News from 11/05/2008
King Sturge Index: Real estate climate significantly worsens again
In its October poll, the Property Activity Index compiled by King Sturge registered the severest decline in the market's mood to date. Based on the poll, the real estate climate rating plunged by 20.5% to 55.4 index points. The earnings climate partial indicator plummeted an even larger 23.6% to 70.4 index points. The investment climate, the other partial indicator, is currently at 41.3 points (previous month: 49 points). On the other hand, based on hard macro-economic data, the drop in real estate market activity of 4% to 150.7 points was comparatively moderate. Market participants still considered residential property to be more stable in comparison to the office and retail segments. Nonetheless, here, too, according to King Sturge, the atmosphere is becoming increasingly glum.
Hamburg: Bouwfonds buys mixed-use building in Altona
Via an investment company, Bouwfonds Hamburg GmbH has acquired the "imPuls Schanze" project on the corner of Atonaer Strasse and Schanzenstrasse. The sellers are HIBB Hanseatische Immobilien Betreuungs- und Beteiligungs GmbH and VIVUM GmbH, which developed the project as a joint venture. According to HIBB's plans, the residential and commercial building is to have two floors for offices, three for residences, and the ground floor for retail on a total of approximately 8,000 sqm. A garage is planned for two below ground level floors. Completion of the project was previously planned for the end of 2009, but construction has not yet begun. HIBB states that the sale took place two to three months ago.
Duisburg: Construction begins on €45mn "Waterfront" project
The construction of the new "Waterfront" quarter between the Ruhrort and the Laar districts of Duisburg has begun. Approximately 20,000 sqm of office area and 110 apartments (about half for a senior citizen facility) will be built in the northern part of the €45mn project. In addition to a "Harbor Market" of some 8,000 sqm featuring a market hall as well as retail and gastronomy areas, there will also be a marina with slips for 120 pleasure craft. The entire railroad harbor area in which the project is being developed comprises a total of 100,000 sqm including almost 45,000 sqm that will be maintained as water area. Project developer Manfred Thim, who, together with Paul John de Jong and Klaus F. Herrmann, belongs to the management of Repro GmbH which is responsible for the project, said that three parties are already interested in operating the senior citizen facility.
Hochtief: Commerzbank reduces stake to 2.6%
Commerzbank has reduced its voting rights in Hochtief AG by reducing its stake in the construction firm from some 12% to 2.58% (1.805mn shares). Of this, 2.5% belongs to the Commerzbank via its subsidiary Atlas-Vermögensverwaltungs-GmbH. According to financial circles, Commerzbank had dispersed the now sold shares widely. In mid-October, the big Russian investor Oleg Deripaska sold his 9.99% stake in Hochtief, which he held via his holding company Basic Element, to the Commerzbank.
Berlin: Poland plans new €80mn embassy on Unter den Linden
Poland wants to build an embassy in Berlin for approximately €80mn. The site for the new building is a ca. 4,000 sqm plot at Unter den Linden 72. According to the news website "Polskaweb," Foreign Minister Radoslaw Sikorski announced that the existing, run-down embassy building that now stands on the area, unusable since 2000, will be demolished. The current location of the Polish embassy is a former military mission in the Grunewald district of Berlin.
MPC Capital: Placement of first closed-end Japan fund
The issuing house MPC Capital has started a closed-end property fund called "MPC Japan" and plans to invest €182mn in major Japanese cities. The fund is investing in nine retail and entertainment properties with €66.5mn in equity which is to be a silent participation raised from investors in Germany. The properties concerned are six buildings and three plots on which appropriate objects are standing. The fund company announced that on the average, the buildings are no older than one year and are rented long-term to creditworthy enterprises. The average remaining lease duration is said to be around 14 years. After Japanese taxes, including the sale, the company is forecastingforecasts cash backflow amounting to 173.5% of the investment within ten years. The acquisition of the objects was performed by MPC's Japanese partner Kenedix.
Duisburg: Office take-up drops to 14,000 sqm during third quarter
During the third quarter of 2008, only some 14,000 sqm of office space were taken up in Duisburg. According to calculations performed by Cubion Immobilien AG, take-up during the first three quarters of the current year amounted to 48,000 sqm—about 9% less than during the same period of the preceding year (52,800 sqm). Take-up during the first half of 2008, at approximately 33,500 sqm, almost reached last year's level. Markus Büchte, the board member responsible for the leasing division at Cubion, explained that, considering the fact that 2007 was a record-breaking year for the Duisburg office market, the result for the first three quarters can "still be categorized as excellent." As only 1,000 sqm of the total take-up from January to September, 2008, went to owner occupancy, the leasing volume during the current year already surpasses the entire year average of the last ten years by 4%, Büchte added. During the third quarter of 2008, vacant property, which is traditionally low in Duisburg, dropped further to 2.3%. Büchte elaborated that for new construction projects and areas with high user value, as little as 0.3% of the area is available at the moment. This "supply shortage" has led to a current peak rent of €13.60/sqm in Duisburg's inland harbor.