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DGAP-Media / 2018-10-17 / 07:00
*Press release*
*Study: Attractive yields in Eastern Germany's mid-sized cities*
*- For the first time, TAG's Housing Market Report 2018 analyses risk/reward
profiles in Eastern Germany*
*- Attractive yields of 4% to 12% and comparable risk profiles to Western
Germany*
*- Positive outlook for housing markets as vacancy rates decline*
*- Housing cost burden remains low, even as rents rise*
*Hamburg, 17 October 2018 *- Real estate investors can look forward to
yields of between 4% and 12% on Eastern Germany's housing markets. What's
more, the risk profiles of many Eastern German markets compare more than
favourably with Western Germany's large and medium-sized cities. In terms of
risk, it therefore makes little difference whether investors acquire
multi-family assets in Rostock or Düsseldorf. At 6.0%, however, gross yields
in the Hanseatic City of Rostock are significantly higher than the average
4.3% on offer in North Rhine-Westphalia's state capital of Düsseldorf.
Similarly, the level of risk associated with residential investments in
Magdeburg compares well with the risk profiles of numerous Western German
cities. Yet, at 7.8%, the average gross yield in Saxony's capital easily
outperforms the yields available in Bremen or Münster, where investors have
to settle for more modest gross yields of 5.8% and 4.3%, respectively. When
it comes to risk, there is almost nothing to separate Eastern Germany's
Halle an der Saale and Western Germany's Wiesbaden. In terms of gross
yields, however, investors enjoy a 3.0-percentage-point yield premium in
Halle.
These are among the key findings in TAG Immobilien AG's "Housing Market
Report Eastern Germany 2018". For the third year in a row, the real estate
consulting firm Wüest Partner Deutschland has analysed housing markets in 27
large and medium-sized cities in Eastern Germany, including data on
demographic and economic trends, rental and purchase prices and tenants'
housing costs. In a major new feature, this year's report also includes an
analysis of regional risk/reward ratios from an investor's perspective.
*Households up, unemployment down*
"Many Eastern German regions are experiencing extremely strong economic
growth, which certainly bodes well for the future and is already reflected
in rents, purchase prices, private consumption, incomes and labour markets,"
said Claudia Hoyer, COO of TAG Immobilien AG. "Cities such as Rostock,
Magdeburg and Halle have emerged as highly attractive destinations for real
estate investments," added Hoyer. Between 2014 and 2016, the populations of
Schwerin, Nauen and Görlitz grew by between 3.2% and 4.0%, a faster rate
than in Dresden (+2.0%) and Berlin (+3.0%). Over the same period, the number
of households in Freiberg, Görlitz, Merseburg, Halle, Greifswald and
Schwerin increased by between 5.5% and 8.8%, compared to a more modest 3.1%
and 4.2% in Berlin and Dresden.
*Risk/reward profiles in 27 Eastern German cities *
Please find attached the full press release with a chart "risk/reward
profiles in 27 Eastern German cities".
Unemployment in each of the study's 27 cities has also declined markedly
over the past six years. Döbeln, Freiberg, Potsdam, Jena, Nauen and
Eberswalde now have the lowest unemployment rates in Eastern Germany at less
than 6.0%. Significant population growth, an increase in households and
declining unemployment are all driving wage growth - and fuelling intense
demand for housing.
*Rents and purchase prices continue to surge*
With no let-up in economic growth in 2017, rental prices gained further
ground in a vast majority of the 27 surveyed cities. Asking rents in nine
markets rose by between 3% and 6% in a single year, including Stralsund,
Eisenach, Weimar, Magdeburg and Jena. In six other markets (Cottbus,
Leipzig, Strausberg, Schwerin, Nauen, Brandenburg), rents surged by 6-10%.
In Berlin and Rostock, asking rents increased by an eye-watering 14.8% and
23.6% respectively last year alone.
Condominium prices have also maintained their impressive upward trajectory,
rising by 3-6% in six markets, 6-10% in another six markets and 10-20% in
Erfurt, Gera, Leipzig, Merseburg, Berlin and Waren an der Müritz. The two
biggest year-on-year price increases in the existing condominium segment
were registered in Rostock (+27%) and Nauen (+42%). Prices in the newbuild
segment also rose substantially, with the strongest increases in Thuringia's
cities and in areas around Berlin and Potsdam, where prices rose by between
15% (Strausberg and Jena) and 30% (Potsdam and Weimar). In the city of
Brandenburg, prices for new apartments gained an average of 50% in just one
year.
