investing in germany 2011

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What on earth is up with Germany?Usually Europe’s prime curmudgeonand top penny-pincher, the country’ssuddenly in a conspicuously buoy-ant mood – with good reason.Employment has remained stabledespite the financial crisis, andgrowth prospects are already positive again. Many investors areplacing their hopes in Europe’s former economic bore.

The German Economic Minister’ssmile has got broader and broaderevery time he’s talked about the domestic economy over the past few

months. “People admire us Germansfor how quickly we’ve emerged fromthe crisis,” Rainer Brüderle told jour -nalists from Spiegel magazine at theWorld Economic Forum in Davos.“There’s huge international interest inhow we managed it.”

And the German real estate market isenjoying re-awakened internationalinterest too. No matter which investorsurveys you consult – by Ernst & Young,KPMG or Union Investment – they allcome to the same conclusion: Germanywill get even more attractive comparedto other core European markets in2011. Prices for A1 properties are set to

rise, as is the transaction volume in thecommercial and residential real estatesectors. But what lies behind this massoutbreak of optimism?

“Investors like to go where economicgrowth is highest at any givenmoment,” explains Stefan Wundrak,Research Manager Europe at Hender-son Global Investors in London. “Inthe past that meant Spain and Ireland,and now it’s Scandinavia and Ger -many.” That trend could take a turn -around if growth rates shoot upelsewhere in Europe. “But that’s not onthe agenda anywhere right now.”

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The German Wunderkind

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Economists predict upwardstrend for Germany.

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CONTINUED FROM PAGE 1

The German wunderkind

ANZEIGE

“Germany pro-duces thingspeople reallywant to have.”

Stefan Wundrak

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First and foremost, it’s German consumers who are firing investors’imagination. While the sales growthexpected in Germany’s retail sector forthe coming years is hardly gigantic inreal terms at approx. 1.7% p.a., it’s looking pretty good in comparison toprevious years (0%). Deutsche Bankresearchers anticipate an upward curvefor private consumption, by 1.25% inreal terms – a result of constantemployment growth and a fall in theunemployment rate “towards 7%”.That’s a model labour market develop-ment in comparison to the rest ofEurope, say the bank’s economists.

So it comes as no surprise that retailproperties in particular are putting asparkle in investors’ eyes. This year’ssurvey by the European fund associ -ation Inrev saw German retail propertyovertake the previously dominant British retail estates in the race formost popular target among fund inves -tors. Compared to the past two yearsthat was a “dramatic change in percep-tion,” Inrev comments. The sector didn’t even make the top ten in 2010.

“Investors have faith in the solid eco-nomic basis of German growth pro -spects,” says Henderson researcherWundrak. “Germany produces thingspeople really want to have.” The Ger-man labour market has been criticisedfor years for its under-developed ser -vice sector in comparison to Britain,“and now England is mourning havinggiven up its production industry with-out a fight – along with the jobs it pro-vided.”

Housing market on the up

Fear of inflation and low interestrates have also given an unexpectedboost to the German market for resi-dential properties to buy. Whereas house prices doubled in Spain and Britain over the ten years up to thefinancial crisis, Germany suffered stag -nation. But suddenly market players aretalking about bidding battles overapartments in the economically stablecities, and demand for rented multi-party buildings in good locations isnow outstripping supply. Estate agentscelebrated two-digit turnover growthrates on their 2010 books. And they’resure of rising purchase prices and newtenancy contracts in the current yeartoo (see page 14).

While there’s plenty of scope for price rises on the housing front, levelsfor high-quality commercial propertiesin Germany seem to have reached aplateau (see page 13). According toBNP Paribas Real Estate, top offices inFrankfurt and Munich were on offer fornet initial yields of less than 5% at the

end of 2010. That puts them almost ona level with Paris (4.75%).

Stefan Wundrak recommends inves -tors concentrate on office space wheretenancy contracts are due to expire within 24 months, or seek out refur-bishments and other projects. “Thatway, you can profit from rising rents inthe future.” His tip is to go for retailproperties where the frequency can beraised by attracting new, expansive store concepts: “Then even an initialnet yield of only 5% can turn into agood growth story.”

Watch out for a bubble

But Andreas Schulten, Member ofthe Board at the leading real estatemarket researcher BulwienGesa, warnsinvestors not go overboard with theiroptimism. Markets, he says, “tend toreact emotionally.” And emotions arecurrently caught up in the euphoricmood of the past few months. Schul-ten therefore doesn’t want prices toclimb any further. When agents startinvoking ROS rates of 4.5% for a spec -ulative new Frankfurt office tower, as

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Export and investments on the up rumour has it for the 60,000-sqm pro-ject TaunusTor, that’s the end of theline for him. “I think the price level forGerman prime properties is right ontarget at the moment. But if Germanygets more popular and investmentpressure increases, I fear the beginningof a new bubble.”

There are similar clouds on the hori-zon for Frank Billand, Managing Direc-tor of the property fund manager Union Investment Real Estate. For theGerman open-ended real estate fund, aheavyweight institutional investor withimpressive purchasing power, foreigninvestments will become less attractivefrom 2013 because of new legal para-meters. That will mean investing morecapital at home. “Competition on theGerman market will grow,” predictsBilland. “And that could lead to pricerises again.”

Henderson researcher Wundrakwon’t rule out new price bubbles forGerman office and retail properties either. “If interest rates stay at this lowlevel another year, we may well faceoverheating.” (mol)

3. March 2011

MICHAEL HEISE

Reforms have caused theMichael Heise predicts good years tocome for Germany. For the foresee -able future, Chief Economist expectsan annual growth rate of 2%. Accord ing to him, the inflation rateis going to remain low and unem-ployment is bound to decrease. Asfar as real estate investments areconcerned, he believes there’s apotential for higher rents and prices.Heise says there’s no miracle in -volved, although people across theworld are surprised to receive suchpositive news from Germany.

Immobilien Zeitung: Mr Heise, youbelieve the euphoria about strongeconomic growth and morejobs in Germany isexaggerated. Why?

Michael Heise:Germany has cer-tainly becomemore competitive –e c o n o m i c a l l y speak ing, thecountry is inbetter shapeand hase m e r g e dquite un -s c a t h e dafter thef i n a n c i a l crisis. Butthis is far from being a miracle to causeeuphoria. The current recovery is onlya bounce after the slump in 2009. Atthe bottom line, Germany isn’t actual-ly beating many other nations when itcomes to economic growth. It’s justthat the slump in Germany was muchdeeper than in, say, France. Similarly,the upwards trend is stronger in Ger-many now, too.

IZ: Some 3.6% of economic growth in2010, and there’s a prospect of less than 3mn unemployed – these are the best figureswe’ve had since the early 1990s!

Heise: Okay. The present admirationfor Germany is also due to the low growth rates we’d been used to for thepreceding 15 years. Abroad, we’veoften been perceived as not very com-petitive and unwilling to undertakereforms. Consequently, it comes as abit as a surprise for some observers toreceive so much positive news fromGermany now – Germany, of all places.

Heise praises the grand coalition’s crisis management

IZ: But you aren’t surprised, are you?Heise: There are absolutely factual

reasons for this upwards trend. Thelabour market and welfare statereforms of the Agenda 2010 projectunder the former Chancellor GerhardSchröder made a major difference. These reforms improved the shockabsorption capacity of the Germanlabour market to a large extent. Fur -thermore, the bargaining process haschanged. National agreements for en -

tire industries have been largely re -placed by individual contracts betweencompanies and their workforce. Thishas made the German economy moreflexible and resilient. And even theGrand Coalition (translator’s note: thecoalition between the ChristianDemocrats and the Social Democrats,in government until late 2009, withAngela Merkel as Chancellor and PeerSteinbrück as Minister for Finance)contributed to today’s good news withits crisis management.

Short-time work schemesimpress even the US

IZ: Are you referring to the extension ofshort-time work (translator’s note: subsi -dised schemes to reduce working hours butkeep people in gainful employment)?

Heise: I believe short-time work hasa proven track record. At the begin-ning, I myself doubted its use. But ithas worked, and it’s received muchattention abroad, even in the US. Andrightly so.

IZ: The crisis was overcome with highnew public debt. Is the upwards trend justa boom on tick?

Heise: As a matter of fact, highpublic debt does entail risks but I thinkwe can contain the amount owed. Itsratio to the gross domestic product iswhat counts. I believe it’s quite pos -sible to push accumulated public debtdown from 80% of the GDP towards70% in the next years.

(Continued on page 5)

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Michael Heise, Allianz Chief Economist Photo: Allianz

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boom, not miracles!IZ: The Maastricht criteria stipulate

60% as a default target.Heise: True, and it’s realistic. All we

have to do is keep the increase inpublic spending one to two percentagepoints below GDP growth. If GDP grows by at least 4% p.a., adjusted forinflation, we’ll be on the right track.

IZ: The Merkel/Steinbrück governmentduo once assumed that the 2006/2007economic boom would continue forever –and were wrong. What indicates that weare really going to see a few good yearsmore this time?

Heise: For the next five years, I’d saythe economy will grow by 2% p.a. onaverage. Maybe even slightly more. Thiswill suffice to push unemploymentrates further down. On that note, wecan’t be sure how the emerging mar-kets will develop, especially China andIndia, and if the oil price will gothrough the roof. Many circumstances,however, indicate that the global econ -omy is set to stay on its growth course.Which will also benefit Germany.

IZ: What are the implications for inves -tors interested in German real estate?

Heise: They can expect higher rentsand prices – not least because the morepositive image Germany enjoys hasalready led to more foreign investmentin this country.

IZ: But what would the benefit be for areal estate investor if the manufacturingsector invests in equipment again and ifthat is the main growth driver?

Heise: The demand for space is setto rise. Many service providers andretailers intend to expand. As for ser -vice providers, I don’t just mean indus -tries that are very close to the actualeconomy but also players in the fieldsof leisure, culture, education andhealthcare. During the crisis, theseindustries have remained largely stable.They’ll create a fair share of jobs.

IZ: The German population is predictedto shrink drastically. Not good news forreal estate buyers!

Heise: It’s going to take some time

until the demographic trend willimpact on the real estate sector. For thetime being, there’s still a high demandfor new housing by Germans who canafford to live in larger homes, and Iexpect this is a likely tendency forimmigrants too. The odds are high thatapartment rents will rise by 2% to2.5% p.a. in coming years, whichwould exceed the expected inflationrate. For the next ten years, inflationshould remain at 1.5% to 2% per year.

Inflation rate won’t exceed2% per year

IZ: Are you really serious?Heise: I know some people are

depicting doomsday scenarios of gal -lop ing inflation or even currency de -valuation. I don’t believe their prophe-cies at all.

IZ: But if you simply look at the costlyincentive packages for the economy andthe high public debt, even many econo-mists think that significant inflation willbe unavoidable.

Heise: I disagree with them. Thepressure on prices will stay high. Com-panies will not have much power toimpose higher prices on anyone. Wecan’t expect wages and salaries to spiralupwards either. Also, I believe that cen-tral banks will remain independentand keep inflation rates at no morethan 2%.

IZ: If that is so, why is everybodyinvesting in residential properties now?

Heise: Quite possibly, some playersare trying to scare off inflation ghostslike that. However, many buyers simp-ly use residential buildings to providesomething much simpler – an incomefor their old age. This trend would onlyfinish abruptly if interest rates were torise substantially, but I don’t see such athing coming up on the horizon.

IZ: Mr Heise, thank you for this inter-view.

Michael Heise was interviewed by Bern-hard Bomke.

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TAKEOVER ATTEMPT BY ACS

Hochtief attracts investorsWith the announcement that itintends to take over the Essen-basedconstruction group Hochtief, theSpanish building company ACS caused a huge stir on the Germanmarket. After all, the German topplayer would then be controlledfrom Madrid. Europe would havethe largest conglomerate in the con-struction sector it’s ever seen, andGermany, the country with the largest building industry by far inEurope, would have only one com-pany left among the top ten on thecontinent, Bilfinger Berger (whichwould come tenth in the leaguetable). On the other side, takeoverconditions are favourable for ACS.

Hochtief has virtually invited inves -tors to place a bid – the company isnearly free from net debt, it successful-ly operates on an international leveland has an annual result target beforetax of more than EUR 1 bn for the nextyears. However, this has had no effecton the stock exchange – Hochtief’sAustralian subsidiary Leighton (Hoch-tief holding 54% of its shares) alonehas a stock exchange value whichalmost doubles that of the parent com-pany (approx. EUR 4.5 bn).

By contrast, ACS’ annual statementsinclude net liabilities of approx. EUR10 bn. If ACS manages to extend itsshare to more than 50% it will be ableto reduce its debt through consolida -tion since it would be offset by Hoch-tief’s asset base. Additionally, ACSwould release potential reserves bysplitting up the Hochtief group, saysAxel Schäfer, a building sector expert

from OC&C Strategy ConsultantsDeutschland. According to him, ACScould compensate for its own weak -ness – too much focus on the homemarket – by adding the Hochtief port-folio to its own activities and matchingthe needs of a market that is calling formore and more internationalisation,adds Marc Gabriel, analyst from Bank-haus Lampe. Furthermore, there areonly few overlaps of operational regions between the two companies.

According to a study by the Munichifo institute called “German buildingcompanies – no penchant for scale”(published in German), German stockcorporations including Hochtief haveno possibility to fend off a hostiletakeover by restricting voting rights orcapping the amount of shares held bysingle shareholders under German

Internationally successful, no net debt, undervalued at the stock exchange – Hoch-tief, based in Essen, is a welcome takeover candidate. Photo: Hochtief

takeover law. Industry experts expectthat the number of M&A transactionsis set to rise again this year, given theeconomic recovery and increasing turn -over figures for companies.

Against this backdrop, other Germancompanies can become takeover candi-dates like Hochtief – or go on a shop-ping spree themselves. For example,Bilfinger Berger, Germany’s numbertwo player after Hochtief, announcedthe sale of its Australian subsidiaryValemus in late 2010 for 2011, Q1; pro-spective buyers: the construction andreal estate group Lend Lease. Mann-heim-based Bilfinger Berger says itintends to invest the earnings from thisdisinvestment in further extending itsservice portfolio. Logically, this wouldimply additional company purchases.

(tja)

WOLFGANG WIEGARD, FORMER MEMBER OF THE COUNCIL OF ECONOMIC EXPERTS:

“Debt crisis benefits German real estate”Prof Wolfgang Wiegard, a memberof the council of real estate expertsand a former member of the federalgovernment’s Expert Council forEconomic Development, sees posi -tive prospects for the German realestate industry. The debt crisis ischanging international payment flows, which will specifically benefitGerman real estate.

