FRANKFURT AM MAIN METROPOLREGION AUF WACHSTUMSKURS CLUB DES AFFAIRES DE LA HESSE BUSINESS LUNCH ANDREAS VÖLKER Frankfurt, 9. November 2017
Agenda Boomtown Frankfurt / Main The Only Way is Up? 1 Office Market 2 Investment Market 3 New Supply Conversion 4 Residential Market 5 New Supply Hybrid Towers 6 Outlook Contact 2
1 Office Market Frankfurt Best result of the last 15 years; 630,000 sqm forecasted for 2017 Development and forecast of take up in Frankfurt sqm Q1 Q2 Q3 Q4 average Q1 Q3 700.000 600.000 500.000 400.000 300.000 200.000 100.000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 + forecast Quelle: BNPP RE 3
1 Office Market Frankfurt Third place behind Berlin and Munich Frankfurt take up in comparison to the Big Six markets sqm 800.000 Q1 Q3 2016 Q1 Q3 2017 10ys average change Q1 Q3 2016/Q1 Q3 2017 700.000 600.000 500.000 400.000 300.000 200.000 100.000 0 9,3% 10,8% 27,2% 12,6% 9,6% 11,6% Berlin Munich Frankfurt Hamburg Düsseldorf Cologne Quelle: BNPP RE 4
1 Office Market Frankfurt Vacancy rate has fallen below the 10% threshold Development of vacant space (total and modern) and vacancy rate sqm 2.500.000 modern vacancy other vacancy vacancy rate in % 2.000.000 1.500.000 12,6% 13,5% 13,7% 13,7% 13,0% 12,3% 12,0% 11,6% 11,2% 1.000.000 9,8% 500.000 Quelle: BNPP RE 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1 Q3 2017 5
1 Office Market Frankfurt Construction activity roughly on the previous year's level; 58% of this volume is not pre-let Space under construction and available space under construction 600.000 sqm available space under construction not available share of available space 500.000 sqm 400.000 sqm 58% 58% 300.000 sqm 200.000 sqm 39% 37% 29% 29% 30% 31% 46% 47% 100.000 sqm 0 sqm 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1 Q3 2017 Quelle: BNPP RE 6
1 Office Market Frankfurt The top rent in Frankfurt rose by 14% to 40.00 /sqm after the financial crisis Development of top rent and average rent in Frankfurt /sqm top rent average rent 40,00 38.00 38.00 38.00 38.50 36.00 36.00 35.00 35.00 35,00 40.00 30,00 25,00 20,00 15,00 10,00 18.60 17.40 17.70 15.90 16.00 16.60 16.70 16.75 16.40 2009 2010 2011 2012 2013 2014 2015 2016 Q1 Q3 2017 Quelle: BNPP RE 7
1 Office Market Frankfurt Frankfurt is still the most expensive office market in Germany Top rents in comparison to the Big Six markets /sqm min./max. 10 years Q1 Q3 2016 Q1 Q3 2017 45,00 40,00 40,00 37,00 35,00 31,00 30,00 26,50 26,00 25,00 21,70 20,00 15,00 Frankfurt Munich Berlin Düsseldorf Hamburg Cologne Quelle: BNPP RE 8
2 Investment Market Frankfurt Second-best result of the last 10 years; 6 bn forecasted Commercial investment volume and share of foreign investors in Frankfurt m 7.000 Q1 Q3 remaining year share of foreign investors in % 70% 6.000 60% 5.000 4.000 53% 50% 40% 3.000 30% 2.000 1.000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 + forecast 20% 10% 0% Quelle: BNPP RE 9
2 Investment Market Frankfurt Net prime yield for office properties stands at 3.20 % Development of net prime yields (office) in comparison with London and Paris 6,00% Frankfurt London Paris 5,50% 5,00% 4,50% 4,00% 3,50% 3,00% 3,50% 3,20% 3,05% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q3 2017 Quelle: BNPP RE 10
3 New Supply Conversion Conversion of the former police department site in Frankfurt Main Address Friedrich-Ebert-Anlage 5-11 & 13-31 Mainzer Landstraße 98-104 Ludwigstraße 18, 60327 Frankfurt Gross floor area appr. 40,600 m² District Gallus Baujahr 1912-1916 / 1936 / 1960 Current use of the building Former police department of the city of Frankfurt am Main - the building is currently completely empty. VIEW 1: MAIN ENTRANCE (FRIEDRICH-EBERT-ANLAGE) VIEW 2: MAINZER LANDSTRASSE 11
3 New Supply Conversion Development of the former Deutsche Bank site 1 Office 2 Residential 1 Hotel & Serviced Apartments 3 Residential 4 Office Retail & Gastronomy Completion expected for 2022 215,000 sqm gross floor area Residential: 600 apartments and 1,000 residents Office: 90,000 sqm office space 12
4 Impacts of Brexit for Frankfurt Bis zu: 150 AP nach Dublin Bis zu: 250 AP nach Frankfurt Bis zu: 1.000 AP nach Frankfurt Bis zu: 200 AP nach Frankfurt, 100 Sonstige Bis zu: 6.600 AP (unbekannt) Bis zu: 1.000 AP nach Paris Dublin Madrid London Paris Frankfurt Bis zu: 400 AP nach Paris Bis zu: 1.500 AP nach Frankfurt, Madrid und Sonstige Bis zu: 100 AP nach Frankfurt Quelle:: BNPP REC / Frankfurt Main Finance e.v. AP = Arbeitsplatz Bis zu: 4.000 AP (vorauss. vor allem Frankfurt) Bis zu: 400 AP nach Frankfurt 13
