2008-10-06

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Germany |

On the Upswing: The Real Estate Market of the Berlin/Potsdam Metropolitan Region

Berlin: * The Berlin Sales Offices of HOCHTIEF Projektentwicklung GmbH and TLG IMMOBILIEN GmbH Present the 2nd Project Development Survey on Occasion of the Expo Real Trade Fair for Commercial Real Estate in Munich * Total Volume of Completions Shows 25% Increase Compared to Last Year * High-Priced Residential Real Estate Dominates Market for Project Developments * Vacancy Quota is Falling while Top Rents are Rising

The real estate market in the Berlin/Potsdam metropolitan region continues to flourish. Notwithstanding the crisis of the financial market, the total volume of projects either completed, under construction, or planned through 2012 has pushed up to 5 million m². Compared to last year’s survey, the 2008 figure equals an increase by about 1 million m². This is the finding of a survey that the BulwienGesa AG research institute compiled for the second year in a row on behalf of the Berlin sales offices of HOCHTIEF Projektentwicklung GmbH and TLG IMMOBILIEN GmbH. The survey was presented today on occasion of the Expo Real trade fair in Munich. In addition to its analysis of current developments in the real estate segments of office, retail, and residential, the survey also focused on forecasts regarding the prospects of the real estate economy in the cities of Berlin and Potsdam through 2012.

“Despite the autumnal mood on the international loan markets, Berlin’s real estate market is experiencing springtime,” Carsten Sellschopf, head of the sales office of HOCHTIEF Projekt¬entwicklung, summarises the survey, which is titled “The Market for Project Developments in the Berlin/Potsdam Metropolitan Region, 2008." The volume of buildings completed in the office, retail, residential, and miscellaneous segments alone – totalling 804,000 square metres – showed a 25% increase over last year in 2008. This translates into a monetary value of approximately 1.5 billion Euros. The development of residential real estate projects under construction was particularly dynamic, with the segment reporting twice the floor space. “Traditionally a town of tenants, Berlin’s housing market is showing an upturn – especially in the high-priced and luxury segments,” Sellschopf observed while noting an ongoing differentiation of supply and demand. “Before the background of the economic development, the industry will continue to focus on top projects in prime locations.”

“The project development market of the Berlin/Potsdam metropolitan region has gained in momentum during the past twelve months; the upswing continues. Aside from an increase in the number of development projects, the declining vacancy quota and the rising top rents reflect his development,” added Jörg R. Lammersen, head of the sales office of TLG IMMOBILIEN GmbH. “Notwithstanding the positive stats, it remains to be seen just what kind of long-term ramifications the turbulences on the international financial markets will have on the non-monetary markets in general and on Berlin’s real estate market in particular.”

Andreas Schulten, member of the board of BulwienGesa AG, draws attention to the structural shifts among project developers: “The share of regional project developers has increased by more than 10% at the expense of international players, and equals about 32% at present. This illustrates that Berlin is not only developing into a modern location with a broad-based service and development character, but has plausibly positioned itself as a real estate location, too.”

While downtown retail properties under construction dominated the 2007 survey with 30%, their share dropped to 13.6% in 2008, which equals a total of 382,500 m² in completed lettable floor space. This is the result of a shift toward residential projects, which at 42.7% or 530,334 m² account for nearly half of the entire market. Floor space in planning was dominated, this year as last year, by office developments, whose share equalled 44.8% or about 1 million m² in lettable space. Remarkable about the office market is that it shows an increasing number of small-scale project developers, whereas the big players lost some of their share in the overall volume.

Between them, the two cities covered by the survey continue to show marked differences. Potsdam still accounts for less than 10% of the overall project development volume. Simultaneously, its project developments are characterised by a radically different sector breakdown. Although the residential segment currently still represents about 90% of the floor space under construction, its share in the planning segment will drop down to 42.4% by 2012. Inversely, the realisation of retail space will radically increase its share and eventually reach 44.1%. Office real estate projects, however, will remain negligible both short- and long-term.

Katrin Wagenaar for TLG IMMOBILIEN GmbH / Hochtief Projektentwicklung GmbH - 2008-10-06

Announcement by TLG IMMOBILIEN GmbH / Hochtief Projektentwicklung GmbH. The originator takes responsibility for its content.