayment, and longer fixe-interest terms, are also needed, according to the IW.
Climate Protection Has to Make Economic Sense
The IMMOBILIEN ZEITUNG reported on 12.05.2016 that regulations to decrease the energy requirements of buildings in Germany through to 2050 are so strict that they can only be met by the exclusive use of energy from renewable sources. During 2014, emissions from buildings had already been reduced to 119 million tonnes of CO2. In accordance with the “Climate Protection 2050″ plan recently unveiled by the Federal Ministry of the Environment, this figure should be reduced to annual emissions of not more than 80 million tonnes by 2030. It is clear that, in order to deliver a climate neutral stock of buildings, investment in energy efficiency modernisations needs to increase considerably. At the same time, the real estate industry is intensifying its calls for the repeal of regulations that have added considerably to the cost of construction and modernisations. In the opinion of Andreas Mattner from ZIA, climate protection measures should always make economic sense. Rather than supporting the plans from the Ministry, ZIA has called for an expansion of subsidised KfW support for non-residential buildings. In contrast, the Ministry would like to balance increased costs with higher subsidies. By 2030 at the latest, and only in exceptional cases, will buildings that have undergone energy-efficiency refurbishments be permitted to exceed newbuild standards by a maximum of 40%. The real estate industry will be affected by the impact of cuts to feed-in tariffs for electricity generated by photo-voltaic modules, which are set to decrease progressively over the next few years.
Property Prices in Munich Continue to Rise
On 12.05.2016, the IMMOBILIEN ZEITUNG reported on figures released by the city’s Committee of Real Estate Valuation Experts, which show that investments in real estate in Munich rose by 20% to €12.6 billion last year. Forecasts for 2016 see this upward trend continuing. Alongside overall investment volumes, prices also experienced marked growth. Prices for development land zoned for housing added around 12% in 2015. A plot of land in a good location now costs would-be buyers 20% more than 12 months earlier. Prices for land in the regions around Munich also rose significantly. The cost of land for a multi-family house had risen to between €2,000 and €3,000 per square metre by the end of 2015. Overall, the almost 12,850 transactions represented a moderate decrease in comparison with 2014. But this was largely due to a shortage of land and properties coming to market. Despite demand running at record levels, 22% fewer multi-family houses were sold than during the preceding year. In money terms, the figure was only 10% lower, proving just how dynamic price growth is in Munich. Furthermore, the IMMOBILIEN ZEITUNG reported that Munich urgently needs to create space for new housing. At the third regional housing conference, such calls were not turned into concrete actions. It has nevertheless become clear that population growth can only be catered for with the help of the municipalities surrounding Munich. Increasing housing density with Munich’s borders will not be enough to solve the city’s housing problems on its own. As reported, the major problem here is the shortage of available land.
GERMAN REAL ESTATE NEWS
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Feri Real Estate Market Rating
The Feri Real Estate Market Rating provides a forward-looking assessment of potentials and risks for investment return on regional real estate markets. Ratings are based on detailed econometric forecasts of regional real estate markets including regional economic development. The rating currently includes more than 150 cities in Europe, in the United States and in Asia.
In this issue:
Real Estate Market Rating for Lyon
Lyon is next to Paris and Marseille one of the most important centers for trade, transport and services of France. Lyon’s central geographic location and key transport networks make the city one of Europe’s most important transport junctions. The new freight (and possibly passenger) railway tunnel between Lyon and Turin, currently under construction, should enhance the economic importance of both cities. With four universities and a large number of research centers, Lyon provides a high-quality environment for training and research activities. The region’s corporate configuration includes a number of top-ranking firms. These generally superior underlying conditions have enabled Lyon to achieve a high ranking as one of the more growth-intensive regions in France.
Feri rates Lyon as a business location “A”, which is upgraded to the 1st quarter 2015. It translates into “high potential, low risk”. With this rating result the city ranks 19th in the comparison of European Metropolises.
Office Real Estate
Regarding office real estate Feri rates Lyon “C”, which is unchanged compared to the 1st quarter 2015. The city ranks 3rd among office locations of European Metropolises. Feri awards the office top locations “C” and the side locations “C”
Lyon’s office market is one of the smallest among metropolitan centers in Europe. While it is relatively cheap in relation to other European markets, it is the second most expensive market in France. Since the mid-1990 the market has shown a positive development. During the crisis, for example during the past two years, Lyon’s market was more stable than many other metropolitan markets in Europe. This is due to supply, which isn’t very volatile. Considering demand, the market is well diversified. Beside typical service sectors, there are several centers of research and development as part of the manufacturing industry.
Since the beginning of the decade rental prices on the Lyon office market are moving sideways as a result of a continuously weak labor market. The development in the years to come will perform somewhat below the expected long-term growth trend of 2.2% per year. Construction activity will gain only moderate speed, which should support rental growth. Due to the increasingly positive development on the demand side, rental growth will continue to be positive. However rent increases will be more moderate than in the first half of the last decade.