*Asking rents and purchase prices in Eastern Germany, H1 2018 vs. H1 2017*
_Please find attached the full press release with a chart "Asking rents and
purchase prices in Eastern Germany, H1 2018 vs. H1 2017"._
Vacancy rates across all Eastern German regions have continued to decline as
demand for housing has skyrocketed. The only markets still suffering from
double-digit vacancy rates are Gera, Dessau-Roßlau and Görlitz. In
contrast, the markets in Berlin, Potsdam and Jena have effectively exhausted
their housing reserves as vacancy rates have plummeted to 1.1%. Housing
supplies are scarce almost across the entire region as vacancy rates have
declined in Dresden (1.9%), Rostock and Weimar (2.0% each), Waren an der
Müritz (2.4%), Erfurt (2.5%), Greifswald (3.5%) and Strausberg near Berlin
(3%).
*Rents remain affordable and housing can cost less than 20% of household
income*
Despite dynamic rental price growth, housing remains generally affordable
for Eastern Germany's many tenants. In a majority of the surveyed cities,
net rents (i.e. excluding heating and utilities) now average between EUR
4.80/sqm and just under EUR 9.00/sqm. Berlin (EUR 11.85/sqm) and Potsdam
(EUR 10.22/sqm) are the only two markets where average net rents have broken
into the double-digit range. Correspondingly, housing cost burdens in all of
the region's cities (with the exception of Berlin and Potsdam) have not
risen above 20-25% of net household income. In parts of Saxony, housing cost
burdens even remain well below 20%.
You can download the complete Housing Market Report Eastern Germany 2018 for
free at:
https://www.tag-ag.com/en/service/downloads/housingmarketreport/ [1]
*About TAG Immobilien AG*
TAG Immobilien AG is an MDAX-listed company with a history stretching back
over more than 125 years. The company's primary focus is on the Greater
Hamburg and Berlin areas, the Salzgitter region, Thuringia / Saxony and
North Rhine-Westphalia. Under the TAG Wohnen banner, TAG Immobilien AG
currently manages some 82,400 dwellings, together with their associated
commercial areas, garages and parking spaces. The company's goal is to
constantly improve the quality of its housing portfolio for its tenants. In
line with this goal, TAG develops its real estate holdings to meet modern
housing requirements, participates actively in the communities in its
residential quarters, and promotes a positive neighbourhood spirit. The
Group continually reduces vacancies and increases the value of its total
portfolio via the prudent management of its properties and the
future-oriented development of its overall portfolio, thereby delivering
added value and increasing returns for all of the company's shareholders.
*Press enquiries:*
*RUECKERCONSULT GmbH *
Katja Binnyus
Tel. + 49 (0) 30 2844987 41
Fax +49 (0) 30 2844987 99
_binnyus@rueckerconsult.de [2]_
_TAG Immobilien AG_
_Dominique Mann
Head of Investor & Public Relations
Tel. +49 (0) 40 380 32 300
Fax +49 (0) 40 380 32 388 _
_ir@tag-ag.com_
End of Media Release
Additional features:
Document: http://n.eqs.com/c/fncls.ssp?u=TKBYCQOUBB [3]
Document title: PR TAG Housing Market Report Eastern Germany
Issuer: TAG Immobilien AG
Key word(s): Real estate
2018-10-17 Dissemination of a Press Release, transmitted by DGAP - a service
of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
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Archive at www.dgap.de
Language: English
Company: TAG Immobilien AG
Steckelhörn 5
20457 Hamburg
Germany
Phone: 040 380 32 0
Fax: 040 380 32 388
E-mail: ir@tag-ag.com
Internet: http://www.tag-ag.com
ISIN: DE0008303504
WKN: 830350
Indices: MDAX
Listed: Regulated Market in Frankfurt (Prime Standard), Munich; Regulated
Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover,
Stuttgart, Tradegate Exchange
End of News DGAP Media
733939 2018-10-17
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(END) Dow Jones Newswires
October 17, 2018 01:00 ET (05:00 GMT)