4 Impacts of Brexit for Frankfurt Impacts on international banks 15 large international banks have announced plans to move jobs from London to Frankfurt Among them are primarily numerous American as well as Japanese major banks 14
4 Impacts of Brexit for Frankfurt Impacts on the office market Additional Impacts As a result of the relocation and the creation of jobs, 1,000 new jobs could be created in Frankfurt by the end of the year and 10,000 new jobs are expected for the next five years In view of these figures 200,000 300,000 sqm of office space are needed at the office market Frankfurt Based on the current situation there are about 240,000 sqm of modern vacant space in the city, the most prefered location for banks In the optimistic case 88,000 additional jobs resulting from secondary effects could be created in the Rhine Main region in the next 4 years Under this assumption, housing demand will increase especially for the high price segment in Frankfurt Almost 20 residential towers are already planned or under construction 15
5 Residential Market Frankfurt Noteable increase in all residential market segments Development of average rents according to residential market segments /sqm very good good average simple mean 19,00 17,00 15,00 13,00 11,00 17,0 14,8 14,2 13,7 12,5 9,00 7,00 5,00 1. Hj 2. Hj. 1. Hj 2. Hj. 1. Hj 2. Hj. 1. Hj 2. Hj. 1. Hj 2. Hj. 1. Hj 2. Hj. Quelle: BNPP RE 2011 2012 2013 2014 2015 2016 16
5 Residential Market Frankfurt Wide price ranges in the different residential sub-markets Rental price range according to residential areas /sqm 30,00 25,00 2016 in /sqm Ø in /sqm 24.70 25.10 27.30 20,00 18.90 15,00 12.40 13.70 15.00 16.90 10,00 5,00 0,00 10,20 11,00 8,30 8,70 simple average good very good Quelle: BNPP RE 17
5 Residential Market Frankfurt Growth rate of purchasing prices well above average increase in rental levels Development of purchase prices according to residential areas /sqm 7.000 very good good average simple mean 6.000 5.000 4.000 3.000 6,000 4,800 3,900 3,700 3,100 2.000 1.000 0 1. Hj 2. Hj. 1. Hj 2. Hj. 1. Hj 2. Hj. 1. Hj 2. Hj. 1. Hj 2. Hj. 1. Hj 2. Hj. Quelle: BNPP RE 2011 2012 2013 2014 2015 2016 18
6 New Supply Hybrid Towers Grand Tower Highest residential tower in Germany (174 m) Location: Europaviertel Completion expected for Q2 2019 Approximately 400 units Apartment sizes between 61 and 300 sqm 19
6 New Supply Hybrid Towers One Forty West 140 m high residentialand Hoteltower Location: Bockenheim Completion expected for Q1 2020 Nearly 200 apartments A Melia four star hotel 20
6 New Supply Hybrid Towers 160 Park View Two towers with residential and hotel spaces Location: Bockenheim 130 condominiums and a hotel with 150 rooms Completion expected for Q4 2019 21
6 New Supply Hybrid Towers Drei Schwestern Three residential towers Location: City Up to 500 residential units Sizes from 50 to 250 sqm Completion expected for Q4 2020 22
7 Outlook Commercial real estate market New records: We expect more than 630,000 sqm of office take up in Frankfurt for 2017 Rental price rises are likely to accelerate in the preferred market segments Frankfurt could reach the 6 bn mark of commercial investment volume in 2017 A further moderate fall for top yields cannot be ruled out 23
7 Outlook Residential real estate market Further lack of supply: According to forecasts, almost 800,000 people will live in Frankfurt in 2027 Further increases of rental and purchasing price levels is to be expected Serious problems to develop affordable housing within the city s boundarys Further compaction of inner city areas is pushed forward Building residential towers and new neighborhoods out of the city centre is gaining in importance Heighten suburbanisation Frankfurt needs to cooperate with the neighboring towns 24
Kontakt Andreas Völker Geschäftsführer BNP Paribas Real Estate Holding GmbH Goetheplatz 4 60311 Frankfurt am Main Andreas.Voelker@bnpparibas.com Weitere Marktinformationen im Internet: www.realestate.bnpparibas.de 25
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