PROPERTY MARKET REPORT 2020 - BUSINESS PROMOTION
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PROPERTY MARKET REPORT 2020 BUSINESS PROMOTION
CONTENTS THE PROPERTY MARKET IN THE HANNOVER REGION
Foreword 3
Dear Reader,
Investment market 4
Office property market 8 At the year's midpoint, the property market was dominated by the corona pandemic, which has been having varying
levels of impact on the property submarkets. After enjoying a very good start to 2020, Hannover’s retail, hotel and
Logistics property market 14 gastronomy submarkets are now considered to be the most severely affected. In the residential, office and logistics
submarkets, medium to long-term effects of the economic crisis caused by the pandemic remain unclear.
Residential property market 18
Traditionally, property markets experience a delayed response to crisis situations. For investors, Germany has always
Retail property market 22 been considered a safe haven in uncertain times, and Hannover in particular has in the past been generally less vola-
tile than other regions in Germany.
Hotel property market 26
The decline in all submarkets in Hannover this year has however been particularly high due to the exceptionally good
Imprint 30 previous year. In 2019 several records were broken, with floor-space turnover of almost 200,000 m2 for offices and
380,000 m2 for logistics, and peak office rents of 18 €/m2. Hannover was also very well positioned last year in the
Images 31 hotel and retail sectors. The total transaction volume in the Hannover Region for the four commercial submarkets
in 2019 exceeded €1 billion for the first time. The residential property market has been characterised for years by a
near-insatiable demand.
How Hannover's property sector will overcome the corona crisis is not yet fully clear from the perspective of the
majority of market players. At present, market data that is usually used for valuation purposes seems to be of limited
meaning or should be interpreted only cautiously.
It is therefore particularly important that assessing and categorising current developments in the Hannover property
HANNOVER AS A market is made on sound data and opinions from regional players. For this reason, this shortened issue of the market
PROPERTY LOCATION report presents the most important market data and trends, and is being published already at the beginning of
HAS THE POTENTIAL August.
TO OVERCOME THIS Hannover as a property location has the potential to overcome this crisis in a sustainable way. Property businesses
UNPRECEDENTED CRISIS who have been working together for 17 years with the city and region as well as with the support of bulwiengesa AG
IN A SUSTAINABLE WAY. to produce the property market report, are convinced of this. This property market report once again demonstrates
the commitment and trust in working together within Hannover’s property sector, especially in difficult times.
Ulf-Birger Franz Sabine Tegtmeyer-Dette
Head of Business, Transport and Education Department Head of Business and Environment Department, First Town Councillor
Hannover Region State Capital Hannover
Cover page: me and all hotel hannover, Aegidientorplatz Hannover
2 PROPERTY MARKET REPORT 2020 FOREWORD 3
INVEST-
MENT–
MARKET
View from the Intercity Hotel, Raschplatz Hannover
AN INVESTMENT The Hannover Region is an innovative industrial location, expanded Hannover's position as the most important
VOLUME OF AROUND a service metropolis and a logistics hub for national and location after Germany’s seven major A-locations. At the
international markets. The regional economy has developed same time, Hannover has been offering ever more appealing
€1 BILLION MADE positively in recent years leading to a sustained demand for investment opportunities and attracting investors wanting
2019 AN ABSOLUTE property in all submarkets. This has consolidated and to invest in locations that retain value.
RECORD YEAR IN THE
HANNOVER REGION.
4 PROPERTY MARKET REPORT 2020 INVESTMENT MARKET 5
MARKET MOODS
AND TRENDS
An investment volume of around €1 billion made Transaction volume for commercial property market Transaction volume for commercial property market When the markets pick up after the crisis,
2019 an absolute record year in the Hannover Distribution according to size classes 2015 to 2019 Distribution according to submarkets 2015 to 2019 Hannover as a property location must by then at
Region. The first quarter of 2020 also got off to the latest be in a position to again quickly satisfy
1,200 100 1,000
a very promising start. Shortly before the start of demand for core properties with the aforemen-
the corona lockdown, it was expected that 2020 tioned characteristics.
