Residential City Profile Cologne 1 st half of 2017 Published in August 2017 Cologne
Socio-economic trends Cologne 1 st half of 2017 Population and households 2016 Population Households District Total since 2011 (%) Migration balance* Natural population growth* Total since 2011 (%) Single-person households (%) Innenstadt 128,295 0.4 2,663 446 82,111-0.9 67.2 Rodenkirchen 108,182 5.6 946 34 53,899 4.2 47.0 Lindenthal 151,150 7.1 1,460 508 81,538 5.0 53.3 Ehrenfeld 107,957 3.3 786 399 58,179 2.3 54.0 Nippes 117,892 4.0 1,124 299 60,864 2.9 51.2 Chorweiler 83,546 4.1-89 194 36,134 4.7 32.8 Porz 113,611 4.9 359 39 53,888 4.4 41.3 Kalk 121,089 7.1 1,620 333 58,442 6.3 46.0 Mülheim 149,979 3.3 876 358 75,243 3.2 47.0 Cologne 1,081,701 4.4 9,745 2,610 560,298 3.3 50.5 * Net migration is the difference between inward and outward migration. Natural balance is the difference between the number of births and deaths Population growth mainly due to inward migration of young adults Cologne s strong population growth in 2015 continued in 2016, with the population increasing by 1.2% to 1.082 million. The main cause of this growth was inward migration to the city, leading to positive net migration of 9,745. Cologne is growing because of positive net migration of 18 30 year olds, whilst all other age groups are reducing in size due to outward migration. This demonstrates the strong appeal of the city as a place to study and launch careers. Almost half of the new arrivals hold foreign passports, with this figure including refugees who have arrived in the city over the past two years. In addition to positive net migration, Cologne has also seen a rise in the number of births. By 2040, the City of Cologne expects its population to grow steadily to 1.187 million. Economy and demographics by comparison Residential City Profiles August 2017 2
Housing Market in Cologne 1 st half of 2017 Stock data 2016 Residential buildings Housing units Housing completions* District Total Multi-family buildings (%) Total since 2011 (%) Total thereof in multifamily dwellings Innenstadt 9,593 85.7 82,508 0.7 32 31 Rodenkirchen 16,550 29.0 54,909 6.6 105 53 Lindenthal 20,569 39.8 82,678 4.6 593 454 Ehrenfeld 11,710 49.2 55,544 1.8 233 223 Nippes 12,431 52.1 60,584 1.0 272 237 Chorweiler 14,055 18.2 35,345 2.5 180 75 Porz 18,049 26.6 52,670 2.2 244 217 Kalk 14,153 41.7 57,322 3.4 277 132 Mülheim 20,212 40.0 74,226 1.5 181 162 Cologne 137,322 39.9 555,786 2.6 2,117 1,584 * Housing units in residential and other buildings Fall in the volume of completions and rise in the construction surplus After reaching a peak of almost 4,000 new homes in 2015, the number of residential units completed fell to around 2,100 in 2016. However, this should not be viewed as a trend reversal towards lower construction activity, as there was a simultaneous rise in the construction surplus to around 7,200 dwellings. More than two-thirds of these residential units are already under construction, with completion expected within the next 18 months. Over 70% of these homes are being constructed in multi-family dwellings. Major construction projects which will release high volumes of homes over the next few years include the Clouth site in Nippes, the Sürther Feld in Rodenkirchen and the Deutz AG site in Mülheim. At present, with around 7.2 of every 1,000 apartments, the focus of the completed projects is the Lindenthal district. Here, major projects are underway in Scheidtweilerstraße in Braunsfeld and on the western outskirts of Widdersdorf. A specific focus of the city s urban development programme is the preservation of the social housing stock. This increased for the first time in 2016, albeit by just 140 homes, but this means that one in every 15 homes in Cologne is the subject of a rental