“All indicators point to positivedevelopment,” Wiegard writes in areport submitted by the Council ofReal Estate Experts, published byImmobilien Zeitung and the GermanProperty Federation (ZIA). Accordingto him, gross domestic product andavailable private incomes are set torise, and despite a minor increase, in -ter est rates are to remain on a rela tivelylow level in 2011. Above all, however,international payment flows will change direction, which will benefitGermany.

In recent years, interest rate cuts informer high-interest countries likeSpain or Ireland triggered an invest-

ment boom that made itself stronglyfelt in the real estate sector. Wiegardpoints out that part of the funds wereGerman capital exports. “Loans weregranted to Spanish real estate compa-nies, and investors bought asset-backedsecurities in the US.”

Towards the end of the financial crisis and in the wake of the debt crisis,this trend was bound to stop, Wiegardsays. The market for securitised prop -erty loans has collapsed, real estatebubbles in Spain, Ireland and the UShave burst and capital demand in thesecountries has come to a standstill,especially in the real estate sector.

Lacking other investment opportun -ities abroad and due to higher riskmark-ups for foreign investments, theearlier capital outflow from the systemwill be used to invest in Germany to agreater extent, Wiegard expects. “A sub-stantial part of it will go to the realestate industry.” (pm)

Wolfgang Wiegard. Photo: Alexander Sell

Larry Elliott on the strongest economicgrowth in Germany since its reunification,12 Jan 2011

What is the explanation for this? Thepat answer is that it is all about China,with Germany simply the European outpostof the east Asian growth miracle. (...) Theexport boom has been given added strengthby the problems on the eurozone’s peri -phery, which have led to a drop in thevalue of the single currency on the world’sforeign exchanges. That has made Germangoods even more competitive. But the ideathat Germany’s strong performance in 2010was down to fortunate timing is nonsense.(...) Germany has realised that the secretsof success are hard work, ferocious qualitycontrol, reliable long-term sources of fi -nance and co-operation between policy -makers, companies and trade unions. (...)There is, though, one caveat to this successstory. Germany’s growth is unbal anced(...). This matters, not just for the weakercountries of the euro zone which have beenunable to live with Germany’s hyper-com-petitiveness, but for the global economy as awhole, where the imbalances between thebig exporters and the big importers havestarted to widen again. (...)

The Economist on the balance of powerbetween Germany and France in the Euro-pean Union, 9 Dec 2010

(...) The balance of power between theFranco-German pair that have dominatedEU policymaking has shifted across the Rhine. The euro-zone debt crisis, duringwhich all eyes have been on Germany, ex -poses this cruelly. On the fundamental ele-ments – a permanent post-2013 debt-crisismechanism, a treaty change to enshrine itin European law, tougher rules and sanc -tions for rule-breakers, no enlargement ofthe bail-out fund – Mrs Merkel has gotwhat she asked for, while Mr Sarkozy hasbeen stuck on the sidelines. (...) Germanyis reaping the benefits of years of wagemoderation and labour-market reforms thatimproved its competitiveness. (...)

The Vienna economist Stephan Schulmeisteron the effects of the euro crisis, 17 Dec 2010

(...) Financial investors have taken refugefrom loans in “problem countries”,changing their course towards Germangovernment bonds. As an effect, interest-rate levels in these countries are set to risewhereas they are bound to drop in Ger -many. The debt crisis weakens the exchangerate of the euro, which will benefit the“world export champions” more than any -one else. In the short term, it seems thatGermany will eventually be rewarded for itsdiscipline. Alas, it’s a false impression – since the “interest rate virus” is bound tospread, the German economy will be severe -ly affected too. (…) There will be two maineffects: German exports will be weakenedproportionally to the size of the affected econ omies. And: The larger the volume ofrescue packages, the more serious doubts willbe in the financing capacities of Germany.

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RETAIL

Woolworth is reinventing itselfWoolworth has disappeared in theUS, while in Germany the depart-ment store chain is experiencing acomeback. Discount store expertDieter Schindel is reinventing thebrand with a substantially reducedassortment, minimum staffing andmoney from two entrepreneur families.

What would Franklin WinfieldWoolworth (1852 – 1919) have saidabout the shops in Unna, Gera andKarlsruhe that bear his name? No mat-ter what, Woolworth’s founder wouldbe proud because a low-price depart-ment store can incorporate a viablebusiness concept even in the 21st cen-tury – at least in good old Germany.

Cheap, that’s what Germans aregood at. Against this backdrop, it’s nowonder that the people who have shaped the new Woolworth Deutsch-land (independent from the US busi -ness since 1998) are mad for dis-counts. Stefan Heinig, the founder oflow-cost store chains KiK and Tedi, andKarl-Erivan Haub whose family ownsthe Tengelmann group (KiK’s majority

A Woolworth’s in Unna (North Rhine-Westphalia) Photo: Woolworth

ANZEIGE

shareholder) took over the insolventWoolworth in summer 2010. Heinigand Haub contracted Dieter Schindelas the company’s top exec, a man whomade KiK explode from nil to 3,000outlets. With him, Woolworth intendsto open one store per week on averagein 2011, and what’s more: they want toturn Woolworth into a flourishingbrand after years of ailment.

“We’re there for quick supplies ratherthan for a shopping experience,” saysSchindel about his strategy. Schindel –a South Africa fan – has drastically nar-rowed the assortment from 20,000

articles to 6,000. He chucked outsports articles, outdoor shoes, news -papers, goods on commission, alcoholand multimedia, which left two corefields – hardware and householdgoods (65%) and textiles (35%). “Weneed to focus on basics,” says Schindel.Jobs have been cut to a minimum – ineach store, there’s only one FTE. Unfitbranches – too small, too large – weredisinvested, unneeded space returnedto the landlords. Lucky for Woolworth:The most important lessor, Cerberusfinancial investors, backs Woolworth’splan. In future, the minimum size of a

Woolworth store will be 1,000 sqm,the upper limit being 2,000 sqm. “Aplace like Meschede doesn’t need a9,000-sqm department store,” saysSchindel, referring to oversized retailproperties in many German cities. Butdon’t compare the German conceptwith its South African Woolworthcounterparts: “In South Africa Wool-worth’s is a textile store somewherebetween Peek & Cloppenburg (transla-tor’s note: a mid- to upmarket Germanchain) and C&A”, says Schindel.

While another department storepatient, namely Karstadt, is still inrehab Woolworth is already out of hos-pital again. Some 40 tenancy contractshave been signed for the current calen-dar year. Woolworth in Germany – acompany left with 158 department stores and 4,300 employees after insol-vency proceedings – now boasts 166stores and 5,500 employees. Its ownersbelieve the market holds sufficientpotential for 500 stores. But that’s notwhere the story has to end – after all,Woolworth Deutschland holds therights for the whole European Unionexcept the UK. (cvs)

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an interest rate of 6% p.a. and stilldeduct interest as operating expenses.”Additionally, there is one “crisis law” onHoppe’s list (although it’s of minoreffect): “Granting groups of companiesan exemption from land transfer taxunder section 6a of the Land TransferAct was at least helpful.” This way, a privilege was created for restructuringsuch groups; they are not subject toland transfer tax if they consolidate.However, he concedes that this hasn’tbrought about any relevant growth.

One of his peers from Cologne, Gunnar Knorr of Oppenhoff & Rädler,harshly criticises the Federal Ministryfor Finance (BMF): “Tax subjects aregiven stones for bread,” is his verdict,

because the BMF is sticking to the ruleslike barnacle to a ship. Knorr speaksfrom experience: “In 80% of all cases,land transfer tax is due although thegovernment wanted to facilitate restructuring to allow for more eco -nomic growth.” Knorr believes that themarket has come to new life for otherreasons: “Money has become moreavailable again, there’s more pressureon those willing to sell, sales have tooccur by certain deadlines, companieshave more leeway and their latestannual statements aren’t quite as bad as before.” Bottom line: “The legal frame-work conditions haven’t been helpfulbut they haven’t been detrimental either.” (ba)

Statutory help for the real estate industry wasn’t quite on the Bundestag’s agenda during the crisis.Photo: Deutscher Bundestag/Werner Schüring

LAW-MAKING IN A CRISIS

Anti-crisis legislation and tax relief? Nothing!

The Federal Ministry for Finance is giving real estate companies a hard time ratherthan helping much. Photo: Fotolia.de/Thomas Röske

Germany’s Chancellor Angela Merkelrelentlessly emphasises what’s beenachieved under her government. Butif you look at the world of real estateand wonder if it received any sup-port through legal adjustments ortax relief, you won’t be able to findanything beyond the immaterial.

Investors have begun to show newinterest, financing schemes have becomeavailable again, the industry has becomesomewhat optimistic. A result of cleverpolitics and smart lawmaking? No.

A neglected sector

Mathias Müller, President of Frank- furt’s Chamber of Industry and Com-merce, clearly states: “I know of no legalor fiscal changes with a significantimpact.” He believes that politicians aretreating the real estate business with disregard. There’s only one political mea-sure Müller remembers: “At least we’vehad some economic incentive packagesto help the construction industry and itssuppliers.” However, he doubts this hasbeen sufficient to develop genuineupturn dynamics: “The market regulatesitself, and investment goes to regionswhere the economic conditions are inorder and return prospects are good. Inthe housing sector this is true for Frank-furt and Munich, for example.”

Speaking of housing, it’s the topicFalk Schollenberger and Konrad Kanzlerhave specialised in. They both workwith the NAI Apollo Group, Schollen-berger as a Managing Partner and Kanz-ler as Head of Research. In their view,there’s been no support for the real estate market – quite the contrary. Landtransfer tax increases in various Germanstates and energy-saving regulationsresulting in higher costs for new build -ings are two factors to slow down eco-nomic recovery, says Kanzler. But: “Themarket has successfully responded tothem,” says Schollenberger. Accordingto him, “bricks and mortar are sexy.”The two experts say the market for pri-vate investment was subject to turbulentdynamics last year, with many pur -chases in large cities. Schollenbergerasks: “Do we really want policy-makersto interfere with the market by law?”

Axel Kunze, a Partner in the Berlinbranch of the Squire, Sanders & Demp-sey law firm, has identified at least oneincentive by the lawmakers: “Thereduction of VAT for hotels had animmediate positive effect.” As a matterof fact, there was a nominal turnoverrise of 7.1% for overnight stays duringthe period from January to November2010 (calculated on a YOY basis).“According to the industry’s associa -tion, Dehoga, we saw the highest growth rate since 1994.” In 2010, hereceived numerous requests for con -sult ancy services in connection withhotel projects. “Our clients were inter -ested in both, new construction and pur chases.”

Little help to no avail

Matthias Hoppe, legal counsel andtax advisor at Wilmer Hale, Berlin, doesn’t see any major help from thegovernment. “Unfortunately, there’vebeen no simplifications especially in taxlaw.” But: “Raising the allowance for theinterest-rate barrier from EUR 1 mn toEUR 3 mn is relief, especially for smalland medium-sized companies.” Here’shis calculation: “Through this new rule,I can take up a loan over EUR 50 mn at Retail properties:

Current return rates

© Immobilien Zeitung; source: Cushman & Wakefield

Type of property Returnrate in %

Shopping centres 5.10

Food stores (stand-alone) 7.25

Large-format retail(e.g. DIY stores, hypermarkets)

6.95

Inner-city retail properties,premium locations

4.10

Not only are store rents highest inMunich, shops in central locationsof the Bavarian capital yield the highest turnover per sqm.

Retail rents of up to EUR 310/sqmare paid for the most coveted shops inMunich’s pedestrian zone, which places it in 10th position worldwide(source: Cushman & Wakefield), inpole position in Germany. Accordingto Comfort agents, space productivitybetween Marienplatz and Karlsplatz(EUR 6,540/sqm p.a.) is highest inGermany, too. The yardstick value forone sqm of developable land in thepedestrian zone was EUR 50,000 inlate 2008 – another German record.Not least, the demand from inter -national retail chains (Abercrombie &Fitch, Urban Outfitters, Apple etc.) hasbrought about constant fierce compe -tition.

The same holds true for Berlin, Dus-seldorf, Hamburg, Cologne and Frank-

STORE RENTS

Munich the most expensive locationfurt. “Tenants are even willing to makeone-off payments for existing tenancycontracts,” says Christoph Scharf, Headof Retail Letting at BNP Paribas RealEstate. (cvs)

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LOGISTICS PROPERTIES

Business on a rollGermany has many roads, andthey’re normally full – full of trucks.Trucks carry payload across thecountry, and sooner or later theyhave to head for a logistics centre.In 2010, this type of properties werebuilt, bought and rented out in larger quantities than in the crisisyear 2009. Many factors indicate thatthis upwards tendency is here tostay. There’s plenty to do for devel -opers of warehouses, and investorscan tap into new opportunities offthe beaten track of offices and com-mercial real estate.

“The crisis is over, and we’re in themiddle of a boom,” says Rainer Koep-ke, Industrial Real Estate Head of JonesLang LaSalle (JLL). 40% of all logisticscompanies want to recruit new staffthis year, storage facilities are indemand in many places but not onoffer. On the other hand, there’s littleupwards scope for rents – the logisticsindustry doesn’t expect any additionalrevenue as it’s always been at the mer-cy of unforgiving price competition.Annual logistics turnover in Germany

exceeds EUR 200 bn, which only oneother sector substantially outperforms– automotive. Some 2.7 mn peoplework in companies involved some wayor other in logistics.

Space scarcity in strongholds

By mid-2011, Koepke expects a lackof large plots from 10,000 sqm in prom inent logistics locations like

Germany, a land for logistics. Photo: BilderBox.com

Frankfurt. The problem: “Tenants wantto keep contract periods as short aspossible,” says the JLL expert. “But ifyou only want to rent for three years,no developer will build you awarehouse.” Project developers andbanks prefer contracts over at leastseven or – better still – ten years.Otherwise, banks refuse to grant loans.

Even if long-term letting has beenagreed on for a development project,

banks want an equity ratio of 20% to40% on the table, which is a highhurdle for small or medium-sizeddevelopers. Furthermore, large playerslike Gazeley, Goodman and Prologiswere mostly sorting out internal mat-ters during the financial crisis. Prologis,Germany’s number one, is likely to beoccupied with itself again now after themerger with AMB.