90 900
could even reach similar levels to previous record 1,000
years. 80 800 Investment pressure from national and interna-
tional investors remains very high due to a lack
Share of transaction volume in million €
70 700
Share of transaction volume in %
Towards the middle of the year, there was 800 of alternatives, thus securing opportunities for
Transaction volume in million €
however a collapse in activity and hence in the 60 600 investment in the Hannover Region. The situation
Hannover Region’s property investment market. is likely to calm down again at the beginning of
600 50 500
Hardly any significant new contracts were the third quarter, but will remain tense for the
concluded in the second quarter. Some transac- 40 400
time being, particularly in submarkets such as
tions that were initially suspended or postponed 400
retail or hotels, in view of the ongoing incidences
due to the pandemic give hope for a catch-up 30 300 of infection.
effect in the second half of the year, but a repeat
20 200
of the previous year’s strong result is currently not 200
anticipated. 10 100
0 0 0
Any concerns about a rise in opportunist investors
2018
2018
2016
2016
2019
2019
2015
2015
2017
2017
with speculative intentions in the regional market
are not shared by the majority of Hannover’s
players. Instead, they see opportunities and Above € 100 m € 50–100 m € 20–50 m Office Retail Volume in € m
expect new developments in all submarkets to € 10–20 m € 5–10 m Up to € 5 m Logistics and industry Hotel Other
focus even more strongly in future on sustain- Source: bulwiengesa AG, data for the Hannover Region Source: bulwiengesa AG, data for the Hannover Region
able utilisation and sustainable sectors rather
than on short-term high returns. Both users and Net initial yield in prime locations 2015 to 2020
project developers and investors will have to give
even greater attention to the sustainability of 6.5
buildings. Flexibility, digitalisation and the ability
6.0
to deal with crisis situations (e.g. from pandemics
and climate change) will be the key issues of the 5.5
Net initial yield in %
future.
5.0
Only when locations such as Hannover strengthen 4.5
their capabilities in this area will they be able to 4.0
compete with national property markets. Over
the years, construction and development in 3.5 AN INCREASE IN
Hannover has taken place according to needs and 3.0 OPPORTUNIST
with little speculation. Needs-driven projects in
INVESTMENT IS
2020
2018
2015
2016
2019
2017
Main rail freight station, Weidendamm Hannover
all submarkets are currently tending to coun-
teract vacancies and the threat of falling prices. NOT EXPECTED FOR
From the perspective of the regional property Logistics Office THE TIME BEING.
sector, this could prove to be a competitive Hotel Retail
advantage in this crisis. Source: bulwiengesa AG
For yield spreads, the lower end points are always given.
Data situation uncertain due to corona effects
Forecast first quarter 2020
6 PROPERTY MARKET REPORT 2019
2020 HANNOVER REGION INVESTMENT MARKET 7
Visualisation, Continental AG, Hans-Böckler-Allee Hannover
Office In 2019, office space turnover was almost
Office rental space 2020 in m2 MF-G 5.06 m
200,000 m2, an absolute record for Hannover and
the three surrounding towns of Garbsen, Laatzen
Hannover city 4.57 m
and Langenhagen. There is no shortage of attrac-
Surrounding towns of Garbsen, Laatzen and Langenhagen 0.49 m
tive projects. In the past five years (2014 to 2019),
Office space turnover 2019 in m2 MF-G 198,000
around 240,000 m2 of new office space has
Hannover city 158,000
been built and a further 115,000 m2 has under-
Surrounding towns of Garbsen, Laatzen and Langenhagen 40,000
gone complete renovation. By 2023, a further
Vacancy rate 2020 in m2 MF-G 180,000
400,000 m2 is to be added (of which 80,000 m2
Hannover city 145,000
will be redevelopments).
Surrounding towns of Garbsen, Laatzen and Langenhagen 35,000
Vacancy rate 2020 3.6 %
Hannover city 3.2 %
Surrounding towns of Garbsen, Laatzen and Langenhagen 7.7 %
Peak rent 2020 in m2 MF-G
City 17.00
City periphery 15.30
Average rent 2020 in m2 MF-G
City 13.00
City periphery 11.50
Net initial yield in prime city locations 2020 3.8 %
Source: bulwiengesa AG; Hannover Region surveys; information from market participants;
data as at mid-2020
MARKET MOOD:
STABLE DEVELOPMENT
DESPITE CORONA
OFFICE
PROPERTY
MARKET
8 PROPERTY MARKET REPORT 2020
2019 OFFICE PROPERTY MARKET 9
design offices, Philipsbornstrasse Hannover
Office space turnover 2015 to 2019 THE OFFICE Office rents 2015 to 2020
200 PROPERTY MARKET 20
IS IN THE MAIN 18
180
UNFAZED AND STABLE. 16
160
14
in €/m2 MF-G
140
12
Space turnover in thousand m2 MF-G
120 10
8
100
6
80
2020
2015
2018
2016
2019
2017
60
Office space vacancy 2015 to 2020
Peak rent, city Average rent, city
40 400 8
Peak rent, city periphery Average rent, city periphery
350 7
20 Source: bulwiengesa AG; Hannover Region surveys; information from market participants
Data situation uncertain due to corona effects, forecast to mid-year 2020
300 6
0
Vacant in thousand m2 MF-G
250 5
2018
2015
2016
2019
2017
Completions 2015 to 2023
Vacancy rate in %
200 4
200
Rental surrounding area* Owner-occupier surrounding
area 150 3
175
Rental Hannover Owner-occupier Hannover
100 2
* Value for the surrounding area (Garbsen, Laatzen, Langenhagen)
150
Source: Hannover Region surveys; information from market participants 50 1
125
0 0
in thousand m2 MF-G
2020
2015
2018
2016
2019
100
2017
75
Vacancy Hannover Vacancy rate Hannover
Vacancy in surrounding Vacancy rate in surrounding
area* area 50
* The vacancy rate was calculated and updated on the basis of the 2019 office
space survey for the Hannover market area. On the basis of the current survey, 25
the vacancy figures updated since the 2015 survey using estimates were
retroactively adjusted to the 2019 survey results.
