Rent reversion in the German office market has significantly increased
The results of the German office rent reversion index (DMX), published annually by IPD and sponsored and initiated by the alstria office REIT-AG, show for 2011 that the German property market has significantly increased over the last year. While office rental space in 2010 showed nearly no potential for rental growth with a value of -0.4%, the potential to May 2011 increased considerably to a value of 3.9% in May 2011. The current average contract rent (rent stock) for existing leases is 12.89 EUR/sqm/month, which is significantly less than the current sustainable rents of 13.40 EUR/sqm/month.
The results of the DMX, which shall bring transparency to the rent reversion of the German office market, show for May 2011, that almost all the investigated cities have a positive rent reversion potential, but again with significant differences in the amount of potential in these locations. "This year again the DMX shows very interesting results and confirms once, why the German property market is particularly popular with foreign investors," said Lars Dierkes, Head of Lease Intelligence at IPD Investment Property Databank GmbH, Wiesbaden. "We see a significant potential for rental growth in almost all analyzed German office locations, which holds the chance of rising yields for investors."
The sustainable rents in the German office market have significantly increased during the previous year by 7.7% on average
The results of the DMX show that the German office rental market has recovered since last year. All analyzed cities show a positive growth for sustainable rents. Both the average contractual rent and the sustainable rent had a significant growth compared to the results of last year, with a higher increase of sustainable rents of 7.7% compared to 3.2% for contract rents. "The results of this year’s DMX is testimony of the positive momentum that is building up in the German office leasing markets", says Olivier Elamine, CEO of alstria. The only location with a slight decline in average contract rent is Cologne, where a slight decrease of contract rents was measured by -0.5%.
For all investigated locations, with the exception of Dusseldorf, a positive rent increase of 3.9% by average was measured. The highest potential for rental growth is currently measured in Hamburg with 9.6%, where the sustainable rents increased by 10.2% to 14,69 EUR/sqm/month and thus have risen disproportionately to the growth of contract rents with 3.0% to 13.41 EUR/sqm/month. Also a high potential rental growth can be seen in Munich (6.5%), Cologne (6.4%) and Berlin (4.2%). A slightly less positive potential for rental growth is currently seen in Stuttgart (3.8%) and in B-cities (2.9%).
Dusseldorf is the only location under investigation, still with negative rental growth potential, Frankfurt is currently close to balance
Despite the overall positive development of sustainable rent and contract rent Dusseldorf as the only location, as well as in the previous year, still shows a negative potential for rental growth currently of 2.8%. The amount of the negative potential has, however, due to the substantial growth of sustainable rent of 4.3%, decreased, as the contract rent only showed an increase of 1.5%. Therefore Dusseldorf shows a sustainable rent of currently 12.73 EUR/sqm/month and an average contractual rent of 13.09 EUR/sqm/month.
As close to balance results indicate for the contract rent in Frankfurt am Main. Despite a substantial growth of 6,8% in sustainable rent since last year the potential for rental growth is only 0,5%, as the average contract rent also showed a considerable growth of 7,3%. Therefore the contract rent of 19.61 EUR/sqm/month almost shows the same level as the sustainable rent of 19.71 EUR/sqm/month.
The DMX is calculated by comparing the contract rent of existing leases against the sustainable rent from the valuations of properties. The results of the DMX are based on eight sub-indices calculated from a stock of 21,000 leases with a monthly rental value of EUR 260 million. These leases are analyzed based on their market segment and the term of the lease and lease age.
The complete DMX results are available for free from IPD under www.ipd.com/germany or by email to germany@ipd.com
Hamburg/Wiesbaden, Germany, May 10 2011
About IPD Germany:
IPD devotes itself as a global service provider in the objective Performance measurement of institutional investors. As a global leader in real estate performance measurement and analysis IPD is present in more than 20 countries in Europe, North America, Asia, Africa and Australia. Our services and products include the publication of country indices, portfolio benchmarking, research, organizing conferences for investors, managers, owners and tenants.
The country indices of IPD are a globally recognized standard for performance and real estate markets and also form the basis for trading in property derivatives.
For more information visist www.ipd.com/germany.
Contact IPD Investment Property Databank GmbH
Lars Dierkes
Head of Lease Intelligence
Tel. 06 11 – 33 44 987
Email: lars.dierkes@ipd.com
Press IPD Investment Property Databank GmbH
Alexandra May
(Cert.) INVESTOR RELATIONS+COMMUNICATION
Tel.: 06 11 – 72 48 944
Email: am@alexandra-may.com
About alstria:
alstria office REIT-AG (symbol: AOX, ISIN: DE000A0LD2U1) is an internally managed Real Estate Investment Trust (REIT), that exclusively focuses on acquisition, owning and managing office real estate in Germany. alstria was founded in January 2006 and converted to the first German REIT in October 2007. The company, based in Hamburg, is listed at the Frankfurt Stock Exchange and on the SDAX.
The Company owns a diversified portfolio of office properties in attractive locations throughout Germany. Currently the portfolio of alstria comprises of 74 properties with a total lettable area of approximately 821,000 sqm and is valued at approximately EUR 1.4 billion.
alstria's strategy is based on active asset and portfolio management as well as on establishing and maintaining close and long-term relationships with customers and decision makers. alstria focuses on long-term real estate values.
For further information:
http://www.alstria.com/
http://www.alstria.blogspot.com/
www.twitter.com/alstria_REIT
Contact alstria office REIT-AG:
Ralf Dibbern
Phone: +49 - 40 - 226 341 329
Email: ir@alstria.de
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