It may be difficult to finance newwarehouses but the letting businessrocketed in 2010. JLL measured a turn -over of 4.32 mn sqm (letting plusowner use) – an all-time high and anincrease by 33% on 2009. Remarkably,the largest new constructions commis-sioned in 2010 are situated in easternGerman locations like Erfurt and Ora-nienburg. Although Erfurt was electednewcomer of the year by market re -searchers at the Fraunhofer Institute,Koepke is sceptical about re-letting exist ing stock. As before, JLL has desig-nated Berlin, Dusseldorf, Frankfurt(am Main), Hamburg and Munich asGermany’s top five locations for logis -tics. Continued on page 13

ANZEIGE

ASSET MANAGEMENT DEVELOPMENT PROPERTY MANAGEMENT CONSULTING ON TRANSACTIONS

PURCHASES AND SALES RENTALS


OFFICE LETTING IN GERMANY

“Outperforming the European competition”The German office market has oftenbored investors with low volatilitylevels. But they can be a USP overother countries. They are now.

At present, much more office space islet in the five most important Germansubmarkets together than in Europe’slargest individual market for offices,Paris. According to Hela Hinrichs,Europe Researcher at Jones Lang LaSalle (JLL), tenancy contracts in Ber-lin, Dusseldorf, Frankfurt, Hamburgand Munich totalled 2.5 mn sqm in2010 whereas only 2.16 mn sqm wasachieved in Paris. In 2011, too, Ger-many (2.4 mn sqm) will remain slight-ly ahead of Paris (2.3 mn sqm).

Germany’s polycentricity might havedistracted you from these figures. Asthere is no single megacity, the marketfor investors is fragmented. At thesame time, diversification over variouslocations makes drastic slumps in rentsand prices virtually impossible. Unfor-tunately, the same holds true for heavygrowth rates – something investorsmight only dream of in Germany. Asan effect, rents in the Moscow growthmarket shot up by 20% in 2010 followed by London’s West End (18%).In Madrid, they dropped by 9%. InGermany, upwards and downwardsdeviation from the previous year’svalues stayed minimal – 3% less wasachieved in Frankfurt, at the bottomend of the scale, whereas 4.5% more isthe Dusseldorf figure at the other.

Compared to other nations withtheir leading capital cities like Spain,France and the UK, the German marketslightly lacks dynamics, says Piotr Bien-kowski, BNP Paribas RE’s German MD.“In a metropolis, a small economicspark can start a wildfire,” he says,casting a glance at notoriously volatileLondon.

As we ask him where in Germany heexpects most movement in 2011, Bien-kowski answers: “Munich, in all like-lihood.” In 2010, he says, Munich –unlike other important German officemarkets – reached its annual turnoverfigure without any one-off tenancycontracts covering disproportionallylarge properties. “For me, Munich isthe strongest and most dynamic of allurban markets in Germany.”

Developers, go to Frankfurt!

For the time being, the real estateexpert sees great opportunities inMunich but also in Frankfurt. “Bothcities offer ideal opportunities for let-ting 20,000-sqm to 30,000-sqm officesto large clients.” According to Bien kow -ski, Frankfurt’s vacancy rate (highest inGermany at approx. 15%) poses no hindrance. “In this city, users demandextremely high quality but there is littleon offer to match this need. This givesyou leeway for raising the rent, regard-less of the many vacant offices no ten-ants can put to good use.”

For Dusseldorf, however, Bienkowskipredicts a downwards trend in rent turn over for this year. “A new tenancycontract with Vodafone over 90,000sqm was an absolutely exceptionaldeal that can hardly be repeated,”Bienkowski says. As far as Hamburgand Berlin are concerned, he predictstenancy markets to remain on the pre-vious year’s level in 2011.

Compared to other European coremarkets, Bienkowski sees Germany in agood position. “You shouldn’t expectmuch change for the better in France,Spain and Italy at the moment. In Germany, however, companies havealready begun to recruit new staff, andthey’re on the lookout for new prem -ises. Therefore, we expect Germany tooutperform the European competitive

field in 2011.”At the same time, Bienkowski has a

word of warning for investors – don’thope for the new economic momen-tum to spread from central locations tooffices in peripheral ones. He says rentsin the outskirts are highly unlikely togrow any further. “Tenants are simplyexchanging old quality for new officesat identical prices.” (mol)

-200

0

200

400

MoscowLondon-West-End

London-City

ParisMunichHam-burg

Frank-furt

Dussel-dorf

Berlin

201120102000

1.200

1.400

739 83

9

Net absorption of office space (in thousands of sqm):

Berlin set to absorb most square metres in 2011

© Immobilien Zeitung; Jones Lang LaSalle


Business on a rollHowever, not even half of the total

turnover in the industry was generatedthere in 2010 (1.8 mn sqm).

7% of gross initial yield

To date, investors have only shownmoderate interest in logistics prop -erties. According to Colliers, the 2010transaction volume amounted to EUR1.2 bn – a 53% increase over 2009 thatonly accounts for approx. 6% of theentire volume of commercial real es -tate bought and sold last year. Offices(EUR 8 bn) and retail properties (EUR6.8 bn) were in higher demand.

According to Urmut Ertan, ManagingDirector of the real estate service com-pany Realogis, the gross initial yieldrate for warehouses with long-termtenancy in places like Dusseldorf,Frankfurt, Hamburg, Cologne andStuttgart amounts to approx. 7%. Inthe course of this year, he expects adrop below the 7-percent threshold forcontracts over more than ten years foroutstandingly creditworthy tenants –until the end of year, such top prop -erties may even slump to 6.85% ingross initial return rate.

The Fraunhofer researchers believeErfurt is not the only sustainableunderrated logistics location in Ger-many. Upcoming regions with a future,they say, include Magdeburg, and Göt-

tingen is considered a spot with growthpotential. The picturesque universitytown is connected to a new autobahn.Like all the others, it’ll soon be jammed. (bb)

Place Storage capacities in sqm

Tenant/Developer

Erfurt 60,000 Eurogate Distribution/Prologis, Gieag

Oranienburg (near Berlin) 52,500 Rewe (owner and user)

Hörselgau (near Erfurt) 50,400 Rhenus (owner and user)

Mönchengladbach 50,000 Fiege/Fiege, Union Investment

Friedrichshafen-Kluftern 46,000 Stute, Tognum, MTU (owner and user)

Malsch (near Karlsruhe) 46,000 Daimler/Goodman

Landsberg-Frauenwald 43,000 Edeka (owner and user)

Uffenheim (Franconia) 40,000 XXX Lutz (owner and user)

Erfurt-Stotternheim 38,000 Netto (owner and user)

Graben (near Augsburg) 38,000 Lidl (owner and user)

Bargteheide (near Hamburg) 37,000 Aldi (owner and user)

Bedburg (near Bergheim) 31,000 TK Maxx/Alpha Industrial

Eitting (near Munich) 28,500 Rewe (owner and user)

*Tenants/developers and owner-occupiers © Immobilien Zeitung; Jones Lang LaSalle

Top logistics developments 2010:*

Largest projects developed in the east

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HOUSING MARKET

Residential Properties: A steamboat speeding upThe German market for housing islike a steamboat – if you jump ontoit, you’ll move forwards, albeit slow-ly. Not fast enough for some passen-gers, but here’s some shipping news:The boat is gaining steam, rents andproperty values are on the rise. As aresult, numerous companies intendto buy, whereas others like Oaktree,Cerberus and Goldman Sachs arewaving their investments goodbye.

“The housing market has seen a seachange across the board,” HaraldSimons, board member of the empiri-ca Institute, describes the situation inthe spring report commissioned byImmobilien Zeitung. As he writesabout increasing apartment rents andprices, his matter-of-fact view shinesthrough. He can take on a differenttone though if you talk to him: “Morethan 20% within two years blows mymind!” More than 20% rent increasefor new contracts in Berlin is the insti-tute’s projection for 2010 and 2011together. Quite possibly, Simons says,this figure may be an underestimate.The empirica Institute is expecting arent increase of 16% in Hamburg andover 10% in Cologne and Frankfurt.

Low interest rates, inflation angst,the wish to secure one’s assets and therealisation that the German economyemerged from the crisis far less beaten

10%, properties in Frankfurt by 6%and Munich housing by 4%.

By contrast, André Adami, a consult -ant at the BulwienGesa Institute, is try-ing to dampen expectations down.According to him, higher purchasingprices will lower achievable total returnrates for flats (value adjustment pluscash flow). After a preliminary projec-tion of 8.3% for 2010, BulwienGesaestimate the total return rate for Ger-man housing to reach 6.8% this yearand approx. 6.5% p.a. until 2014.

More foreign investors

The total return rate BulwienGesaexpects for 2010 to 2014 (approx. 6.3%p.a. on average) doesn’t compare withthe rates for commercial and industrialreal estate and retail properties (ap prox.8% and 6.5%, respectively, p.a.) butinvestors still like flats. In a survey con-ducted by Ernst & Young, 44% of com-panies that have pursued activities inthe German market in recent years saidthey wanted to focus on housing in2011. 36% of investors have retail prop -erties at the top of their list, only 20%are still going to buy into offices.

Against this backdrop, portfoliotransactions may well increase in vol -ume. Last year, BulwienGesa recorded129 deals totalling just under 69,400units, which went into new ownershipfor a total transaction sum of EUR 3.64bn. All data-collecting institutes andagents agree that foreign investors arere-entering the scene. According toSavills, international money stoodbehind just one deal in five in 2010 butacquired about half of the selling vol -ume in units.

For this year, BulwienGesa’s consult -ant Adami is expecting a trade volumeof approx. EUR 5 bn. His calculationdoesn’t include possible large dealslike the sale of housing trusts held bytwo public banks, LBBW (24,000 flats)and BayernLB (nearly 34,000 units).Adami projects that average prices willgo up by 3% to 4% to more than EUR800/sqm on average. “We observed amajor leap in 2010 when prices wentup by 8% to 10% to 14.5 to 15 annualrents, netted for service charges, heat -ing etc.”

The rent and price increase will please all those who bought into themarket long ago and are trying to exitit now. Having sold its 11.35% share inthe listed Deutsche Wohnen, Oaktreeno longer has a stake in this company.Allegedly, the Americans fetched a

higher price for voting rights than inOctober 2010 when they disinvestedapprox. 11% too – since then, the shareprice has climbed in excess of 15%.

GSW: second IPO attempt

Times are fine for Cerberus and theWhitehall Fund owned by GoldmanSachs as well – they are planning asecond IPO attempt for the Berlin hous -ing company GSW. Just recently, theysecured refinancing for an 890-mn-euroloan. The industry believes that the fail -ure to refinance had been the reasonwhy they didn’t go public with it in early 2010, despite previous announce-ments. Financial experts say the Ameri-cans will launch Deutsche Wohnen onthe stock exchange some time in thenext three to five months. (cr)

GSW, which owns 50,000 apartments in Berlin – here’s one of their properties in Reinickendorf – is being brought into positionfor a second IPO attempt by Oaktree and Goldman Sachs. Photo: GSW

ANZEIGE

than feared have all sparked new dynamics in the market for rental andowner-occupied housing. Since German economists are predicting that2011 is going to be a good year forbusiness and the number of completedhousing units – just under 150,000 in2010 – falls substantially short ofdemand, estimated at 200,000, marketplayers are seeing upwards price indi-cators again. Nationally, new contractletting is predicted to go up by 2.5% to3% in 2011 while apartment prices aregoing to rise by 3% to 4%. You canactually pin higher hopes to some regions – for example, empirica be -lieves that purchasing prices in Berlinare set to go up by 12% on average,Hamburg prices are going to rise by

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%

Cologne

Stuttgart

Berlin

Munich

Frankfurt

Dusseldorf

Hamburg

20122011

8,0%

6,3%

7,2%

7,4%

4,3%

6,9%

7,2%

6,4%

5,6%

5,8%

5,6%5,1%

8,3%7,5%

Projection for total return rates, housing on stock*:

Highest yield opportunities in Cologne

*value adjustment plus cash flow © Immobilien Zeitung; Source: BulwienGesa

Selected offers for MIPIM1. Retail center in North Rhine-West.

New build, 10-15 y. contract,top tenants, € 50 m, 7,4% yield

2. Hotel in MunichNew build, 20 y. lease, AAA-operator, € 40 m, 6,0% yield

3. Commercial property in MunichNew build, 10 y. contract, besttenant, € 30,0 m, 6,0% yield

www.langer-vermoegensanlagen.de

If you intend to issue a Pfandbrief,the loans you grant have to complywith dedicated legal provisions. Aboveall, you’re obliged to observe the German Mortgage Value Lending Ordin ance (BelWertV) under which the prop erty value that can be realised inthe long term applies. “This leaveshardly any room for speculative considera tions because mortgage lend -ing values are the key parameter whenyou use a Pfandbrief for refinancing.On the other hand, this has a positiveimpact on real estate prices and pro -vides for stability,” says Louis Hagen,the Speaker of the Board at MünchenerHypothekenbank.


“The Pfand-brief stoppedthe formationof price bubbles.”

Prof. SteffenSebastian

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“Some banksstepped on thebrake in time.”

Dirk Richolt

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COMMERCIAL REAL ESTATE FINANCE

Pfandbrief lets German banks come up for airThe German real estate finance sector hasn’t emerged from thefinancial crisis unscathed, as becomes apparent from the debaclearound Hypo Real Estate and severalof the central banks owned by German states, the Landesbanken.The banks have the Pfandbrief tothank that things didn’t turn outworse. What’s more, what is knownas the German three-pillar bankingsystem provided a significant safetynet for the real estate industry whenthe going got tough.

Before the onset of the financial crisis the German banking system hadbeen regarded as rigid, obsolete, old-fashioned – and a growth obstacle.Allegedly, Germany was overbanked,competition as fierce as a lion, marginshad hit rock bottom. Private commer-cial banks heavily criticised the three-pillar system which would only allowfor mergers within one of the pillars ata time, i.e. between public banks (Spar-kassen), cooperative banks (Volksban-ken) and private banks (Geschäftsban-ken). Mergers of banks from two orthree pillars are impossible. More thananything, implied government guar -antees for publicly held institutionswere a thorn in the flesh of large pri-vate banks.

Sparkassen were only minorly – if atall – affected by the turbulence oncapital markets since their focus isregional. “Consequently, volatility onfinancial markets has not infested theGerman banking system to the extentwe’ve seen this happen in the UK, forexample,” says Steffen Sebastian, abanking expert at Regensburg-basedIrebs, praising the stability-enhancingeffect of the three-pillar system. How -ever, the economist says, part of the stability was lost through “sometimesmad foreign investments” by some ofthe Landesbanken that bit off morethan they could chew; regional banksown these umbrella institutions andhave been affected by their losses inforeign operations as a consequence.