Source: bulwiengesa AG; Hannover Region surveys; 0
information from market participants
2020
2022
2023
2016
2015
2018
2019
2021
2017
Data situation uncertain due to corona effects
Forecast to mid-year 2020
Newbuild–completions Hannover Renovations Hannover
Newbuild–completions surrounding area Renovations surrounding area
PROPERTY MARKET REPORT 2020 Source: Based on the bulwiengesa AG spring forecast; Hannover Region surveys; information from
market participants; data as at Q2/2020
Data situation uncertain due to corona effects, forecast as at mid-year 2020
10 PROPERTY MARKET REPORT 2020 OFFICE PROPERTY MARKET 11
design offices, Philipsbornstrasse Hannover
MARKET MOODS AND TRENDS
The current half-yearly results for the office prop- It remains to be seen how office space turnover
erty market reveal no decline for the time being. will actually develop. It is currently unclear what
By mid-2020, office space turnover was around effect the crisis-related intensification of digital
100,000 m2, and the peak rent had fallen only working and increased working from home will
slightly, remaining at a high level compared with have and whether the trend towards flexible
recent years. office space rentals and co-working, which has
also recently been observed in Hannover, will
An exceptionally strong first quarter underpins weaken.
the positive impression of the first half year. With
the onset of corona restrictions, however, market The number of office employees in Hannover is
activity came to a standstill also on the local however expected to continue to rise in the com-
office property market. This initial phase of uncer- ing years, so working from home and digitalisation
tainty seemed to have been overcome by the are likely to have only a short-term dampening
mid-year, strategic projects have not been halted effect on office rentals and project development
and negotiations that had been started are gen- volumes. Whether “pre-corona” growth rates in
erally being concluded without changes. turnover and rents will again be achieved in the
near future is not yet foreseeable.
However, the fall in the office property market is
particularly great this year after the 2019 record
year. Economic slowdown before corona meant
there were already initial signs of a cooling down
at the end of 2019/beginning of 2020. The
increasing rise seen in inner city rents over recent
years would probably have levelled off in 2020 design offices, Philipsbornstrasse Hannover
even without the impact of the corona crisis. The
current situation is accelerating the trend, and
rents should stabilise in 2020 at a still high, but
slightly declining, level.
IN 2020, THE FALL HAS
BEEN PARTICULARLY
GREAT AFTER THE
RECORD YEAR OF 2019.
12 PROPERTY MARKET REPORT 2020 OFFICE PROPERTY MARKET 13
LAPP logistics centre, Industrieweg Hannover
Logistics
LOGISTICS–
Logistics space available in 2020 in m2 3.71 m
of which constructed after 2009 1.45 m
Logistics space turnover in 2019 in m2 380,000
Rents in prime locations 2020
Peak rent in €/m2 5.20
PROPERTY
Average rent in €/m2 4.25
Net initial yield of logistics centres in prime locations 2020 4.4 %
All figures refer to the Hannover Region.
Source: bulwiengesa AG; Hannover Region surveys; current space is an update based on
existing space surveys from Q4/2019, data as at mid-2020
MARKET
Information provided by market participants in mid-2020
The Hannover Region is a European logistics hub and important hinterland
port location for seaports in northern Germany. Commercial and industrial
companies are the main drivers of demand in the regional logistics industry.
In recent years, many contract logistics companies have established them-
selves at the location, carrying out logistics tasks for other companies and
thus creating a high level of added value for themselves. Warehouse space
turnover at the end of 2019 was at a high of 380,000 m2.
