Market Report 2011 GerMany - Europe Real Estate

2
Dear Readers,
In forming a valid opinion concerning the much talked about upturn, it is useful to examine it in detail. Firstly, in
geographical terms: The level of interest in what are described as B-locations is increasing significantly again – both
among domestic and foreign investors. This is an opportunity for us to present no fewer than 75 locations including
the TOP 7 as viewed from our investment perspective.
Next in line is construction activity: Walking around Germany’s office locations these days, one thing is immediately
apparent: The cranes are missing. A great many people still attribute this to “the recession”. And they are correct
insofar as current restraint in the area of development projects is still a cyclical reaction to the implosion of the
financial markets. However, this situation will change during the course of the year.
And finally, we turn our attention to the development of revenue and rents: In the interim, expectations of increasing
rents have returned to rental markets. The jubilant announcements of the fourth quarter of 2010, which saw a veritable
explosion in the number of leases agreed, are still ringing in the ears of many. Viewed superficially, this may
be interpreted as additional evidence of an upturn. However, closer inspection initially reveals that this still relates to
the decisions postponed during 2009 and 2010. Real increases in rents have thus far been confined to the top end
of the market. However, fears can also be dispelled in this area during the current year. The emerging price trends
are generally positive and although still rather sluggish, they are clearly visible in overall terms – and concentrated
disproportionately in the premium sector.
From the perspective of IVG, the scenarios outlined above do reflect a market reality that puts Germany as a realestate
location firmly back on a classic upturn trajectory. Or to quote our rather more exuberant American colleagues:
We’re at the centre of the “perfect storm”. Which brings us to the issue for investors: Where to invest in Germany
during this upturn outside the promising TOP 7? You’ll find answers to this question in our location scoring, which we
are publishing for the first time.
This Market Report Germany 2011 also aims to give you answers to other important questions: Where is the upside
in the German real-estate market? “Only” in terms of economic recovery? How long will the recovery that is currently
being talked up actually last? How do we deal with ever increasing vacancy levels? What role do the B-locations
have to play in national and international investment activities? To what extent will added value be the next investment
level for investors?
With this market report by IVG Research, our aim is not only to provide answers to the question outlined above. We
also wish to provide an overview of the market figures in the real estate location of Germany in 2011.
We hope you enjoy reading it
Oliver Voß Thomas Beyerle