Dirk Richolt, a finance and capitalmarket expert at CB Richard Ellis,points to the fact that nonetheless, theGerman real estate market would havestruggled with much higher volatility ifit weren’t for the three-pillar system.“Today, nobody would question thesystem any more.”

The Pfandbrief, “good and inexpensive”

The Pfandbrief – the German versionof a covered bond – is even moreimportant for the German real estatemarket than its division into three entirely separate segments. Thesebonds are a refinancing tool whichpractically enjoys iconic status in realestate finance. Allerkamp and EdgarZoller, BayernLB’s Head of Real Estate,describe it as “the premium product ofthe German capital market.” Zoller:“Even at the peak of the crisis on thefinancial market, German banks werepractically able to refinance themselvesby issuing Pfandbriefe on a daily basis.”

Claus-Jürgen Cohausz, a BoardMember of WestImmo, praises thePfandbrief as a reliable and inter -nationally inexpensive refinancingsource. Owing to strict legal require-ments for assessing its loan value, itsfixed interest rate and the quality of its

cover, it is a much-appreciated securityamong investors. Thomas Ortmanns, aBoard Member of Aareal, sees the factthat many countries use the Pfandbriefas a model for the legal construction ofcovered bonds as proof of its outstand -ing quality, calling the capital marketproduct an “undisputed benchmark.”Accordingly, risk mark-ups are low.“Without Pfandbrief refinancing, themarket would never have been com -petitive,” says Richolt. He estimates theprice difference between the Pfandbriefand a “common” covered bond atapprox. 50 basis points.

Professor Sebastian of Irebs, how -ever, sees other reasons that precludeda price bubble in Germany from thevery outset, such as the interest ratelevel in Germany – which is high, ifyou consider economic growth rates –after the introduction of the euro.Compared to other countries likeSpain and Ireland where growth rateswere high at the time, investment inGermany soon become relatively unat-tractive. So, whereas excessive loanfacilities and money supply growthfavoured the development of a pricebubble in Spain and Ireland, Germanyremained untouched by the trend.

Luck and judgement

Currently, the situation has reversed– Germany’s booming, many other EUcountries are in a recession. “In thissituation, the ECB’s prime rate tends tobe too low for the German economy.Should this constellation persist over alonger period, price bubbles may formin Germany too,” Sebastian warns.Luckily, there’s the Pfandbrief to“counter such tendencies as a conser-vative financing vehicle” – it stops loangrowth since their cover is restricted to60%, no more. “Therefore, I expect realestate prices on the German market torise but the risk of massively exagger -ated prices is something I shouldregard as rather low,” says Sebastian.

Speaking of luck: Dirk Richolt be -lieves the German real estate banks havehad their share of it. “If demand hadkept on stagnating in the German econ -omy for six to twelve more months, thiswould have triggered a massive chain ofinsolvencies that would also have af -fected the real estate industry andbanks.” But besides luck, judgementplayed a role too in keeping up stabil -ity: “Some banks stepped on the brakein time and carried out relatively fewtransactions during the boom phase,”Richolt says. And last but not least, saysCohausz of WestImmo, support mea -sures by the government ensured stabil -ity in the banking sector. (nik)

German banks could refinance themselves with the Pfandbrief even when the crisis hit capital markets. Photo: vdp

ANZEIGE

because of the large amounts held indeposits. As a result, a genuine creditcrunch never came about in Germany– not even at a point where individualprivate banks showed reluctance,” saysGero Bergmann, Sales Head of BerlinHyp.

Jürgen Allerkamp, CEO of DeutscheHypo, adds that Volksbanken and

Now, in year four after the beginningof the financial crisis, the criticism hasebbed away – the German three-pillarsystem has a proven track record as astabilising factor. “Especially Sparkas-sen and Volksbanken had comprehen-sive lending capacities at their disposalduring the financial crisis, not least

Selected offers for MIPIM1. Commercial building in Munich

Top location, long term con-tracts, € 70,0 m, 6,0% yield

2. Shopping center in MunichNew build, 10-15 y. contracts, top tenants, € 30,0 m, 5,8% yield

3. Office building in HamburgTop condition, 10 y. contract,AAA tenant, € 50,0 m, 6,5% yield

[email protected]


As many as three German projectshave made it – they’re among the 18nominees for the 2011 MipimAwards. They include the DeutscheBank Towers in Frankfurt, the JohannisContor in Hamburg and theSchrödterhaus in Leipzig. It’s goingto get tense in March when the visitors to the Mipim trade fair inCannes will once again vote for thebest real estate projects worldwide.In recent years, the Germans havebrought home a number of trophies.

As many as two German projects arecompeting in the Refurbished OfficeBuildings category of the Awards – theSchrödterhaus, revitalised by MagnatAsset Management, and the alteredJohannisContor in Hamburg, plannedby kbnk architects of Tecno. Both properties are fighting against the FirstTower office block in Paris by AltareaCogedim.

Deutsche Bank competing inthe Green Building category

The Frankfurt office towers of Deut-sche Bank were submitted for a differ -ent category – Green Buildings. Theirrivals include the Italian headquartersof 3M and the Levent Office Project inTurkey by Tekfen Real Estate Develop-ment.

Future Projects is the name of a newcategory to be added. The Central Parkin Australia, the Pixel Garden City inDenmark and the Japanese SustainableUrban Redevelopment project are all

trying to win over the visitors’ vote.Entries in the Hotel & Tourism Resortscategory include Navarino Dunes,Costa Navarino (Greece); the ParkHotel Hyderabad (India); and the WHotel (UK).

Entering the ring for Business Cent-res are two French projects, namelyChèque Déjeuner Headquarters andthe CMA GGM Tower, and one inHong Kong, the International Com-merce Centre. As for Residential Devel -opments, they include the Burj Khalifa

skyscraper (United Arab Emirates),One Jackson Square (USA) and theSavonnerie Heymans in Belgium.

This year’s vote will be split, visitorsand jury accounting for one half of iteach. “We’ve changed the procedure soas to avoid smaller, less known pro jectsin the competition being disadvant -aged when they would be goodenough to win a Mipim Award,” saysthe trade fair’s Director Filippo Rean.Among other criteria, the jury looksinto the originality of concepts, archi-

Last year, two German project teams were among the lucky winners of MipimAwards. Photo: Reed Midem

MIPIM AWARDS

Three German projects nomineed for Awardstectural quality and how the buildingfits into its surroundings. Up to the lastAwards, the decision had been com -pletely at the visitors’ discretion. Inaddition to the 18 nominees men -tioned, three British projects have beennominated for a special prize, since theUK will be Mipim’s guest of honourthis year. They include 5 MerchantSquare, KPMG Canary Wharf and theW Hotel. Furthermore, a special prizewill be granted to one of the projectsby the jury alone.

German projects among lastyears’ winners

As always, it’s an international jury,chaired this year by Michael Strong,Chairman and CEO of CB RichardEllis. Other members include the archi-tect Jacques Ferrier, Paolo Gencarelli,Head of Group Real Estate at theUnicredit Group, Ann Heywood, Prin-cipal of the College of Estate Manage-ment, Frank Khoo, Global Head ofAsia at Axa Real Estate, Robert Peto,President of the Royal Institution ofChartered Surveyors, and Olivier Piani,CEO of Allianz Real Estate. Immobili-en Zeitung is once again joining in asa partner of the Mipim Awards.

German projects have often emergedas winners from past Mipim Awards. In2010, BonnVisio Real Estate receivedone of the coveted trophies for theKameha Grand Hotel in Bonn andHochtief Projektentwicklung won thevisitors’ vote for the Marco Polo Towerin Hamburg. (law)

Refurbished Office Buildings

Hamburg The JohannisContor inHamburg was devel -oped on the site of anhistoric building whose façade wasretained by the Tecnodevelopers. Plans forthe refurbishment ofthis house – whichnow boasts over 3,000sqm of gross floor space since it wasextended at the top –were made by kbnkarchitects. The roof isthe JohannisContor’sspecial feature – itlooks closed from theoutside but you canactually look out of itthrough metal bladesfrom within. “We’vemanaged to lend anhistoric building amodern touch,” saysFrank Birwe, knbk’sManaging Director.

JohannisContor

Leipzig The Schrödterhaus is atypical trading house,so many of whichwere built in this cityin the early 20th cen-tury. It has undergonemodernisation byMagnat Asset Manage-ment from 2009 to2011, converted intoan office and retailbuilding with approx.9,000 sqm of lettablespace. All office areasare connected througha passage that’s alsoavailable for hostingevents. The Schrödter-haus offers its tenantsa conference floor freeof charge, dependingon how much spacethey’ve rented in thewhole building. Allcommercial units havealready been fully let.

Schrödterhaus

The First Tower, Paris, FranceDeveloper: Altarea Cogedim

PHOTOS: NOMINEES


PHOTOS: NOMINEES

Green Buildings

ANZEIGE

Frankfurt

As part of the largest individual refurbish-ment measure of a European building,Deutsche Bank converted its Frankfurtheadquarters into a green building(120,000 sqm of gross floor space). Theproject stretched from 2007 to 2010, and ithas already received a preliminary DGNBGold Certificate and an LEED Platinum Cer-tificate (on the grounds of criteria for newconstruction). Except for the position andarrangement of the entrance, the twotowers may look the same as before from

the outside but as a matter of fact, the entire façade was exchanged and equippedwith windows you can open. Alongside amajor reduction of energy consumption,the floor efficiency of these skyscrapers wasoptimised. “It’s a USP that we’ve moder -nised existing stock and managed toexceed the standards of quite a few othernew constructions,” says Holger Hagge,project leader. Due to refurbishing, the lifecycle of the towers – in use for 27 yearsnow – has been prolonged substantially.

Deutsche Bank

3M Italy Headquarters, Malaspina Business Park, Milan, ItalyDeveloper: Pirelli Real Estate

Levent Office Project, Istanbul, TurkeyDeveloper: Tekfen Real Estate Development


PHOTOS: NOMINEES

Residential Developments

PHOTOS: NOMINEES

Business Centres

PHOTOS: NOMINEES

Hotel and Tourism Resorts

PHOTOS: NOMINEES

Future Projects

One Jackson Square, New York, USADeveloper: Hines

Navarino Dunes Costa Navarino, Messinia, GreeceDeveloper: Temes S.A.

Savonnerie Heymans, Brussels, BelgiumDeveloper: CPAS Bruxelles

Burj Khalifa, Dubai, United Arab EmiratesDeveloper: EMAAR Properties

W Hotel, London, UKDeveloper: McAleer + Rushe

The Park Hotel, Hyderabad, IndiaDeveloper: Apeeja Surrenda Park Hotels

Chèque Déjeuner, Grennevilliers, FranceDeveloper: AG Real Estate

CMA CGM Tower, Marseilles, FranceDeveloper: SCI Tour d’Arenc

International Commerce Centre, West Kowloon, Hong KongDeveloper: Sun Hung Kai Properties

Sustainable Urban Redevelopment, Takamutsu, Yamaguchi, Nagahama, Numadu, Ohita, JapanDevelopers: Takamatsu Marugame-machi Machidukuri and others

Central Park, Sydney, AustraliaDeveloper: Frasers Property Australia

Pixel Garden City, Copenhagen, DenmarkDeveloper: 3B Housing Association

less CO2 emissions89 %

less heating energy67 %

74 %less water consumption

Deutsche BankSocial Responsibility

Green grounds for the MIPIM AWARD ‘Green Building’New Deutsche Bank Towers


DUSSELDORF

The Lena factor, and billions to invest

THE RUHR VALLEY AS A REAL ESTATE MARKET

All quiet on the investment front

Dusseldorf can pride itself on beingthe top climber among the Germanoffice markets in 2010. What is more,this trend is likely to continue for2011 – prospects for the capital cityof North Rhine-Westphalia are cur-rently good. Don’t underestimate theeffect of the Eurovision Song Contestthat’s going to be held there.

The moment Lena and her col -leagues reach for the winner’s title inthe competition, Dusseldorf’s fame isbound to spread all across Europe. Forthe time being, however, Dusseldorflocals have to explain to internationalinvestors with patience that “their cityis close to Cologne” – a painful state-ment. Unsurprisingly, campaigns havebeen developed to raise awareness forDusseldorf (or Düsseldorf, as youwould spell it in German, with anumlaut) as an investment location.

From an economic point of view,Dusseldorf doesn’t need such efforts,as its real estate industry is in an excel-lent condition. For this segment, 2010was a year to remember. The largesttenancy deal for ages (90,000 sqm)was struck – Vodafone started the devel opment of new corporate head-quarters.

German investors still dominate the market

The project has already been sold,even before the first spade was duginto the ground – Deutsche Fonds Hold ing will become Vodafone’s land -lord. Eight transactions last year

involved more than EUR 50 mn each,the five largest of which totalledapprox. 50% of last year’s total turn -over. No less than three deals exceededthe 100-mn-euro threshold – morethan in any other German city.

Remarkably, almost all investorswho bought Dusseldorf properties in2010 were from Germany; their busi -ness turnover in the city amounted toEUR 1.4 bn. However, foreign buyershave already begun to knock on Dus-seldorf doors, despite some reluctanceon their part. Allegedly, a consortiumlead by a US investor group has acquired the Deutsche Bank block atKönigsallee from Spanish Metrovacesa.

What makes Dusseldorf so attractive

at the moment? First thing to mention,Dusseldorf hosts a well-balanced mixof industries. By contrast with Frank-furt where it’s all about banking, Dus-seldorf is home to a variety of indus -tries which provide for good and relatively stable demand on the officemarket. On top of that, numerousattractive office buildings are underconstruction near the airport and inthe Unternehmerstadt developmentzone, and Daniel Libeskind’s Kö-Bogenis a definite highlight project. A soundbalance between supply and demandmakes Dusseldorf a top location toinvest your money. And after the ESC,everyone will know the place – and theumlaut in its German spelling. (thk)

The Rhine panorama, Königsallee, high return rates – Dusseldorf has a lot to offer to investors. Photo: thk

Space for investors – the Phoenix-See project in Dortmund Photo: City of Dortmund

For an overwhelming majority ofinvestors, the Ruhr valley is some-what tantamount to terra incognita.However, it’s worth having a closerlook at this region between Duis-burg and Dortmund, especially as ithas a certain strength for resistingcrises.

You can’t expect outstanding returnrates in Germany’s largest metropolitanarea where about 5 million people live.However, the Ruhr valley has otheraces up its sleeve – there’s virtually novacancy but high demand and abso lutesafety for investors.