Planned and known projects for the next few years (until 2023) currently
add up to a total of around 650,000 m2 of warehouse space and 30,000 m2
of office and mezzanine space for logistical use.
MARKET MOOD:
CAUTIOUSLY OPTIMISTIC.
14 PROPERTY MARKET REPORT 2020 LOGISTICS PROPERTY MARKET 15
MARKET MOODS
AND TRENDS
Logistics property turnover in the Hannover Region 2015 to 2019 Logistics/production completions in the Hannover Already in the first weeks of the corona crisis, The crisis has strengthened upstream and
Region 2017 to 2023 the logistics industry proved itself to be a key downstream logistics for the growing online
400 200 sector, indispensable for the supply of essentials. retail sector. On the other hand, the situation
The shutdown of the brick-and-mortar retailers is currently tense for property and logistics
350 180
led to a short-term sharp increase in demand infrastructures, which are primarily designed for
160
300 for storage solutions for goods that could not industrial logistics. This has hit the automotive
Warehouse space in thousand m2
Warehouse space in thousand m2
140 be delivered. At the same time, online retailers sector particularly hard. Regional market players
250
120 recorded a massive increase in orders. This devel- can foresee that in the medium to long term an
200
opment not only resulted in an increased demand increased demand for logistics and production
100
for warehouse space, but also increased the strain space (for light industries) could arise by produc-
80
150 on infrastructures in the courier, express and tion being brought back to Europe. To improve
60 parcel services sector. supply chain security in retail and industry as
100
40 a whole and make them more crisis-proof,
50 These impacts and demand drivers were also increased logistical space requirements are also
20
clearly felt in the Hannover Region. Available likely to arise in the Hannover Region. Market
0 0
space is however somewhat limited after the very participants urge that the foreseeable increase
2017
2018
2019
2020
2021
2022
2023
good previous year. For logistics and industrial and sustained high-level of demand needs to be
2018
2016
2019
2015
2017
property, turnover of approx. 135,000 m of2
met by designating new commercial sites and
warehouse space was recorded at the mid-year, speeding up approval processes.
Rent Own use Source: Surveys and own calculations by the Hannover Region
and rents have remained largely stable. Ongoing
Data situation uncertain due to corona effects,
Source: Surveys and own calculations by the Hannover Region
Forecast based on currently known projections negotiations and strategic projects already The increasing importance of logistics property
planned are generally being concluded or as an asset class is evident from the investment
continued unchanged. market. Investments in logistics properties also
took a leading position in the Hannover Region in
Rents for logistics and warehouse space 2015 to 2020 the first quarter and first half of 2020.
8
6
Rent in €/m2
4
Airport Business Park, Langenhagen
2
LOGISTICAL
0 INFRASTRUCTURES
HAVE BEEN
2020
2015
2018
2016
2019
2017
SUBJECT TO
Peak rent for logistics and warehouse space Average rent for logistics and warehouse space
STRESS TESTING
Source: bulwiengesa AG SINCE THE
Data situation uncertain due to corona effects, forecast to mid-year 2020 BEGINNING OF
THE CORONA
PANDEMIC.
16 PROPERTY MARKET REPORT 2019
2020 LOGISTICS PROPERTY MARKET 17
Housing at Kaltenweider Platz, Langenhagen
Residential
RESIDENTIAL
Rents 2020
Newbuild, peak rent in €/m2 15.70
Newbuild, average rent in €/m2 12.50
Re-let, peak rent in €/m2 13.30
Re-let, average rent in €/m 2
9.30
PROPERTY
Home buying 2020
Owner-occupied apartment, newbuild, prime group in €/m2 5,750
Owner-occupied apartment, newbuild, average in €/m 2
4,600
Multipliers 2020
Apartment blocks/investment properties, newbuild, prime group 30.0
Apartment blocks/investment properties, newbuild, average 28.0
MARKET
Apartment blocks/investment properties, stock, prime group 27.0
Apartment blocks/investment properties, stock, average 25.0
All figures refer to the State Capital Hannover.
Source: bulwiengesa AG; data from market participants as at mid-2020
The residential property market in the Hannover Region is characterised by
regional providers and demand from private households. Population growth
in the state capital and neighbouring municipalities has led to rising demand
in the residential property market in recent years. At the same time, housing
completions in the city and surrounding area has been insufficient, so a
considerable need for new housing exists at present and will continue in the
future.