price cap / controlled occupancy. The City Council has quoted a target of around 1,000 new social apartments to be constructed every year. It also updated its cooperative construction model in April and hopes that by simplifying the adequacy test, it will simplify its application, as the model has only been applied once since its introduction in 2014. In future, the social housing quota of 30% will be applied to development projects comprising more than 20 residential units, and some of the infrastructure costs will have to be borne by investors. Residential City Profiles August 2017 3
Requirement for 48,000 new homes by 2025 By 2019, the City of Cologne wants to create around 6,000 new homes every year to meet the high demand caused by population growth. This corresponds to the estimate for the number of new homes required. Taking into account the population growth forecasts, some 48,000 new homes will have to be built by 2025. Although in recent years a high number of building permits have been issued and new development land quickly designated and activated, there are already signs that the supply of sites for residential development is drying up. This is reflected in land prices which in 2016, according to the local valuation board, increased by an average of 15% for sites designated for the construction of multi-family dwellings. Housing supply and demand for new buildings Residential building completions 2015 und 2016 Residential City Profiles August 2017 4
Rental Housing Market in Cologne 1 st half of 2017 Rental price bands for offered apartments of rental prices Median in /sqm/month Rents continue to rise sharply In the first half of 2017, asking rents rose by around 9.3% year-on-year to reach their current level of 11.50/sqm/ month. Rents have increased by 0.50/sqm/month or 4.5% compared to the previous half-year period, which is the second-highest half-yearly increase observed since records began in 2004. Therefore, the trend towards higher rental price growth, which has been emerging since 2016, continued in the first six months of 2017 and remains roughly four times the long-term average (which has been 2.2% per annum in Cologne since 2004). Considering the high population growth and continued insufficient level of construction activity, there is a higher likelihood of above-average rental growth over the next twelve months. Residential City Profiles August 2017 5
Rental price bands for offered apartments (1 st half of 2017 in /sqm/month) All apartments New build (since 2012) District 10% Median rent* (50%) since H1 2016 in % 90% Median rent* (50%) since H1 2016 in % Innenstadt 10.70 14.15 9.0 26.45 15.40 2.5 Rodenkirchen 9.30 12.10 7.2 18.05 13.50 9.2 Lindenthal 9.50 12.50 7.7 16.75 13.55 3.7 Ehrenfeld 9.55 12.10 8.2 19.20 12.90 7.6 Nippes 8.85 10.95 5.0 18.25 12.65 3.0 Chorweiler 7.00 8.95 9.3 11.05 10.00 7.9 Porz 7.50 8.85 1.0 11.95 10.65 6.6 Kalk 7.75 9.95 7.5 14.25 10.95 7.1 Mülheim 7.70 9.80 6.5 16.10 11.55 12.1 Cologne 8.30 11.50 9.3 19.40 13.20 6.7 * Median rent: 50 per cent of the listings are above 50 per cent below this figure Top segment sees rents increased by a third The following rental trends were observed in Cologne in the first half of 2017: The more expensive the residential location, the higher the rise in asking rents. In the top segment (90 th percentile), rent rose by an average of over a third. The upper-middle segment (75 th percentile) recorded an increase of around 15% year-on-year. In the lower half of the market, rent rises were still significantly high at 5% 7%, but the rise here was more moderate than in the upper market segments. One exception becomes apparent when looking at rental trends in the individual districts. Chorweiler showed the highest rise despite having some inexpensive