The large cities – Duisburg, Essenand Dortmund – have almost no spaceleft to let in the up-market segment. Alocal agent reports that he hasn’t beenable to find a 350-sqm office area inDuisburg for a solvent tenant – “I seeample opportunities for investment,”the expert says. If you are ready for

13.50/sqm, give or take 50 cents persqm.

But the question is: How will rentsdevelop when no new space is addedto the market? And yes, no new spaceis being added – completion rates forDuisburg, Essen and Dortmund arenearing zero.

The news about this unique situ -ation in the Ruhr valley has reachedsome real estate investors in Germanytoo. The package deals of recent yearsincluded some properties in the Ruhrvalley too, and several holding com -panies now own individual propertiesthere. More than anybody else, con -servative investors have developed apenchant towards the region, especial-ly because it has remained a fortress ofstability during the last economic crisis. For one thing holds truer for theRuhr valley than for any other locationin Germany – without a bubble, there’snothing that can burst. (thk)

speculative investment in new con-struction in the Ruhr valley now, youwon’t need to worry if you’ll be able tolet it, he says.

And if you want to play it safer, whynot go for a refurbishment project –which will even give you the chance to

dictate what you believe is the rightrent, given the scarce supply. Clearly,however, you’ll have to bid farewell torents as high as in Cologne or evenDusseldorf. Average rents for qualityproperties in the three largest marketscurrently range at approx. EUR

Dusseldorf’s Lord Mayor, Dirk Elbers,holding the key to the ESC host city

Photo: City of Dusseldorf


FRANKFURT

Fully let housing next to empty officesHousing is scarce, large offices arevacant. But the options Frankfurtauthorities can offer to convert com-mercial into residential propertiesare restricted. At the same time,Frankfurt’s population continues torise.

In 1990, some 634,000 people livedin Frankfurt. By now, their number hasexceeded 688,000 – and rising. Frank-furt’s population keeps growing, whichmeans more revenue for the local treasury and more sales for local busi -nesses. Plus it implies a questionamong local planning authorities andthe real estate industry: Where do newresidents want to live in Frankfurt?

In the most recent past, Frankfurthas defined some large constructionzones. Here are just two examples:Upon completion, some 10,000 peopleare going to live and 30,000 work inthe Europaviertel in Frankfurt’sWestend area. The new quarter willcover a surface of 90 ha and includeresidential buildings, offices, hotelsand retail properties.

Riedberg, a new quarter in themaking, will provide space for 6,000units for some 15,000 people. “AtRiedberg, the city still has reserves ofhousing land where over 18,000 unitscan be constructed,“ says MarkusFrank, head of the local department foreconomy. “At the same time, however,we have to create new residential spaceby converting and re-densifying existing stock.“ Reading between thelines - there is some space left.

Basically, there’s plenty of it availablein Frankfurt anyway. With over 2 mnsqm of office vacancy, Frankfurt is farahead of any other German city ortown in this category. In many cases,buildings are empty because they don’tmeet the high demands of those on thelookout. “The proportion of Frankfurtoffices older than 30 years is notunsubstantial,” says Frank. And Marcus

Mornhart, head of JLL’s office lettingdepartment in Frankfurt, estimates thatapprox. 20% of existing vacant stockhas by now become unmarketable.Total refurbishment, use conversion ordemolition seem to be the only alter-natives.

Local authorities have already begunto drill in this direction, trying to per-suade owners of vacant offices to con-vert them into residential units. Onesuccessful example will be a residentialquarter to be built in the office districtof Niederrad. “There’s also an incen tivescheme for housing development inthe Bahnhofsviertel (translator’s note:the area around Frankfurt’s central

station, notorious as a red-light districtwith some derelict office buildings inbetween). Subsidies are provided if youconvert a commercial building into aresidential property,” Frank explains.“Ultimately, however, any conversionis at the owner’s discretion.”

Often, high refurbishment costs andlow rental income, compared to of -fices, stop landlords from realisingconversion plans. Last year, the averagerent for offices in Frankfurt amountedto EUR 20/sqm, top rents in premiumproperties almost doubling that. Toprents range between EUR 38/sqm(according to CB Richard Ellis and Col-liers) and up to EUR 33/sqm (accord -

ing to Jones Lang LaSalle, JLL, whodistinguish between top rents achievedin various properties and a uniquepeak rent, which was as high as EUR39/sqm). Nonetheless, housing deve-lopment will remain a burning topicon Frankfurt’s political agenda because“Frankfurt is a popular city to work inas it hosts many different industriesand companies,” says Frank.

Another convincing feature is its cen-tral location and its high connectivity,which make Frankfurt a popular loca -tion for entrepreneurial activities. Localauthorities predict that approx.724,000 people will live in Frankfurtby 2030. (api)

ANZEIGE

The Riedberg housing project – space for approx. 15,000 people by 2017. Photo: HA Stadtentwicklungsgesellschaft

HafenCity Hamburg GmbH, Osakaallee 11, D - 20457 Hamburg Phone: +49 - 40 - 37 47 26 - 0, Fax: +49 - 40 - 37 47 26 - 26Email: [email protected], www.HafenCity.info

HAFENCITY HAMBURG: DYNAMIC GROWTH WITH HIGH SUSTAINABILITY STANDARDS

For Hamburg, HafenCity represents a chance offered to very few major European cities. On a site covering 157ha on the Elbe waterfront in the heart of the city, a new metropolitan city is emerging. The project is progressing rapidly: 80 construction projects are either being planned, under construction or completed. In regenerating these old port areas, HafenCity sets the highest ecological standards, featuring mixed uses and short distances, energy-efficient mobility, its own Ecolabel for

sustainable building and innovative heating supply. HafenCity is thus an important dynamo driving sustainable growth in Hamburg.

ANZEIGE


HAMBURG

Young people, and an upbeat local economyThe real estate set from Hamburgare taking impressive figures alongon their trip to Cannes – the lastmile of the property race in Ger-many’s northern metropolis alreadybegan after the summer holidays!For offices and investments alike,achieved results have been above theten-year average, and an all-timehigh was recorded for Germany’stop logistics centre where some610,000 sqm of space was let. Thepopulation of Hamburg is growingyounger and younger, and upbeatlocal businesses are planning to hirenew staff on a large scale in 2011.

According to a ranking of Germanstates conducted by the Initiative for aNew Social Market Economy (INSM)in 2009, Hamburg leads the tablewhen it comes to gross domestic pro-duct (GDP) per capita (EUR 48,229),available income per capita (EUR23,602) and demographic develop-ment for 2006 to 2009, which evenincludes employment – the city’spopulation grew by 1.7% (main agegroup: 18 – 30 years) while its workingpopulation rose by 5.9%, with particu-larly strong growth among highly skilled workers.

A diversified economy

After a below-average decrease of theHamburg GDP in 2009, a 3.6% growthwas recorded in 2010. The trend isexpected to continue at 2.5% this year.According to a survey on the economicclimate by the Hamburg Chamber ofCommerce in December 2010, some42.6% of local entrepreneurs assessed

their business situation as “good”opposed to no more than 9.8% answer -ing “bad”. People have devel oped morewillingness to invest and some 27.5%of local companies are planning torecruit additional staff in 2011. Thenumber of jobs already rose by 8,800(0.8%) in 2010 whereas the number ofinsolvencies dropped by 8.3% to thelowest percentage figure nationwide.

What do these figures imply? An -dreas Köpke of the Hamburg Agencyfor the Promotion of Economic Gro-wth (HWF) tells us they are the upshotof a largely diversified economic structure with many SMEs. “Duringpast crises, this structure has protectedHamburg against major downturn thatcould have affected the whole city.”Köpke isn’t shy to point out his ownmerits: “Hamburg already pursued aclustering policy when no-one else inGermany knew what a cluster was.” Tounderpin his argument, Köpke -

mentions public support for digitalbusiness from the mid-1990s, and promoting the local aviation industrywith a focus on Airbus since 2000 – inearly 2011, the aircraft manufacturerstruck the largest deal in aviationhistory ever (USD 15.6 bn).

“European Green Capital”

At present, the City of Hamburg promotes the games industry and renewable energies, which has hadimmediate reverberations on the realestate sector – Bigpoint game devel -opers signed a contract to rent 11,000sqm of office space in the “Denkmal”(“Monument”) refurbishment projectby Strabag Projektentwicklung, the largest new contract in central Ham-burg for years.

In January 2011, the wind powercompany Nordex moved from nearbyNorderstedt into new Hamburg

Hamburg is shaped by industrial companies, the port and Hafencity. Photo: ff

Facts and figures

Total population, 2011: Hamburg 1.8 mnMetropolitan region 4.3 mn

Gross domestic product (GDP):Hamburg 2009 -3,2%Germany 2009 -4,7%Hamburg 2010 +3,6%Germany 2010 +3,6%Hamburg 2011 +2,5%Germany 2011 +2,3%

Office space turnover, 2010:506,000 sqm (+28%)

Investment turnover, 2010:EUR 2 bn (+57%)

Industrial space turnover, 2010:610,000 sqm (+59%)

© Immobilien Zeitung;source: Hamburg Chamber of Commerce/

Jones Lang LaSalle/Grossmann & Berger

headquarters with 500 employees. Thecompany intends to take on severalhundred additional engineers by 2014.The US group General Electric (GE)plans to locate its new technology centre for offshore wind power plantsin Hamburg, thus creating 60 new jobsby 2013. Broadwind Energy, anotherAmerican player, wants to develop itsEuropean business from Hamburg. Thecompany’s Managing Director, MichaelStegelmann, says this step is logicalbecause the Hamburg region boasts600 companies in the field of windpower. Furthermore, “as Europe’s environmental capital in 2011, Ham-burg is the place to be.” With a newlocal government of Christian Demo -crats and the Green Party in power, theformer catchphrase of the “growingcity” was replaced by “future-orientedgrowth”. Continued on page 24

Hamburg hat Platz für Ihre VisionenHamburg, a place for your visions

Land for commercial and residential uses

www.real-estate.hamburg.de MIPIM 8. – 11. 3. 2011, Cannes, H4.30 Level 4

Central location – Berliner TorBorgfelder AlleeMixed use: offi ces, student accommodation, hotelPlot size: 3.700 m², GFA: ca. 6.000m², tender offers invited

Contact: Paul [email protected]

Living between park and ElbeElbchaussee 288Plot size: 654 m²Site built with listed two-storey detached house,minimum price: 500.000,- EUR

Contact: Jan [email protected]

Attractive site in HamburgPlot size: ca. 1.200 m²GFA: ca. 11.000 m², for new-build project, tender offers invited, minimum offer: 4.000.000,- EUR

Contact: Nils [email protected]

Maritime living beside Kaufhaus canalSüdlicher Binnenhafen, HarburgSize of site: ca. 11.450 m²GFA: ca. 20.450 m²tender offers invited, minimum offer: 5,2 Mio. EURContact: Anna [email protected]

New neighbourhood – OxPark in LangenhornListed building with additional new-builds possibleQuarters 3+5, quarter 6tenders to be invited soon

Contact: Ute [email protected]

Freie und Hansestadt HamburgFinanzbehörde – ImmobilienmanagementDammtorstraße 7, 20354 Hamburg


LOWER SAXONY

Hanover: First in the second divisionHanover has long been praised asGermany’s best B location – but asfar as logistics and retail propertiesare concerned, the capital city ofLower Saxony already ranks amongpremium players. What’s more, theoffice market is a model for stability.

If you go on a virtual trip to Hano-ver – a city of 500,000 – with Google

maps, its central position in Germanywill strike you at once; it’s located atintersections of railway lines andmotorways between Hamburg andFrankfurt (the A 7 autobahn), and between the Ruhr Valley and Berlin (A2). Furthermore, an important man-made waterway, the Mittellandkanal,flows through Hanover. Hanover hoststrade fairs, it’s a university city, andHanover’s airport in Langenhagenconnects people and products withfaraway countries.

An important hub

As a location for logistics, the AirportBusiness Park accounted for 17% oftotal logistics space turnover (313,000sqm) in the Hanover region in 2010(2009: 270,000 sqm). Nearby Lehrte –home to a goods traffic centre (GVZ) –contributed one third. With more than300,000 sqm let, Lower Saxony’s capital leaves behind most denselypopulated regions in Germany. A studyby the Fraunhofer Institute SCS hasconfirmed Hanover’s importance as alogistics region with a gateway func-tion for Europe.

Year after year, Hanover is in the German top five when pedestrian zonefrequency is measured. According tothe retail agent Comfort Hamburg,rents of up to EUR 180/sqm are achie-ved in Georgsstraße and Bahnhof-straße. Even after the opening of ECE’sErnst-August-Galerie, a shopping mall,in October 2008, floorspace demandby national and international chainstores has not relented.

No 1 in the retail business

“Hanover has a very large catchmentarea, and it’s the undisputed numberone spot in the region,” says Andreas

Schulten, BulwienGesa. “Investmentsin central locations such as the Ernst-August-Galerie or the Kröpcke-Center, amore recent project, are protected bythe government. Such protection isimportant.” Hanover’s centrality indexis 138, which places it among Ger-many’s most important retail locationswith a large offer for the hinterland.

Major shifts were recorded aroundGroße Packhofstraße, an A1 location. Abuilding formerly used by SinnLeffers,a mid- to upmarket textile store(20,000 sqm of usable floor space), wasbought by the Irish low-cost clothingretailer Primark who intend to open anoutlet (8,000 sqm of retail space) in2011. Nearby, the Sahle group fromGreven acquired Karstadt’s technicaldepartment store, future tenants in clud -ing TK Maxx, Zero and Edeka. GünterRudloff of Comfort Hamburg says thatHanover is very interesting for investorsbecause return rates, currently rangingbetween 5.4% and 5.8%, are slightlyhigher than in comparable strongholdslike Dusseldorf, Frankfurt or Stuttgart.

Currently, business is somewhat slower in the office segment of the

market. As in recent years, Hanoverman aged to hit the 100,000-sqm markin 2010 as far as total space turnover isconcerned. Some 93,000 sqm of thetotal figure (106,000 sqm) was rentedout – a moderate decrease by 6% from2009. Despite a minor increase in toprents by 2.5% to EUR 12.80/sqm in2010, Andreas Schulten expects “rentswon’t rise in 2011, just like in otherGerman cities.” However, Hanover isnot a volatile market because “in otherplaces like Frankfurt, where vacancy hasrocketed to as much as 18%, Hanoverhas remained at just 4.9%.” Top returnrates amount to 6.4%.

