News from 08/20/2008
Apartments: Gewos study for 2007 sees 3.6% price increase
After years of stagnation, the prices for units in condominiums in Germany rose noticeably in 2007, the ifs institution for urban development reported on the basis of a current Gewos study. The average price was said to have climbed by 3.6%, to €125,100. In western Germany, the increase, at 2.8%, was milder than in the east, where the average price increased by 9.4%. Stefan Jokl, the director of ifs, explained that this development is due, above all, to disproportionately high price hikes in metropolitan areas. While the upward trend in the prices of condominiums was clearly discernible, the change for single-family houses was indefinite with the average slightly sinking by 0.1% to €161,900.
Bavaria: 915,000 apartments needed
According to a forecast made by the research institute Empirica AG, 915,000 new apartments will be needed in Bavaria by 2025. Nearly one third of the demand—approximately 265,000 units—will be in the Munich region. Jürgen W. Heike, Bavaria’s secretary of the interior, said at a press conference, “We’re going to need more apartments, especially in Munich. Otherwise, the already very high rent prices will keep on rising.” Bavaria has a continuing downward construction trend: the number of building permits issued dropped by approximately 7% to 17,750 during the first half of the year compared to the same period in the previous year. Despite these figures, the demand for subsidies for residential construction increased significantly during the first six months. As of July 31, according to Heike, 31% more grants for resident owned and rental apartments were approved than during the same period in 2007. It was reported that, all in all, the State of Bavaria will be distributing some €200mn in subsidies this year.
Sparkassen Immobilien AG: Profit rises, EBIT falls
The Austrian Sparkassen Immobilien AG has submitted its business figures for the first half of 2008. Its EBITDA rose by 34% to €34.3mn (first half of 2007: €25.5mn). Due to the absence of a one-time effect during the same period in the previous year, the concern’s profit rose to approximately €9.0mn (first half of 2007: €1.0mn). On the other hand, due to low revaluation profits and heightened operating costs, EBIT fell to €32.2mn (first half of 2007: €40.8mn). Revenues climbed by 20% to €54.1mn,during the first two quarters of 2008 compared to the same period during the prior year, while rent revenues grew by 19%, to €42.9mn. German properties were still contributing the largest share of rent revenues at 42% (Austria: 30%; CEE countries: 28%). Due to heightened operating and maintenance costs for German residential properties, operating expenses increased to €27.4mn (first half of 2007: €21.4mn). The value of the property portfolio comprising 265 objects grew from €1.3bn to €1.7bn during the first six months of 2008. The total usable area amounted to 1,444,100 sqm (+33%). As of June 30, the gross rental yield for the entire portfolio was 6.3%; occupancy was about 91%. The company's management reaffirmed its forecast for all of 2008 at €99mn in revenue, €78mn in rental income and an EBIT of €72mn.
HGA/CRE: Joint nursing home fund goes on market
HGA Capital and Colonia Fonds Management GmbH are starting to market their joint closed-end nursing home fund, HGA/Colonia Care Concept I, which is investing in a portfolio made up of six nursing homes at six locations in Germany (Malente, Dortmund, Monheim am Rhein, Hannoversch-Münden, Reichertshausen and Ampfing). According to the initiators, the investment volume of the fund will be €75mn, of which €36mn will be in equity. Distributions are forecast to start at 6% annually, rising to 7% annually as of 2021. The presumed term of the fund will be approximately 18 years. The average lifetime of the leases for the nursing homes is 20 years.
Stuttgart: Expenditures for “Stuttgart 21” rise by €265mn
The rail project called “Stuttgart 21” will cost some €265mn more than had previously been assumed. The government of the State of Baden-Württemberg has now officially confirmed that construction costs are going to rise from €2.8bn to €3.076bn. The new sum is calculated under the assumption that construction costs will increase by 1.5% annually until 2016, state minister of the interior Heribert Rech declared. Only when this amount is exceeded, he said, would the €1.45bn risk fund established by the project’s partners be accessed. On the other hand, Rech admitted that further planning insecurity remains: “It’s clear that you can’t know down to the last cent today what the Stuttgart—Ulm railroad project will have cost after its completion in 2019.” The signing of a financing agreement is planned for October. The lion’s share of the expenditures will be borne by both Deutsche Bahn (approximately €1.3bn) and the federal government (€1.17bn). The State of Baden-Württemberg has pledged €370mn.
Logistics: Valad sees substantial demand growth
The Australian Valad Property Group is observing substantial growth in the demand for rented logistics space in Germany. During the first half of the year, the firm rented out approximately 90,000 sqm of office, storage and logistics space in existing buildings, 80% of this in the second quarter of 2008 alone. Despite the summer vacation period, it is becoming apparent that the trend towards strong demand, especially for logistics and storage space, will continue during the third quarter of 2008. In past years, the Hamburg and Düsseldorf regions were in the lead; now, significant growth is being recorded in the Frankfurt/Main, Kassel and Berlin areas. Valad’s CEO Klaus Kortebein said, “It’s becoming clear that firms are securing their space now, as new storage and logistic space now under construction will only be put on the market over the course of the next two years.”