News from 07/30/2008
Closed-end funds: Placement volume fell in 1st half year
Investor interest in closed-end real estate funds fell noticeably in the first half of 2008. According to a Scope survey, €1.57bn of equity was placed during that period, 34% below the volume raised in the same period last year. The survey indicates that this fund sector has taken a beating due to investor uncertainty following the sub-prime crisis. Even though the fundamentals are not expected to change in the short term, Steffen Möller, chief executive analyst at Scope, expressed confidence for the second half of the year: “Based on many similar reports, real estate funds in the second half of the year may pick up speed, for fund issuers that have been holding back over the past few months will come out with new products.” Among the fund issuers that, against the trend, were able to increase their placements in the first half year are Dr. Peters Gruppe, Commerz Real, and Nordcapital. Other big players, US-Treuhand and IVG for example, brought almost no new real estate products to the market during that period.
Munich Region: Cornerstone laid for 45,000 sqm Premiere headquarters
The cornerstone was laid for Premiere's new headquarters in Unterföhring. A ca. 45,000 sqm gross floor area building is being developed for the pay TV service on the approximately 26,500 sqm former Kirch AG property. Commerz Real AG is providing the funding as an investment. The 1,100 Premiere employees are to move into the new headquarters in the middle of 2010. Due to the insolvency of Kirch AG, which formerly owned Premiere, and the temporary loss of German football broadcast rights, the new headquarters project had been put off since 2006.
Dresden: Demand for office space falls 22%
According to a new market report by Dr. Lübke, the take-up of office space in Dresden is slipping: through the end of the second quarter, only around 30,400 sqm of office space was rented in the capital of Saxony. That is a rental space take-up about 22% lower than in the first half of 2007. The negative result is in any case somewhat relative because the five year average of 18% was exceeded. Due to low net reduction, offers for office space have only slightly declined compared to the 1st quarter and there is currently around 337,500 sqm available. With the total of office space at around 2.5mn sqm, this amounts to a still high vacancy rate of 13.8%. The highest rents in the top locations of Altmarkt and Prager Strasse have remained constant for over four years at €10/sqm. According to Dr. Lübke, real estate firms are currently being very cautious: The report says that consideration of new projects or re-development is usually undertaken only if there are large users of space involved.
Market: Mood is clearly worse
The mood of the real estate sector has significantly deteriorated in July. The monthly real estate economic index from King Sturge fell from 101.3 points in June to 90.8 points in July. That is the lowest level for the current year—the previous low was 97.1 points in April. Particularly strong is the decline among the 1,000 polled market participants of readiness to invest: this partial indicator fell 16% from 82.2 to 69.2 points. The second real estate climate indicator, the yield climate, sank only lightly from 121.7 to 114.1 points. The troubled mood, according to King Sturge, is a consequence of the real estate market's downturn. This statistically based estimated value fell in July from 176,4 to 169.2 points and, with that, has reached the lowest value since 2005.
Stuttgart: Häussler changes SWR Studios and Villa Berg plans
Rudi Häussler has presented his designs for the Villa Berg hotel and the neighboring SWR television studio area. Instead of the previously planned luxury suites, the top floor of the Villa will now have a business club and meeting place for entrepreneurs. Häussler told the Stuttgarter Zeitung that the ground floor continues to be reserved for a restaurant although instead of a gourmet facility it is now to be “a lifestyle restaurant with a pretty terrace, which welcomes families, too.” The planned investment volume is around €25mn. Häussler hopes he can still begin construction in 2008. Changes were also shown for the television studio area which will become available after the broadcast service leaves in 2011. Now, a new hotel will not be built there, but instead up-scale senior residences. The planned total investment will be in the area of €90mn.