MARKET MOOD:
POSITIVE AND PRACTICALLY NO
NOTICEABLE IMPACT FROM THE
CORONA CRISIS.
18 PROPERTY MARKET REPORT 2020 RESIDENTIAL PROPERTY MARKET 19MARKET MOODS
AND TRENDS
After a brief corona lull, which was probably due Building permits and completions Purchase prices of owner-occupied apartments Residential rents in the prime price segment in Hannover
more to uncertainty and a general wait-and-see City and Hannover Region 2015 to 2019 (newbuilds) in Hannover 2015 to 2020 2015 to 2020
(based on residential units)
attitude at the beginning of the lockdown, the 6,000 18
residential property market is currently crisis- 16
5,000 5,000
proof and comparatively unfazed by the impact
14
of the corona pandemic. At the moment, the
4,000 12
overwhelming majority of regional market players
10
see no negative impacts of corona on ongoing
in €/m2
in €/m2
3,000
8
and planned projects. For the short term, the 4,000
2,000 6
residential property market in Hannover is experi-
encing minimal effects from the crisis. Supply and 4
1,000
demand for residential property continues undi- 2
minished. Purchase prices and rents are stable to 0 0
slightly rising. 3,000
2020
2020
2015
2018
2016
2019
2015
2018
2016
2019
2017
2017
Number of residential units
However, even before the crisis a stabilisation in
purchase/rental rates had already been apparent Average Prime group Re-let Newbuild
for higher-priced offers. This ongoing trend has
2,000 Source: bulwiengesa AG Source: bulwiengesa AG
been reinforced by the effects of the corona
Data situation uncertain due to corona effects Data situation uncertain due to corona effects
pandemic. For the medium to long term, negative Forecast to mid-year 2020 Forecast to mid-year 2020
effects could take on a "hotspot" character,
where sectors or large companies are particularly
hard hit. It therefore remains to be seen in the 1,000
Hannover Region to what extent the macroeco- Residential properties – Multipliers 2015 to 2020
nomic crisis will impact on major, sector-leading
companies, e.g. in the automotive and tourism 30
sectors, which could possibly lead to sustained job 28
losses and widespread drops in income. 0 26
2018
2015
2016
2019
2017
24
If the need for affordable or subsidised housing 22
were to increase even more than previously,
Multiplier
Permits surrounding area 20
regional actors would see a future need for
Permits Hannover city 18
action. From the perspectives of project devel-
Completions surrounding area 16
opers and housing construction companies, any Completions Hannover city 14
scope for increasing prices for privately financed
Source: State Office for Statistics of Lower Saxony (Landesamt für Statistik Niedersachsen), 2020 12
apartments is almost exhausted. This is posing (Construction of new residential and non-residential buildings; excluding construction measures on
existing buildings and excluding residential homes; time series M8100116 and M8090116) 10
increasing problems for companies due to resi-
dential construction developments in the past
2020
2015
2018
2016
2019
2017
having usually been possible through publicly and
privately cross-financed projects.
Apartment buildings (existing) average
THE SUPPLY AND Apartment buildings (existing) prime
DEMAND FOR Apartment buildings (newbuild) average
Apartment buildings (newbuild) prime
RESIDENTIAL PROPERTY Source: bulwiengesa AG
IS UNDIMINISHED. Data situation uncertain due to corona effects, forecast to mid-year 2020
20 PROPERTY MARKET REPORT 2020 RESIDENTIAL PROPERTY MARKET 21Hirmer, Schillerstrasse Hannover
RETAIL
PROPERTY
MARKET
Retail In terms of turnover, the Hannover Region is one of the
strongest retail locations in Germany. In 2019, estimated retail
Sales area Hannover Region in m2 2.1 m
sales reached around € 7.9 billion. For 2020, pre-corona
Surrounding area 1.15 m
forecasts for the region remained at around € 7.6 billion. In
Hannover city 0.84 m
addition to Hannover's city centre with its prime locations of
of which inner city Hannover (Mitte district) 285,000
Georgstrasse and Bahnhofstrasse, customers are also attracted
Retail centrality 2020 (Germany = 100) by specialist retail centres, shopping centres, locations in
Hannover city 120.9 various city districts and attractive town centres in the
Surrounding area 106.3 surrounding area.
Purchasing power 2020 in € 8.21 b
Hannover city 3.77 b
Surrounding area 4.44 b
Retail sales 2020 in € 7.56 b
Hannover city 3.95 b MARKET MOOD:
Surrounding area 3.61 b NEGATIVE TRENDS ARE
Rent Q1/2020
EXPECTED TO INTENSIFY.