A concept called “Hannover City2020+” (note the double n in the Ger-man spelling), adopted in 2010 by theCity Council, is a dedicated attempt toshape the future of central Hanover.Implementation is intended to start atKlagesmarkt, where large complexesand a high-rise building (the latter stillsubject to discussion) are planned forconstruction as of 2012. Furthermore,2011 will see a resolution as to whetheror not a second town hall will be builtat Raschplatz. (ff)

Niki-de-Saint-Phalle-Promenade, underground in Bahnhofstraße. Photo: ff

ANZEIGE

Auch im Jahr 2011 präsentiert REAL ESTATE STUTTGART wieder ihr Markt-modell mit den drei Streifen. Diese stehen für Dynamik, Engagement und Er-folg unter dem Motto SUCCESS IN REAL ESTATE BY TEAMGEIST. Seien Sie unser Gast auf der MIPIM 2011, Stand H 4.31.

REAL ESTATE STUTTGARTChartered Surveyors GmbH

Königstraße 80, 70173 StuttgartRainer Reddehase FRICS MBA

Tel. +49 711 222 946 35Mobil +49 172 626 50 50

www.real-estate-stuttgart.deStuttgart München Berlin

Due Dil igence Privatisierung Consult ing

DREI ERFOLGSSTREIFEN

MIPIM 2011

Stand H 4.31


Young people, and an upbeat local economyAs a side effect, Hamburg has pre-

sented itself as “European Green Cap -ital” at Expo Real and Mipim since2009. Focal points are the Internation -al Building Exhibition (IBA) in Wil-helmsburg, a suburb neglected fordecades on the south bank of the riverElbe, and its opposite neighbourHafencity on the north bank. Withsome effort, IBA 2010 managed to findfirst investors for the showcase quarterin “Neue Mitte Wilhelmsburg” – Wil-helmsburg’s New Centre. Companieslike Otto Wulff, Hochtief, HamburgTeam, SchwörerHaus or Primus Devel -opment are realising hybrid houses,water houses, smart-price and smart-material homes up to 2013. Theinvestment volume of about 50 IBAconstruction projects totals EUR 600mn.

By 2020, the investment volume forHafencity is expected to total EUR 8.6bn including some EUR 6.6 bn fromprivate investors. Some EUR 1.2 bn alone will have to be spent on the highly densified Überseequartier (Over- seas Quarter). For the time being, of ficespace sales are making slow progress. Inrenting 40,000 sqm, local authoritieshave facilitated the start of the secondconstruction phase. With this contractand other new tenancy agreements, thepublic sector turned out the largest newtenant last year. It goes to show howwell- balanced the Hamburg economyis – mark the introduction to thisarticle – if you consider that in beingso, they only signed for 15% of thetotal turn over (500,000 sqm).

“No industry is so strong that themarket couldn’t cope with cancel -

lations,” says Andreas Wende, JonesLang LaSalle. Bottom line: Hamburg isthe least volatile among Germanmetropolitan areas. Wende is expectinga similar turnover figure for 2011 withfewer large deals. Although the top rentlevel slightly dropped to EUR22.50/sqm in 2010, he believes thatrents are set to increase a bit in centrallocations in 2011 as demand willremain high. The climbing vacancyrate, currently at 9.6%, might hit the10-percent barrier in 2011 since200,000 sqm of new office space willcome onto the market.

With EUR 2 bn, the investment market achieved its third best result inhistory after 2006 and 2007. A fixationon classic core properties has led toreturn rates of 4.8% for offices andunder 4.5% in retail. However, there are

first signs of a sea change. For example,Deka Immmobilien took over theMetropolis-Haus development projectfor EUR 93 mn – despite its premiumlocation, tenancy agreements beforecompletion only amount to 40%.

An all-time high of 610,000 sqm wasachieved in the logistics market in2010. According to Grossmann & Ber-ger, this figure was 59% higher than in2009. Whereas national growth of newtenancy in this sector amounted toapprox. 30%, Hamburg was able toenhance its position as Germany’s largest submarket in logistics.

The forwarding and transport indus - try (47%) and trading companies(33%) headed the list of new tenants.As a result, Hamburg is benefitingfrom economic recovery in all re -spects. (ff)

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BADEN-WURTTEMBERG

A perfect mix – shopping, culture and a special flairThere’s no need to worry about thefuture of retail business in the largecities and towns of Baden-Wurttem-berg, the bottom left rectangle onGermany’s map. Key indicators showthat retail is bound to grow. There’sjust one fly in the ointment – newtenants are hard to attract as theright kind of space is scarce. Now’sthe time to react.

After the two-year economic crisis,Baden-Wurttemberg is back and goingstrong with extraordinarily high growth figures. On a regular basis,Baden-Wurttemberg locations reachtop positions in German ranking tablesfor retail-relevant factors such aspurchasing power, sales and centrality.Is this because of their often-quotedMediterranean atmosphere?

As a matter of fact, the highest density of restaurants with at least oneMichelin star is in Baden-Wurttemberg.Additionally, the state offers pictur -esque landscapes and cultural activ -ities. Its shopping flair, however, is thechief ingredient to round off a perfectdish.

Large shopping precinctsplanned in Stuttgart

By tradition, Königstraße in Stuttgarthas always boasted the highestdemand to match with a pedestrianfrequency of up to 12,000 per hour.The Stuttgart branch of Jones LangLaSalle (JLL) expects top rents in thiszone to climb from EUR 230/sqm toEUR 235/sqm this year. Since demandfor space by national and internationalretail chains is unbroken, even the300-euro barrier might be exceeded.Once again, there are rumours aboutkey money for interesting central loca-tions including luxury spots like Kirch-straße and Stiftstraße, Schulstraße andCalwer Straße or Market Square.

With such high demand, even mixedcommercial properties with initialreturn rates of 5% are sought after byprospective buyers – besides officebuildings. The high demand for retailand wholesale properties couldn’t bemet last year due to supply bottle -necks. The total transaction volumeamounted to no more than EUR 25mn, Stuttgart-based Colliers Bräutigam& Krämer inform us. Since Stuttgart isa “must” location for nationwide retailconcepts, JLL expects Baden-Wurttem-berg’s capital to remain a preferred target for retail expansion in 2011.

Projects in the making indicate howthe transaction and letting market forretail properties can come alive again.Several large projects with mixed uses –offices, retail, wholesale, restaurantsand catering – have been planned orare being developed. According toBankhaus Ellwanger & Geiger, theyinclude the Quartier S in Paulinen-straße (24,000 sqm), the Postquartier

(just under 10,000 sqm), the BülowCarré and the Century (totalling35,000 sqm) and a project jointly carried out by the regional governmentand the Breuninger fashion store onKarlsplatz (49,000 sqm) which includes a hotel development.

Plans for the surroundings ofMailänder Platz in the new Europavier-tel behind the central station are controversial. They belong to the Stutt-gart 21 infrastructure project which hasmade it into the news – even inter -nationally – due to public protest. Thethree consortium partners – ECE Pro-jektmanagement, Strabag Real Estateand Bayerische Hausbau – intend tobuild a 43,000-sqm ECE shoppingmall with a Mediterranean atmos -phere, plus housing, offices and ahotel. “This is the largest investment bythe private sector in Germany and maybe the largest of its kind in Europe,”says Klaus Vogt from the Agency forEconomic Promotion of Stuttgart.

Unmatched great locations in the south

As yet, the impact of Stuttgart 21 –set to replace the old rail terminus witha through station – on retail businessin Ulm is unclear. Ulm is a high- centrality city in the east of Baden-Wurttemberg, bordering on Bavaria.Unlike in Stuttgart, the public and toppolicy-makers are backing the stationproject. If the new railway lines arebuilt, Ulm would only be a 30-minutejourney away from Stuttgart. Therefore,Ulm intends to become more attractivearound its own station. The nearbySedelhof quarter (15,000 sqm) is envisaged as the largest developmentproject in the retail segment for thenext years.

Germany’s southernmost and sun-niest city is Freiburg in the south ofBaden. Retail rents for individual storeswith up to 120 sqm in its top streets,Rathausgasse and Kaiser-Joseph-Straße,

Shoppers come flowing as they find choice and ambience. In the competition for A1locations, key money is a buzzword. Photo: CIS City-Initiative Stuttgart

have risen by 60% to EUR 160/sqmover the past ten years, which placesFreiburg in tenth position among the253 most important shopping loca -tions in Germany. In parallel, the valueof these assets has climbed by approx.35% on average. Besides its unmatchedvicinity to Switzerland and Alsace, ithas a multicultural flair (being a uni-versity town). Its restrictive market andcentre concepts have contributed to therise, too. Local project developer PeterUnmüssig wants to show us that thereis scope for development – his West-Arkaden, a project worth EUR 120 mn,is planned to offer 10,000 sqm ofshopping space plus areas for housingand offices.

Konstanz, or Constance, situated onthe lake of the same name, also bene-fits from its closeness to Switzerlandand southern charm. According to amarket analysis by Comfort, store rentshave gone up by 45 to 60%, currentlyreaching EUR 65/sqm on average.Chain operators particularly appreciateRosgartenstraße and Kanzleistraße, thetwo best retail spots in town. Charm -ing for tourists, a problem for chain

stores: the existing architecture – some-times medieval, often small – canhardly cater for modern store concepts.With its relatively high centrality indexfigure – 131.9 – and solid infra -structure, however, Konstanz is a uni-versity town project developers andinvestors have begun to focus on.

More space around Mannheim and Heidelberg

In the Rhine-Neckar Region aroundLudwigshafen, Mannheim and Heidel-berg, Mannheim has, as always, de -fended its lead in retail (centralityindex: 138). In the 18th century, thecentre of Mannheim was divided intonumbered squares which follow thealphabet. The largest central project isa multifunc tional development calledQ 6 Q 7, located in just these squares,with an investment volume of EUR250 mn, planned by Mannheim-basedEngelhorn and Diringer & Scheidel. Aretail concept covering 24,000 sqm isintended to be its unique selling proposition. On top of that, the centrewill host a four-star-superior hotel,flats, offices and medical practices.

Heidelberg, Mannheim’s neighbour,cannot offer similar floor supply. Notleast, however, it’s an extremely pop -ular tourist destination, which has animpact on the centrality of its retailindustry (125.8). Due to the frag -mented urban structure of central Hei-delberg, demand for medium-sized to large retail properties is very high. Anurban development project namedBahnstadt, one of the largest railwayconversion projects in Germany (116ha), is planned to provide relief, especially for retail parks. There’s goingto be more movement on the marketwhen US Army facilities are given up asthe Americans withdraw by 2015,which will release some 780 ha of space in the Rhine-Neckar region intotal. Several of their sites will be suit -able for retail developments as they arewell connected to transport networks.

(dl)

Q 6 Q 7 in Mannheim – a future-oriented shopping destination scheduled for completion by 2014. Photo: Diringer & Scheidel

One of the leading specialist magazines for the German real estate industry. It reports weekly on activities in the real estate market, delivers background and market information. As well as news about people and businesses.

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borough: first occupants are payingover EUR 8.50/sqm, with top rents atup to EUR 14/sqm and rising. Owner-occupied flats are going for an averageprice of EUR 3,300/sqm in this popularpart of town. Residential property prices in the Wilmersdorf area haverisen almost 30% since 2001, accordingto BulwienGesa. While in Mitte, pricesrocketed by 7.5% in the past year alone.

(mv)

RESIDENTIAL MARKET

Berlin – investors’ favourite

ubiquitous cranesat Scharnhost-straße 6 – 7 torevitalise a formerpost distributioncentre. The endresult will be around 120owner-occupiedflats. According toSanus Managing Director SiegfriedNehls, EUR 17.6 mn is going into theproject, with an expected EUR 29.5 mnto be taken in sales.

And there’s more good business tobe done now in the area south of Spit-telmarkt, long shunned by project devel opers. Even Berlin’s local construction magnate Klaus Groth,who is devel oping several residentialbuild ings with 96 units including 43flats for rent on the corner of NeueGrünstraße and Seydelstraße, was surprised by the area’s speedy positivedevelopment. He’s sold the apartmentsfor EUR 2,400/sqm to EUR 3,400/sqm– “And I could have asked for more,”says Groth in retro spect. The average

price now asked in the neighbourhoodis EUR 3,500/sqm, he says, and rentsfor new buildings are all above EUR11.50/sqm.

Whereas one or two large plots arestill available in former marginal areaslike these, developers in establishedparts of Mitte, Prenzlauer Berg andCharlottenburg/Wilmersdorf usuallyhave to make do with gaps betweenbuildings or renovation projects. Thetight market is giving a new kick to pro-

jects that have beenon ice for a while.One example is theproject Am Zirkus 1,taken over by theAustrian companyPeach Prop erty. Thestar designer Philip-pe Starck is in char-ge of interiors forthe apartments,which are on offerfor EUR 4,000/sqmto EUR 10,000/sqm.

Residential use isalso the plan for the

long-vacant Haus Cumberland on Kur-fürstendamm. Profi Partner, Berlin,plans to create 210 units in the property, originally built as a boardinghouse in 1911/12. The revitalised building should fetch prices betweenEUR 3,500/sqm and EUR 7,500/sqm.

A lack of buyers and tenants is un -likely to be a factor. Market researchersat the Gewos Institute estimate that thenumber of households in Berlin willrise by 50,000 by 2015, with the vacancy reserve falling below 1%. Bul-wienGesa recently forecast a drastichousing shortage in Charlottenburg/Wilmersdorf. And the growing demandis already affecting rents in the

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EUR 10/sqm. “It’ll work out,” says thecount. “Definitely. We’re only investingin the former East, because cities like

INVESTMENT OPPORTUNITIES

East Germany, mon amour“Investing in East Germany is somuch fun,” says Christian Graf vonWedel, a man who recently boughthimself a 70 m office tower in theheart of the Thuringian city of Jena.And it’s no wonder: purchase pricesare lower and the economic conditions are often not nearly asgloomy as many West Germans stillthink.

“Our investment chances are downto the fact that the majority of WestGerman investors haven’t yet noticedwhat’s going on in Thuringia, Saxonyand Saxony-Anhalt,” says the head ofthe Graf von Wedel property group,Frankfurt am Main. He’ll be refurbish -ing his new purchase for EUR 3 mnand then renting the offices out for

Weimar and Jena have growing popu-lations and falling unemployment,young people are motivated again andthere are a lot of very young and inno-vative companies springing up.”