rental apartments. Rents are rising sharply even in the city centre, by far the most expensive district. Ehrenfeld is ranked third amongst the districts in terms of rental performance, but is the only district to see a strong increase across all locations. The Porz district on the east bank of the Rhine observed little growth over the past six months, making it the most inexpensive district and taking over this role from Chorweiler. Rent rises in the new-building segment (i.e. apartments built since 2012) were slightly weaker than the rent rises observed across the market as a whole, at 6.7%. Cologne has an extensive urban area and as a result, prices vary widely. For instance, in poorer-quality peripheral areas, apartments are available for less than 11.00/sqm/month, whilst new-build apartments in sought-after central city districts cost an average of 13.00/sqm/month and even over 15.00/sqm/month in the city centre itself. Residential City Profiles August 2017 6
The residential property market Cologne Asking rental prices in the first half of 2017 ìa 542 ì A 57 ì A 59 ì A 1 ìa 3 Chorweiler ì A 3 Nippes Mülheim Ehrenfeld ìa 4 Lindenthal Innenstadt Kalk ì A 4 ìa 559 ì A 1 ì A 4 ì A 3 Rodenkirchen Porz ì A 61 ì ì A 553 A 555 0 5 10 Kilometers ì A 59 Rent Level Average in /sqm/month on postcode level < 10.00 10.00 < 1.,50 13.00 < 14.50 >= 14.50 Water Area Green Area Industrial or Traffic Area Other Area 11.50 < 13.00 Residential City Profiles August 2017 7
Condominium Market Cologne 1 st half of 2017 Purchase price bands for condominiums of purchase prices Median in /sqm Strong price rise for condominium apartments In the first half of 2017, asking prices for condominium apartments increased by around 6.8% to 3,140 per sqm. In contrast to the weak price rises observed in the second half of 2016, apartment prices are now increasing strongly by 5.4%, roughly corresponding to the upswing observed since 2012. Before 2012, purchase prices in Cologne had stagnated and therefore the overall growth rate for the entire period since 2004 is notably low at 3.9% per annum. However, this upswing is likely to be sustained over the next 12 months, assuming that the current favourable market conditions and low interest rates continue. There may, however, be a slight slowdown in growth rates. Residential City Profiles August 2017 8
Purchase price bands for condominiums (1 st half of 2017 in /sqm) All apartments New build (since 2012) District 10% Median price* (50%) since H1 2016 in % 90% Median price* (50%) since H1 2016 in % Innenstadt 3,510 4,580 8.2 6,940 5,220 7.1 Rodenkirchen 1,890 3,930 7.4 5,800 4,980 4.6 Lindenthal 2,100 4,110 9.1 5,680 5,320 16.3 Ehrenfeld 1,810 3,490 3.1 4,920 4,670 23.1 Nippes 2,390 3,500 18.6 4,910 4,660 13.6 Chorweiler 900 2,500 14.0 3,190 n/a n/a Porz 1,440 2,260 11.7 3,170 3,160-2.1 Kalk 1,530 2,390 12.1 3,680 3,460 11.9 Mülheim 2,010 2,630 10.3 3,810 3,580 12.0 Cologne 1,810 3,310 6.8 5,410 4,760 11.3 * Median price: 50 per cent of the listings are above 50 per cent below this figure Lower price segment sees the highest growth Price trends observed in the property market in the second half of 2016 continued in 2017. The strongest growth has been recorded in poorer quality locations and in the lowpriced segment, with prices rising twice as much as the average of the overall market in the lower half of the market, by 11% 15% year-on-year. In the upper-middle price segment (75 th percentile), prices have increased by 6%, almost matching the trend observed across the market as a whole, while the 2% growth recorded in the top segment (90 th percentile) is clearly below-average. The shift in focus of buyers to the most inexpensive segment is also evident when looking at the individual districts. Over the past six