Peak rent, prime city location in €/m2* 185
Average rent, prime city location in €/m2* 145
Yields Q1/2020
Net initial yield in prime locations* 4.0 %
Net initial yield in specialist retail centres 5.1 %
* Bahnhofstrasse, Grosse Packhofstrasse, Georgstrasse
Source: Retail portfolio surveys commissioned by the Hannover Region (data at end of
2016); MB-Research 2020; estimates from market participants at the end of the first quarter
of 2020
Data situation uncertain due to corona effects
Forecast values are from the first quarter of 2020.
22 PROPERTY MARKET REPORT 2020 RETAIL PROPERTY MARKET 23Retail indexes 2015 to 2020 MARKET MOODS
130
AND TRENDS
125
Turnover index, Hannover
In 2019, rental turnover in the retail sector had Despite the current easing of lockdown for tradi- Corona should however not be seen as the trigger
Turnover index, region
120
stabilised in Hannover's prime locations as well as tional brick-and-mortar retailing in the town and for an unprecedented crisis in traditional retailing,
Centrality index, Hannover
in the city’s individual district locations and in the district locations in the Hannover Region, it will but rather as an accelerator of existing trends. In
Centrality index, region
115
surrounding town centres and shopping centres. take longer before widespread normalisation oc- Hannover's prime locations, a decline/stabilisa-
Purchasing power index, Hannover
Germany = 100
110 Purchasing power index, region In 2020, the year got off to a positive start and curs. Expectations of declining incomes and a tion in peak rents had already been observable
demand was good, largely due to gastronomy lower propensity to consume are affecting retail over recent years. Online retail is the current
105 Source: MB Research, 2020 concepts in the traditional retail locations. sales now and are expected to do so in the future. growth driver in the retail sector and can con-
100 Forecast data uncertain due to corona effects It remains to be seen whether economic stimuli, solidate its position during the pandemic while
Food retailers and local shops, by supplying es- e.g. from the temporary reduction in value-added expanding at the expense of brick-and-mortar
95
sentials, were able to escape the corona down- tax, will help brick-and-mortar retailing and gas- retailing. Insolvencies, particularly in the case of
90 ward trend in the rest of the retail sector and, in tronomy to stabilise sales in the short term. Reve- large department stores, fashion retail and ca-
some cases, substantially increased their sales. nue losses for tenants have also affected retail tering, could lead to many concepts (including
2020
2015
2016
2019
2018
2017
This crisis-driven demand has now returned to property owners, resulting in rent losses or de- chain stores) permanently leaving the Hannover
normal. In Hannover's city centre, 70–80 % of the mands for rent reduction. Region and Hannover city centre. Town districts
Retail rents 2015 to 2020 previous year's footfall figures (as of the begin- and integrated retail locations in the surrounding
ning of July 2020) will again be achieved. Visitor Many businesses are currently adopting a wait- area appear to be benefiting from their proxim-
260
numbers had fallen by over 80 % in some of the and-see attitude. The expansion of new retail ity to customers and their local supply function,
240
220
main shopping streets. concepts from Germany and abroad has been and could recover more quickly in the foreseeable
200
largely put on hold for the time being, with de- future.
180 mand for traditional retail space initially collaps-
ing completely. This should also have an impact
Peak rent, city in €/m2
160
140 on the demand for and positioning of retail prop-
120 erties on the investment market. The strength
100 and duration of such effects is currently hard to
80 assess and depends on the further course of the
60 infection.
40
20
0
2020
2015
2018
2016
2019
2017
Q1/
Peak rent, city (prime location) Average rent, city (prime location)
Source: bulwiengesa AG, estimates by market participants in mid 2020 Data situation uncertain due to corona effects, data status Q1/2020
CORONA DID NOT
Footfall, prime locations, Hannover
TRIGGER THE
CRISIS IN BRICK-
Comparison with previous year (2019 = 100 %)
120
100
AND-MORTAR
RETAILING, BUT
80
60
40
IT DID MASSIVELY
20 ACCELERATE
0 TRENDS.
Jan. 2020 Feb. 2020 March 2020 Apr. 2020 May 2020 June 2020
Hirmer, Schillerstrasse Hannover
Source: hystreet.com GmbH, data as at July 2020, total
Karmarschstraße Georgstraße Große Packhofstraße number of registered passers-by per month. Bahnhof-
strasse was not included for technical reasons.