Along the A 14 autobahn, says IVDVice President Michael Schick, theinvestment opportunities are strung“like beads on a necklace”. Magdeburg,Halle, Leipzig and Dresden are all profiting. And on the Baltic coast inMecklenburg-West Pomerania, housesare already more expensive than on itsWest German counterpart, the Bay ofLübeck, as the IVD points out. Anothertown to have sneaked onto investors’agendas is the regional capital of Thuringia, Erfurt. Turnover from resi-dential buildings with small amountsof commercial space rose there by an

Office tower in Jena.Photo: Graf von Wedel

Stylish Yoo-brand apartments designed by Philippe Starck aregoing up on Am Zirkus in Berlin-Mitte. Photo: Eike Becker

A comfortable clientele for owner- occupied flats on Spittelmarkt.

Photo: Groth-Gruppe

Only a couple of years ago, privateinvestors saw no point in buildinghomes in Berlin. That’s all changednow though, and not only new con-struction but also renovation andconversion of commercial propertiesare good business. Rising purchaseand rent prices have made the Berlinhousing market a real favouriteamong investors, even giving locations outside the most popularresidential areas an extra buzz.

The area between the main stationand the future site of the Federal Intel-ligence Service on Chausseestraßenorth of Invalidenstraße may look rather dull and grey right now. But firstimpressions can be wrong. Most of thevacant lots have been sold, with build -ing projects underway or at least planned on every corner. Forward- looking investors such as ChamartínMeermann bought up properties andreal estate years ago, and are now developing them one after another. Berlin-based Sanus has set up the

astounding 77% in the year to 2010.But smaller towns in the east of Ger-

many can make investors very happytoo. One prime example is the Bran-denburg village of Großräschen (popu-lation 10,500), where Flex Fonds fromSchorndorf near Stuttgart bought amulti-party residential building withtwo shops for EUR 5.1 mn. Afterinvesting EUR 2.5 mn, the fund man -agers are now taking EUR 415,000 renta year, presenting their investors withan 8.1% return rate. A local shoppingcentre in Zschorlau, Saxony, yields7.6%. Buying costs one annual net rentless in the east than in the west.

Perhaps not for long though. EastGermany is on its way up, says Grafvon Wedel, who has been investing inthe region for 21 years now. (gg)

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BAVARIA

Housing, Munich’s knight in shining armourDuring the real estate crisis even theMunich market for office propertiesslowed down. However, nobody hasa morning-after feeling – becausethe residential market incidentallyslipped into a new boom.

Crisis? What crisis? Whereas realestate markets across Europe wereailing in recent years due to the stag -nation in commercial properties,Munich had every reason to frolic.Instead of moaning and groaningabout unlet office space, many marketplayers simply shifted their energytowards a different business field – thehousing sector, which had been point -ing in one direction for years: upwards.

Munich’s Expert Committee, forexample, recorded 25% more sales ofplots for multi-storey housing develop-ment in 2010 than in 2009, on a YOYbasis. At the same time, monetary turnover rose by 48%. Even on themarket for owner-occupied homes andpartly owner-occupied properties, salesrevenue went up by 10% compared to2009.

Sales higher than expected

According to a survey on the devel -opment of the housing market inMunich conducted by IVD Süd at thebeginning of this year, the prices forowner-occupied flats on stock in -creased by 5.5% on average to EUR3,050/sqm whereas newly built apart-ments of the same kind grew by 3.8%to EUR 4,050/sqm. In parallel, rentshave continued to rise to EUR13.30/sqm on average for older housesbuilt to a high standard and EUR13.50/sqm for new constructions.“Compared to large European centres,these amounts appear to be low butthe ratio between cost and achievablerent is similar across the board. Accord ingly, it makes perfect sense toinvest in Munich because you can continuously generate return withoutany fluctuations,” says Malte Mauer,National Director Head of ResidentialInvestment Germany at Jones LangLaSalle.

No wonder all the market playersinvolved in Munich’s residential busi -ness are satisfied. Bayerische Hausbau,for example, managed to sell housingfor just under EUR 100 mn in the Bavarian capital – tantamount to 30%above plan. “Even in 2010, we achievedhigher sales in this segment than wehad optimistically expected – we’revery close to the 150-mn-euro barrier,”says Jürgen Büllesbach, Chairman ofthe Board of Management of Bayeri-sche Hausbau. He knows that goodproducts in nice locations currently sellquickly in Munich, and it’s a well-balanced buyers’ mix of owner- occupiers – many of them moving toMunich for the first time – and investors. What’s more: “At present,

we’re seeing many investors purchasinga second, third or fourth apartment,”Büllesbach explains. Plus there arefamily offices or institutional investorsbuying entire houses.

It’s a booming industry, so much sothat the Munich housing developer JKWohnbau undertook somethingunprecedented in the Munich housingproperty scene – they went public inNovember 2010. With their IPO and acapital stock increase, they yieldedgross issue proceeds in the amount ofEUR 80 mn. The company intends touse these funds for tackling a largernumber of projects in Munich andnearby locations.

Prospects remain positive

Prospects for such undertakings aregood, since the local Expert Committeeassumes that the market for owner-occupied flats in the capital of Bavariawill continue to develop positively.According to them, generally increas -ing market figures for housing landcorroborate that the demand for resi-dential properties in Munich won’tslow down. These figures go to showthat housing is considered a particular-ly solid investment, an investmentfocus even.

Büllesbach, looking back in time,agrees that the market is set to stay onits upwards course: “The past curve ofthe Munich housing market shows thatthis sector has never seen a phase where real estate actually lost in value.”At the same time, Büllesbach points tothe excellent outlook for the Bavariancapital, which boasts the best growthopportunities among large cities inGermany. “Furthermore, housing is acommodity which will likely stay scarce in Munich because of the localcircumstances, and there’ll be ademand for secure investments in in

The Welfenhöfe are being developed in Munich’s Au district.Photo: Bayerische Hausbau

future too,” says the real estate expert.Even if office demand in Munich goesup again and some market players

might switch strategies and return tothat segment, the demand for flats isset to remain high. After all, the marketaccounts for some EUR 500 mn of thetotal real estate turnover generated inMunich in 2009 (approx. EUR 1.7 bn).

“There’s no end of the boom insight,” believes Rupert Hackl, head ofthe Munich branch of Eurohypo.“Only two trends could provide for asea change: On one hand, interest rateincreases that secretly, yet constantlydevour the return off those who haveto finance a property.” Go for aninvestment now and you’ll have to payapprox. 25% more interest on a ten-year scheme than six months ago. “Ifthe office market simultaneously develops new dynamics, higher returnrates will make it more attractive.Potentially, funds and institutionalinvestors may shift their focus of inter -est.” As a result, the boom would ruboff. However, Hackl doesn’t see this asproblematic: “In this case, we wouldsimply re-shift our focus towards theoffice market, which would suit all ofus just the same.” (cry)

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GERMAN JOB MIRACLE

The world champion of labour market flexibilityWith the onset of the economic crisis, many workers were maderedundant all over the world. Unlikeelsewhere, however, unemploymentfigures have remained almostunchanged in Germany, since com-panies and the government haveundertaken efforts to keep people ingainful employment using instru-ments such as short-time work andthe like. Their plan has worked – tothe effect that foreign nations havetaken an interest in the “German jobmiracle”.

What began as the subprime crisissoon turned into a global economiccrisis. In mid-September 2008, Leh-man Brothers, one of the largest invest-ment banks in Wall Street, filed forinsolvency proceedings. A few weekslater, Hypo Real Estate got into diffi-culties; since then, they’ve had to besupported with over EUR 100 bn ofgovernment guarantees. The bankinginstitution abandoned its trade fairstand at Expo Real 2008, markets plunged into paralysis as they read thesigns – the crisis had definitely reachedGermany. Accordingly, real estate firmssaw in the year 2009 with pessimism,as was shown in a survey the FederalAssociation of Free Real Estate andHousing Companies conducted amongits members. 78% of respondentsexpected the industry to deteriorate,31% intended to cut jobs.

Job cuts feared

The first institutions to initiaterestructuring and job cuts were bankslike BayernLB. In early 2009, DTZ,Jones Lang LaSalle and Vivacon, Aber-deen’s Degi subsidiary and DeutscheAnnington announced redundancies.In May and June 2009, just under halfof the companies participating in the“Joboffensive” (Employment Offen -sive), an initiative by Immobilien Zeitung, observed layoffs in the realestate sector.

Researchers at the Institute forEmployment Research (IAB) wouldhave agreed since they expected majorredundancies, too. When Lehman Brothers collapsed, the experts had nodoubt that a drastic slump of thedomestic product was unavoidable.“With a decrease of 5%, we were expecting a net figure of 1.5 mn to 1.8mn more unemployed in Germany,”says Joachim Möller, IAB’s Director.However, they had to think twice –2009 statistics only recorded 155,000more people without a job. A miracle?Realistically speaking, a number ofcompanies reacted to the recessionwith approaches quite different fromredundancies.

The academics gradually understoodwhat exactly was happening in thelabour market in the course of the year2009. “The labour market behaved like

a proper role model,” Möller concludes. “The interplay between com panies, bargaining partners andlabour market policy-making workedwell.” Workers took days off to reduce over time balances on their jobaccounts, company-specific alliancesfor employment resulted in costsavings. Not least, short-time work (seebox) provided for flexibility. “Germanyis the world champion when it comesto flexibility within companies. TheGerman system is a role model,” saysMöller.

Some of the companies most severe -ly affected by the crisis had beenthrough an outright boom before –and complained about the lack of skilled labour. Faced with potentialshortfalls, they had hoarded a workfor-ce, not least because they were expect -ing new market opportunities in themedium term. With this strategy, theysafeguarded around 100,000 jobs, saysMöller.

EUR 4.57 bn for short-time work

Some 400,000 jobs were keptthrough short-time work, Möller elab -orates. The Federal Agency for Employ-ment spent EUR 4.574 bn on thismodel in 2009 (of which EUR 2.975bn was short-time benefits in the strictsense, paid for reduced working hours,and EUR 1.598 bn in social securitycontributions otherwise payable byemployers and employees). Last year’sexpenditure totalled EUR 3.060 bn(including EUR 1.680 bn in short-timeallowance).

For the first time in its history, thePiepenbrock group applied for short-time work and respective benefits forthe period between March and Decem-ber 2009 for part of its workforce.When their workload hit rock bottom,some 7,000 hours of short-time workhad to be filed. In retrospect, thegroup’s MD Arnulf Piepenbrockregards short-time work as the mostimportant tool in personnel policiesduring the crisis, more relevant eventhan reduced working hours as such orthe expiry of existing employment con-tracts and internal reallocation of staff.

Germans are global champions when it comes to flexibility within companies. Thesystem has already attracted attention abroad. Photo: Fotolia.de/mkrberlin

In early 2009, his company was drawninto the maelstrom of the crisis. Although the group didn’t lose clientsin its maintenance business, salesdropped by 40%. “I’d never seen sucha grinding halt in business,” says Pie-penbrock.

At the peak of the crisis in June2009, some 5.2% of Germany’s entireworkforce, i.e. 50 of 1,000 peopleemployed, were working short timeunder the government scheme. In theprocessing industries, their proportionamounted to 16.9%, contrasted by alow figure in the construction sector(2.8%). However, those affected in thisindustry had to reduce their workinghours by 40%, which was higher thanin the national economy as a whole(32%) or in the processing sector(31%). These figures were exceeded bythe land and housing industry with anaverage reduction of hours per short-time scheme by 41%, although it mustbe said that the total share of staffaffected in this segment only amoun-ted to 0.3%.

The short-time model:Continued employment instead of redundanciesShort-time allowance under sec-tions 169 et seq. of the GermanSocial Code, Book III, was intro-duced to ensure staff can stay ingainful employment and avoidredundancies even during a per -iod of temporary workload short -age. As soon as the market situ -ation improves, companies arethen in a position to rely on staffwho are trained in what they do.

This model wasn’t invented during thecurrent crisis, though the prerequisitesmaking you eligible for benefits havebeen adjusted several times in its course.For example, the maximum benefit period has been extended from six to 24months by now. Crisis-related specialprovisions have been drawn up to applyuntil the end of March 2012.

It’s a tool you can use when workloadis substantially reduced for economic reasons or due to force majeure (such asfloods), provided the event is only temporary and unavoidable. Workload isdeemed as substantially reduced if theincome generated by at least one third ofstaff in a company is more than 10%below standard due to shorter working

hours. Up to the end of March 2012,short-time subsidisation can also beapplied for by companies when less thana third of their workforce meet this criterion.

In order to be entitled to short-timemoney from the Federal Agency forEmployment, employers and staff representatives (or the affected staffthemselves) must have formally agreedon short-time work as they would with abargaining agreement. Short-time allow -ance is paid by the agency, and it partlyreplaces the remuneration that is no longer due as people work shorter hours.In general, the allowance replaces 60%of the remuneration no longer due or67% if at least one child lives in a house-hold; for calculation purposes, remuner -ation is standardised to lump sums. Inother words, if working hours are re -duced by 30%, employees will only receive 70% of the usual gross remun era-tion from their employers. The FederalAgency will step in and pay 60% or 67%of the 30% net remuneration that’s with-held. Short-time pay provides relief forcompanies too because the agency reim-burses at least 50% of social security con-tributions in proportion with the actualamount of reduced working time. (sma)

Estate agents were hit hard by the crisis, too. Short-time work was intro-duced for all disciplines except for prop erty management, says Peter Rös-ler, Chairman of the Board of Manage-ment of BNP Paribas Real Estate Hol-ding. Seesaw HR policy – heavy layoffsduring a crisis, followed by a recruit-ment rush when it’s over – is a phe -nom enon he calls unhealthy. Personal-ly, he’s been working in the companyfor 25 years and he’s proud of the factthat his company has always managedto keep all staff on board during crisesbut never had to take financial lossesto the books. Just like this time. Zeroredundancies, instead of which thecompany applied for short-time workstarting from May 2009 (32 hours perweek instead of 40) for about onethird of its staff (450 in total). As aninstrument, short-time work had been“the success vehicle” par excellence,Rösler firmly believes. When the mar-ket sprang to new life in late 2009, hesimply stepped on the gas with histeam of well-trained colleagues.

Back then, Paul Krugman publishedan article in the New York Times titled“Germany’s job miracle.” In it, hefavoured a labour market policy withan active approach to creating jobs. Herecommends examining the Germanmethod in detail. As a matter of fact,foreign delegations were already tour -ing Germany to learn more about thesystem at the time.