Office yields in Lyon have decreased only slightly since 2011. Together with stagnant rental prices the development of total returns thus remained below average. During the years before the financial crisis the development of prices was more or less equally caused by the development of rents and by the compression of rental yields. In recent years, however, decreasing rental yields were the driving force of the overall performance of real estate investments. Investors reward the long-term economic strength of Lyon, which is the most important French investment center next to Paris. In the longer run cap rates are expected to soften slightly, due to increasing interest rate expectations. As a result, price development will be muted.
Over the recent years the compression of rental yields were caused by an increased liquidity on international financial markets, modernization of office stock, an increasing transparency on the market, and a favorable economic development. Because of current economic uncertainties it is unlikely, that decreasing rental yields will continue over the years to come. Considering potentials and risks we expect fair rental yields of 6.2% for the coming years. Thus we currently consider the market at almost fair value.
Retail Real Estate
In the comparison of European Metropolises regarding retail real estate Lyon placed 24th with a rating result of “B”, which is unchanged compared to the 1st quarter 2015. Feri awards the retail top locations “C” and the side locations “A”.
Lyon is one of the largest and most attractive retail locations in France next to Paris, where all international renowned retailers and brands are represented. The ensuing improvement in consumer confidence drove a trend of rising retail rents in Lyon which began in 1997 and lasted well into the last decade, with only a short break at the turn of the century and after the financial crisis. The negative effect of the current economic downturn, which started in 2012, has widely worn off and rental markets have stabilized. Top locations such as Rue de la République, Rue Edouard Herriot and Rue Emile Zola benefit especially from this recovery process. In the years to come, economic performance will lead to further price increases. In the long run, the market will turn to a moderate growth path.
Residential Real Estate
When it comes to residential real estate, Lyon placed 23th among European Metropolises with a rating result of “B”, upgraded to the 1st quarter 2015.
Lyon’s rental housing market underwent a consolidation process in the mid-1990s, but when the subsequent economic upswing boosted demand for apartments, rents rose. The expansion of a number of important multinational firms into Lyon, and the coinciding emergence of some dynamic start-up companies, enhanced demand. In general, residential space in the Lyon area has become much more sought after – this pertains particularly to larger, nicer apartments, as well as semi-detached or detached family houses. In recent years, rents for both new and existing apartments showed steady yearly increases. After a short stagnation, due to the financial crisis and the most recent economic downturn, rents are expected to rise again for the upcoming years.
The attractiveness of Lyon as a competitive economic center leads for some time to an increasing influx of high-tech companies. This led to the fact that many mid-level and senior executives moved to the area, which induced a trend of impressively rising prices. Demand is strongest in higherend segments: detached and semi-detached family houses, and large condominiums. This process was interrupted only by the financial crisis and the economic downturn since 2012. After decreasing prices in the course of the economic downturn, markets are stabilizing now. Demand supporting factors are for some time the high positive net migration and the continued historically low mortgage rates. In the years to come, rising prices are expected. Yet the market is unlikely to show the same dynamism as in recent years.
Contact:
Franz Wolfgang Kubatzki, wolfgang.kubatzki@feri.de, phone +49 (0) 6172 916-38 11
Feri Real Estate Market Rating
The “Feri Real Estate Market Ratings” issued by Feri appraise the value potential of regional real estate markets, taking into account the attendant risks. The methodological approach underlying Feri Real Estate Market Ratings is rooted in the empirical observation that the performance of a given real estate market depends essentially on the economic power of the respective city. Before this background, Feri develops a separate prognostic model for each city, mapping the regional economy as a system of independent equations.
For the purpose of compiling its ratings, Feri uses a detailed regional forecast to analyse the socio-economic development, the economic structure, as well as the ten-year indicators specific to the respective real estate market. The forecast findings are evaluated using a mathematical rating algorithm.
The objective behind the ratings is to make the markets more transparent, and thereby to support pending investment decisions of private and institutional investors. Feri ratings are updated on a quarterly basis, and are currently available for 67 German cities and counties, as well as for 60 European cities outside Germany, and 45 cities in the United States.
Feri EuroRating Services AG
Feri EuroRating Services AG is a leading European rating agency, specializing in the analysis and valuation of investment markets and investment products. Feri is also a major economic research and forecasting institute. At present, Feri employs a staff of around 60 professionals to manage about 1000 customer accounts. The company is headquartered in Bad Homburg near Frankfurt, Germany, with sales offices in the United Kingdom, France, and the United States. In addition to its global industry analyses and ratings of companies, countries, capital and real estate markets, Feri regularly appraises the investment funds registered in each country. Annual market surveys on institutional and mutual funds as well as on closed-end participations provide an overview of the perspectives and actions of institutional investors. In the real estate sector, Feri conducts global real estate research, performs real estate valuations, and provides ratings of companies, REITs, real estate, real estate portfolios, and indirect real estate investments (open-end and closed-end real estate funds).
For more information on Feri EuroRating Services, please go to http://fer.feri.de/en/about-us/portrait/.
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