24 PROPERTY MARKET REPORT 2020 RETAIL PROPERTY MARKET 25me and all hotel hannover, Aegidientorplatz Hannover
HOTEL
PROPERTY
MARKET
Hannover's tourism has grown steadily in recent years. Hotel
Overnight stays recently numbered over 4 million per year in the
Number of tourist accommodation establishments 2019 354
city and surrounding area. Business travellers who come to
Hannover city 111
Hannover, especially for the major trade fairs, are not the
Surrounding area 243
region’s only visitors. An increasing number of city tourists have
Hotels 2019 119
also been discovering the Hannover Region.
Hannover city 45
The attractiveness of Hannover as a destination is also Surrounding area 74
reflected in the hotel property market. At the beginning of Number of beds (all accommodation types) 2019 31,621
2020, around ten hotel projects offering around 1,350 rooms Hannover city 14,149
were being completed or under construction. At least twelve Surrounding area 17,472
hotels with around 1,700 rooms are in planning from 2020. Beds in hotels 2019 14,938
Hannover city 9,154
Surrounding area 5,784
Nights (all accommodation types) 2019 4.26 m
Hannover city 2.34 m
MARKET MOOD: Surrounding area 1.92 m
THE EFFECTS OF THE CRISIS Nights in hotels 2019
Hannover city
2.39 m
1.51 m
ARE HITTING MEDIUM-SIZED Surrounding area 0.88 m
BUSINESSES IN PARTICULAR. Arrivals (all accommodation types) 2019 2.28 m
Hannover city 1.4 m
Surrounding area 0.88 m
Average length of stay in days (all accommodation types)
2019
Hannover city 1.7
Surrounding area 1.9
Key figures for hotel chains, Hannover city (Fairmas) 2019
Figures represent the annual average for 2019. Occupancy rate, 2019 average 65.7 %
Source: State Office for Statistics of Lower Saxony
[Landesamt für Statistik Niedersachsen]; Fairmas, Room price, 2019 average in € 103.40
2020
RevPAR (revenue per room), 2019 average in € 67.90
Current data for the hotel market at mid-2020
is not yet available. It is not possible to fore- Net initial yield hotel in 2019 4.50 %
cast the data at present.
26 PROPERTY MARKET REPORT 2020 HOTEL PROPERTY MARKET 27Intercity Hotel at Raschplatz
THE SURVIVAL OF MANY
OWNER-MANAGED SMALL
MARKET MOODS
AND TRENDS
AND MEDIUM-SIZED HOTELS
IS UNDER THREAT FROM THE
Beds in hotels – development 2015 to 2019 Development of hotel businesses 2015 to end of Q1/2020 The effects of the pandemic are being felt particularly strongly in the hotel CORONA CRISIS.
market. An absence of business travellers, cancellations of trade fairs and
9,500 80
other major events as well as travel restrictions have placed extreme
9,000 75
pressure on hotels in recent weeks. Looking at the national market data and
70
8,500
applying it to the Hannover region, initial easing of restrictions has relieved
65
8,000 the situation only to a limited extent. Across Germany, occupancy rates in
Number of hotels
60
Number of beds
7,500 hotels open in June 2020 was only around 25 %. The average room rate was
55
7,000 € 88.40 and average revenue per room (RevPAR) € 22.20. The hotel industry,
50
especially in cities, is therefore still a long way from achieving revenues to
6,500
45
cover costs or make a profit.
6,000 40
5,500 35
The extent to which the existence of the regional hotel industry is actually at
5,000 30 risk depends to a large extent on further incidences of the virus as well as on
the prospects of a market recovery. All major leading trade fairs at the
2020
2015
2018
2016
2019
2015
2018
2016
2019
2017
2017
Q1/
Hannover location have now been cancelled for 2020 or postponed until
2021. The absence of business travellers in the current year can be compen-
City Surrounding area City Surrounding area sated only to a limited extent by city tourists, especially since events that
Source: State Office for Statistics of Lower Saxony [Landesamt für Statistik Nieder- Source: State Office for Statistics of Lower Saxony, 2020 (annual average 2015 to 2019 attract visitors, such as sporting and cultural events, etc., have also been
sachsen], 2020 (annual average) and data as at March 2020, based on hotels still open at that time) cancelled.