“Today, employment is higher thanbefore the crisis,” says Möller. “Even ifsome of the wounds of the recessionhave not yet healed completely, Ger-many’s in a better position than beforethe crisis as far as unemployment isconcerned.” (sma)


FILIPPO REAN

How did you become Mr Mipim, Signor Rean?Although Filippo Rean is coming toMipim in Cannes for no less thanthe seventh time, this year marks aturning point – it’s the first tradefair under his direction. An engineerby profession, Rean worked his wayinto the real estate industry onvarious consultancy jobs.

Structural physics, construction andmaterial science are a home turf forRean (38), who was appointed the newDirector of Mipim and Mipim Asia inOctober 2010. He has an engineeringdegree from Turin where he graduatedfrom a five-year study course. Becauseof the language barrier, Rean didn’tspend his semester abroad in Germany,the country best known for engineer -ing excellence, but in Belgium. Besidesknowing Italian and French, Rean speaks English fluently.

After college and a year in the army,he joined Procter & Gamble in Romeas a business analyst and in marketingbefore taking on new responsibilitiesin strategic consultancy with Bain &Company.

When companies are appraised, theirreal estate often turns out to be thelion’s share of its assets – that’s whyRean took an interest in properties. Hedeveloped real estate skills and becamea sought-after team member when realestate issues were on the agenda.During a two-year MBA course at theHarvard Business School, he honed hisexpertise even further.

Mipim’s new Director (since October 2010): Filippo Rean. Photo: Reed Midem

Rean isn’t only enthusiastic about thebusiness side of real estate; he also lovesarchitecture. The property that makeshis heart beat faster is called Mole Anto-nelliana, Turin’s landmark. He lovestaking guests to this 160- metre towerthat he regards as an outstanding exam-ple of refurbishing projects.

In 2005, Rean shifted gears againand decided to focus entirely on the

real estate industry. He joined GECapital Real Estate in Paris, developinginvestment strategies. The last positionhe filled there was Director of ProductDevelopment, Europe. As he remem-bers those days, his eyes begin to sparkle – on the job, he developed a“360-degree view” of real estate markets. Together with his backgroundin marketing, he’s now offering thisknow ledge for the benefit of Mipim’sorganisation.

When addressed as “Mr Mipim”, hebursts out laughing. However, Mipim’snew head is diplomatic when it comesto other topics; ask him what buildingin the world should be demolished,and he won’t give you an answer. Alter-natively, ask him when Italy will beMipim’s guest country of honour – allhe’ll say is: “Nice question.” At least,Rean (father of two children, marriedto an Italian) isn’t shy to tell us hisfavourite place in Paris – despite hisenthusiasm for real estate, it’s not abuilding but a garden near Palais Royal. (sma)

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Sights to see and places to go

CannesIt’s certainly possible to spend a whole day in Cannes itself outside of the tradefair as well.

The magnificent Hotel Carlton is an absolute must, and can generally be viewedon the first day of events at the Mipim opening party. Another thing you mustn’tmiss is a walk through the old quarter of Le Suquet with its many tiny restaurants

and shops. And suddenly, once you’ve climbed high enough, you’re far from themadding crowd around the Palais.Don’t forget to take a stroll across the Marché Forville too, above the old harbour. The food market is open from Tuesdays to Sundays between 7 am and 1 pm. Thesame site hosts an antique market on Mondays, from 8 am to 6 pm. The city alsoboasts an art and handicrafts market on the weekend (Les Allées de la Liberté, 10am to 6 pm).

Iles de LérinsThe Iles de Lérins are visiblefrom Cannes, and can be reached by regular ferryconnections. The islands ofSainte-Marguerite and Sainte-Honorat are open for visitors.Sainte-Marguerite is the site ofFort Royal, where the famousman in the iron mask washeld in prison. There is also amaritime museum for the sea-lovers.Sainte-Honorat (photo) ishome to a monastery whereover 3000 monks once lived.Even today, monks still produce wine on the island,which is on sale along withother products they make.

AntibesAntibes is only a few miles from Cannes. Its picturesqueold centre is located directly above the sea and sur -rounded by fortress walls. Picasso spent several months living and working in Château Grimaldi, where visitors can admire his works inthe Picasso Museum. The artist has left his traces not onlyin Antibes, but also on other places on the Côte d’Azur,including in Cannes.

Mipim’s location definitely has a distinct advantage: temperatures inthe south of France can reach 20 degrees in March, and thesea view certainly makes up for the complicated journey.What could be more delightful than prolonging your stay fora few days’ holiday? Cannes is a perfect starting point for tripsto the surrounding area, where you can enjoy the French flaireven more intensely away from the Palais des Festivals and theCroisette.

Carnaval deNice What a shock for everyonefrom Cologne and Dusseldorfand all the other Mardi Grasfans: Mipim starts on ShroveTuesday! But never fear, carnival addicts can get theirfix on the Côte d’Azur – at theFrench-style Carnaval de Nice.The festival runs for twoweeks, in 2011 under themotto “Roi de la Méditer-ranée” – King of the Mediter-ranean.The closing ceremony takesplace on Shrove Tuesday (8March 2011) from 8.30 pm,followed by the “burning ofthe king” with fireworks from9.30. Entry is free. For more information, see www.nicecarnaval.com

Saint-Paul deVenceThe medieval village of Saint-Paul de Vence is the place togo for modern art lovers.Many different artists live inthe village, which boastsnumerous galleries.Saint-Paul de Vence is also thehome of the FondationMaeght, a private foundationfor modern art housed in abuilding specially designed byvarious artists (including Cha-gall and Miró). Information:www.fondation-maeght.com

PHOTO: FOTOLIA.DE/PASCAL06

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ating outin Cannes

Le 360°The name says it all: the 360° is located on the roof terrace of the 1835 White Palm Hotel. Which means the guests benefit from a fantastic view ofthe bay and the old city. Unfortunately, the restaurant is so popular that it’sall booked up during Mipim 2011.2 Boulevard Jean Hibert, Tel. +33 (0) 4 92997310www.1835-hotel.com

Le MadeleineThis fish restaurant with sea view isjust the place for garlic lovers. The menu features grilled fish, seafood and bouillabaisse. 13 Boulevard Jean Hibert, Tel. +33 (0) 4 93397222, closed on Sundays, www.le-madeleine.com

TantraFrench food mixed with Japanese specialities (sushi, sashimi) is in storeat Tantra. A DJ creates a club atmos -phere in the lavishly decorated space.13 Rue du Docteur Monod, Tel. 0033-(0)620794681Open every day from 8 pm to 2:30 am,www.tantra-cannes.com

Le Mesclun

Café FlorianThis brasserie serves what they call“harmony food”: organic ingredients,vegetarian platters and unusualvegetables (for instance Jerusalemartichokes).1 Rue Florian, Tel. +33 (0) 4 93396579; Monday to Saturday 8 am to 11 pm,Sunday from 7 pm; www.cafeflorian.fr

Chez ThérèseTrès français – designed in Parisbistro style, this place serves traditional cuisine (including truffles,escargots, fish and meat specialities)with a fine selection of wines.88 Rue Meynadier, Tel. +33 (0) 4 92991909; evenings only www.cheztherese-cannes.com

Auberge ProvençaleCannes’ oldest restaurant was openedin 1860 – and has tickled the tastebuds of Picasso, Sean Connery,George Clooney and Phil Collins.Want to take a piece of the atmos -phere home with you? No problem:the paintings and antiques decorat ingthe rooms are available for sale!10 Rue Saint Antoine, Tel. 0033-(0)4-92992717; open for lunch and dinner;www.auberge-provencale.com

Le MesclunRue Saint-Antoine offers a great choice of fine small restaurants, forinstance Le Mesclun. With space forabout 50 guests, it serves traditionalFrench cuisine, classic yet innovative– but it is a little on the expensiveside.16 Rue Saint Antoine, Tel. +33 (0)4 93994519, 7 to 11 pm, closed on Sundays, www.lemesclun-restaurant.com

Le 360°

L’AvionLovers of Italian cuisine will findfreshly made pasta and pizza bakedin a wood-fired stove at L’Avion. 4 Rue Jean de Riouffe, Tel. +33 (0) 4 93394362, lunch anddinner until 11:30 pm

Tantra

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Helicopter flightsFrom Cannes to Nice in less than 10 minutes? It’s feasible if you charter a helicopter.

Azur HélicoptèreExample: Cannes – Nicefrom EUR 350Tel. +33 (0) 4 93904070www.azurhelico.com

Heli Sécurité Saint-Tropez /Côte d’AzurExample: Cannes – NiceEUR 180 per passengerTel. at Nice airport: +33 (0) 4 94555999www.helicopter-saint-tropez.com


ImpressumInvesting in Germany Special Mipim Edition2011 wird herausgegeben und ver legt vonder

IZ Im mo bi lien Zei tung Ver lags ge sell schaft mbH, Post fach 34 20,65024 Wies ba den,Tel. 06 11-9 73 26-0,Fax 0611-973 26-31,E-Mail [email protected] www.immobilien-zeitung.de

Ver lags lei ter:Jan Mucha

Chef re dak teur (V.i.S.d.P): Tho mas Por ten tp

Re dak tion: Bernhard Bomke bbKatja Bühren tjaAlbert Engelhardt (CvD) aeFriedhelm Feldhaus ffGer da Gericke ggThors ten Karl thkNicolas Katzung nikDagmar Lange dlMo ni ka Leykam molBrigitte Mallmann-Bansa baPeter Maurer pmAnke Pipke apiChristine Rebhan crChristine Ryll cryChristoph von Schwanenflug cvsSonja Smalian smaMartina Vetter mvLars Wiederhold law

Übersetzung:Markus Kowsky

Redaktionsassistentin:Jennifer [email protected]

An zei gen:Markus [email protected]

Martina [email protected]

Kars ten Fran [email protected]

Sabine [email protected]

Uta [email protected]

Alice Schmidt (Marketing)[email protected]

Projekte und Konzepte:Britta Kriechel [email protected]

Druck:Verlagsgruppe Rhein-MainDruckzentrum Rhein MainAlexander-Fleming-Ring 2, 65428 Rüsselsheim

Für An zei gen und re dak tio nel le Bei trä ge ein -schließ lich grafi scher oder bild li cher Dar stel- lun gen wer den Ur he ber rech te vom Ver lagoder den je wei li gen Ur he bern in An spruchge nom men. Mit Aus nah me der ge setz lichzu ge las se nen Fäl le ist eine Ver wen dung vonVer öf fent li chun gen des Ver la gs nur mit des- sen schrift li cher Zu stim mung statt haft.

© 2011 für Tex te und ge stal te te An zei genbeim Ver lag. Nach druck, Ver viel fäl ti gung undelekt ro ni sche Spei che rung nur unter Quel len- an ga be und mit schrift li cher Ge neh mi gungge stat tet.

PHOTO: FOTOLIA.DE/DIDEM GECEGEZER

How do you get from Nice airport to Cannes or from the restaurant tothe hotel? We’ve compiled all the relevant information for you. (bk)

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Bus transferAirport – Cannes: Express (no. 210 bus)

Airport departure times:Terminal 1 and terminal 2 – platform 3 in both cases; runs daily,every 30 mins between 9 a.m. and 7 p.m., plus two more buses at8 a.m. and 8 p.m.

Duration: approx. 50 mins; tickets: only available at the counter(Bureau des Bus); Rates: Single journey EUR 15.60; return EUR 25.50;reductions for under-25s and groups of fourStops in Cannes (coming from the airport): Place Vauban (Bd. Carnot) – Hôtel de Ville (bus station)

Stops in Cannes (going back):Hotel de Ville (bus station) – Rue des Serbes – Place Vauban (Bd.Carnot)Departure times, Cannes, Hôtel de Ville:Services operate daily every 30 mins between 8 a.m. and 6 p.m.,plus two more buses at 7 a.m. and 7 p.m.

Navettes Palais des Festivals – hotels:Like in past years, Reed Midem will organise a shuttle service fromthe hotels in Cannes to the Palais for trade fair visitors (roughly between 8 a.m. and 2 p.m.) and from the Palais to the hotels (roughly between 6.30 p.m. and midnight). Please enquire on the spot for exact departure times and to find out if your hotel isserved, too.

PHOTO: ELKE SALZER/PIXELIO.DE

TaxisAllo Taxi Cannes

Immediate bookings: +33 (0) 890 712227

Reservations (48 hrsbefore the journey): +33 (0) 892 780028

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Car rentalSixt

50 Boulevard de la CroisetteTel. +33 (0) 8 20007498www.sixt.co.uk

Europcar3 Rue du Commandant VidalTel. +33 (0) 4 93062630www.europcar.co.uk

LimousineservicePCA ChauffeursTel. +33 (0) 4 93991568www.canneslimo.com

GM Limousines InternationalTel. +33 (0) 4 93396020www.limousines-cannes.com

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On the move in Cannes

Engel & Völkers Commercial GmbHPhone +49-(0)40-36 13 [email protected]

Rosenstraße 2 | D-20095 Hamburg | Phone +49 40/33 34-0 | Fax +49 40/33 34-1111 | Internet www.dghyp.de

Member of theCooperative FinancialServices Network

Meet our crew at MIPIM.

Dr. GeorgReutterSpeaker of theBoard ofManagement

Anja BühnHead ofSalesManagement

Paul TewesManagingDirectorVR WERT

Verena QuastHead ofCredit RiskManagementEurope

Burkhart MunzelManaging

DirectorVR WERT

BarbaraBanschbach

VR WERTSenior Appraiser

Matthias TillHead of

Real EstateCentre Frankfurt

Norbert GrahlHead of

Credit RiskManagement

ThomasNeumann-

ViewegSenior Manager

Syndication

Manfred SalberMember of theBoard ofManagement

Axel JordanHead of

National Business

Steffen GüntherHead ofInstitutionalClients

Martin GimberHead ofReal EstateCentre Berlin

Harald AlberHead of

Real EstateCentre Stuttgart

Dr. CarstenMeyer-RavenMember of theBoard ofManagement

Hans HenrikDige

Head ofReal Estate

Centre Hamburg

Mark MeissnerRegional DirectorReal EstateCentre Berlin

Dr. RenéBeckertHead ofReal EstateCentre Munich

MatthiasWeimerHead ofReal EstateCentre Düsseldorf

KamillWipyewski

VR WERTSenior Appraiser

Ronald VetterSenior Manager

Syndication

Christian VossSenior ManagerSyndication

MIPIM 2011 – DG HYP welcomes you on boardthe Star of the Sea at ”Jetée Albert Edouard“.

Janine HufferHead of

Syndication

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