Many hotel businesses, especially owner-managed small and medium-sized
businesses, may not survive the crisis under these conditions. Their place
Key data for the Hannover hotel market 2015 to 2019 Overnight stays in the Hannover Region 2015 to 2019 could be taken by projects developed by the brand-name hotels. From the
4.5
property industry's point of view, the economic consequences of the crisis
2015 2016 2017 2018 2019 could lead in the short to medium term to a trend towards cheaper concepts
Hotels 42 40 43 45 45 4.0 in the budget and economy sectors. Future project developments may need
to be based on this approach. Although the number of hotel businesses will
Average 64.5 63.3 64.8 63.6 65.7 3.5
decline, the number of beds in Hannover is likely to increase slightly or at
occupancy in %
3.0
least remain stable due to the number of planned hotels to date, with hotel
Average room 91.0 99.3 101.6 104.5 103.4 operations tending to become larger.
price in €
Nights in millions
2.5
RevPAR (revenue 58.8 62.8 65.1 66.4 67.9 Property investors will also have to contend with these challenges. In recent
2.0
per available years, hotels have also been among the increasingly sought-after asset
room) in € classes in Hannover. However, it is questionable whether the many projects
1.5
Average stay 1.7 1.7 1.7 1.7 1.7 in the pipeline will actually be realised. Currently, many of the negotiations
(in days) 1.0 and strategic projects have been put on ice, aborted or suspended. All
regional market players expect that the hotel industry and thus the hotel
Beds in hotels 8,889 8,357 8,806 9,118 9,154
0.5
property market in particular will take the longest to overcome the
Source: Figures for Hannover city; State Office for Statistics of Lower Saxony, Fairmas performance
0
consequences of the corona crisis. Investors will have to price in these
indicators for the hotel chain industry, 2020
increases in risk and reflect them in their returns.
2015
2018
2016
2019
2017
Hannover Surrounding area
Source: State Office for Statistics of Lower Saxony [Landesamt für Statistik Niedersachsen],
2020, Table Z7360151
For all figures: Current data for the hotel market at mid-2020 is not yet available. It is not
possible to forecast the data at present.
28 PROPERTY MARKET REPORT 2020 HOTEL PROPERTY MARKET 29IMPRINT
Region president
Business and employment promotion department
The report’s content has been ANGERMANN Hannover GmbH Images Continental AG/ Henn: page 8
prepared by the Property Aurelis Real Estate Service GmbH Dirk Laubner: page 17
Market Report Project Group BAUM Unternehmensgruppe Frank Aussieker: page 18
bauwo Grundstücksgesellschaft mbH Henning Scheffen Photography: page 3 below
BEOS AG Peter Hiltmann: page 3 above
Delta Domizil GmbH Olaf Mahlstedt: cover, pages 6, 11 , 13 , 14 , 22 , 25, 27
Deutsche Reihenhaus AG Region Hannover, Sylvia König-Hapke: pages 5, 29
DIE WOHNKOMPANIE NORD GmbH
ENGEL & VÖLKERS COMMERCIAL Hannover
FIH Fürst Immobilien Hannover
GlaserProjektInvest GmbH
Gundlach Bau und Immobilien GmbH & Co. KG
GWH Bauprojekte GmbH
hanova WOHNEN GmbH
HAUS & GRUNDEIGENTUM Service
HE Hannover Estate GmbH
HENSCHEL IMMOBILIEN
HOCHTIEF Infrastructure GmbH Building Hannover
INTERHOMES AG
JLL SE
KSG Hannover GmbH
Landeshauptstadt Hannover, Fachbereich Wirtschaft
MERAVIS BAUTRÄGER GmbH
P3 Pekrul ProjektPartner GmbH
Business and Employment Promotion Department Hannover Region
S-GewerbeImmobilienVermittlung Hannover GmbH
STRABAG Real Estate GmbH
In cooperation with bulwiengesa AG
Text Hilmar Engel, Economic Development
Editor Sylvia König-Hapke, Marketing Department
Layout neuwaerts GmbH
Printing Druckhaus Pinkvoss GmbH
Issue 20/2
As at 8/2020
No guarantee is given for the correctness of the information, errors and omissions reserved.
30 PROPERTY MARKET REPORT 2020 IMPRINT | IMAGES 31REGION HANNOVER STATE CAPITAL HANNOVER
Business and Employment Promotion Business Promotion
Haus der Wirtschaftsförderung Haus der Wirtschaftsförderung
Vahrenwalder Straße 7 Vahrenwalder Straße 7
30165 Hannover 30165 Hannover
Hilmar Engel
Tel: +49 (0) 511 61623-241 Tel: +49 (0) 511 16831-313
Fax: +49 (0) 511 61623-453 Fax: +49 (0) 511 16841-245
wirtschaftsfoerderung@region-hannover.de wirtschaftsfoerderung@hannover-stadt.de
www.wirtschaftsfoerderung-hannover.de www.wirtschaftsfoerderung-hannover.de
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