months, districts with predominantly poorer quality and inexpensive locations such as Porz, Kalk and Mülheim have seen the highest price rises, of between 12% and 21% yearon-year. The high growth in Nippes can be traced back to an increasingly expensive supply of new-build apartments, including the Clouth site. Prices of existing condominium apartments are growing at an above-average rate of 17%. In Nippes, prices have almost doubled in the lowest market segment (10 th percentile). In Lindenthal and Ehrenfeld, which saw the highest price rises for existing apartments over the past six months, asking prices are now rising at a modest rate of 5%. The new-build segment, i.e. apartments built since 2012, is experiencing a strong price rise. Similar to the rental market, the range of prices is wide in Cologne. In sought-after inner-city locations, the average prices are around 5,000 per sqm. Conversely, in average-quality locations on the outskirts of the city, prices are reaching only around 3,500 per sqm. Residential City Profiles August 2017 9
Division of Cologne districts and areas District Innenstadt Rodenkirchen Lindenthal Ehrenfeld Nippes Chorweiler Porz Kalk Mülheim Area Altstadt-Süd, Altstadt-Nord, Neustadt-Süd, Neustadt-Nord, Deutz Bayenthal, Godorf, Hahnwald, Immendorf, Marienburg, Meschenich, Raderberg, Raderthal, Rodenkirchen, Sürth, Rondorf, Weiß, Zollstock Braunsfeld, Junkersdorf, Klettenberg, Lindenthal, Lövenich, Müngersdorf, Sülz, Weiden, Widdersdorf Bickendorf, Bocklemünd/Mengenich, Ehrenfeld, Neuehrenfeld, Ossendorf, Vogelsang Bilderstöckchen, Longerich, Mauenheim, Niehl, Nippes, Riehl, Weidenpesch Blumenberg, Chorweiler, Esch/Auweiler, Fühlingen, Heimersdorf, Lindweiler, Merkenich, Pesch, Roggendorf/Thenhoven, Seeberg, Volkhoven/Weiler, Worringen Eil, Elsdorf, Ensen, Finkenberg, Gremberghoven, Grengel, Langel, Libur, Lind, Poll, Porz, Urbach, Wahn, Wahnheide, Westhoven, Zündorf Brück, Höhenberg, Humboldt/Gremberg, Kalk, Merheim, Neubrück, Ostheim, Rath/ Heumar, Vingst Buchforst, Buchheim, Dellbrück, Dünnwald, Flittard, Höhenhaus, Holweide, Mülheim, Stammheim Residential City Profiles August 2017 10
Sources Page 2 Chart Economy and demographics by comparison : destatis, municipal statistical offices, GfK Geomarketing, Federal Employment Agency, Oxford Economics; Table Population and households : Office for Urban and Statistics Cologne Page 3-4 Table Stock data : Office for Urban and Statistics Cologne; Chart Housing supply and demand for new buildings : Office for Urban and Statistics Cologne, Federal Institute for Research on Building, Urban Affairs and Spatial (BBSR), JLL; Chart Residential building completions : Office for Urban and Statistics Cologne Page 5-6 Chart Rental price bands for offered apartments : IDN ImmoDaten, JLL; Chart of rental prices : IDN ImmoDaten, JLL; Table Rental price bands for offered apartments : IDN ImmoDaten, JLL Page 7 Map: IDN ImmoDaten, JLL, Infas Geodaten Page 8-9 Chart Purchase price bands for condominiums : IDN ImmoDaten, JLL; Chart of purchase prices : IDN ImmoDaten, JLL; Table Purchase price bands for condominiums : IDN ImmoDaten, JLL
Contacts Ralf Kemper Head of Valuation & Transaction Advisory Germany Frankfurt tel +49 (0) 69 2003 1092 ralf.kemper@eu.jll.com Dr. Konstantin Kortmann Head of Residential Investment Germany Frankfurt tel +49 (0) 69 2003 1390 konstantin.kortmann@eu.jll.com Thomas Zabel CEO, Head of Residential Berlin tel +49 (0) 30 886600 115 t.zabel@zabel.com Helge Scheunemann Head of Research Germany Hamburg tel +49 (0)40 350011 225 helge.scheunemann@eu.jll.com Roman Heidrich Team Leader Residential Valuation Advisory Berlin Berlin tel +49 (0) 30 203980 106 roman.heidrich@eu.jll.com Sebastian Grimm Team Leader Residential Valuation Advisory Frankfurt Frankfurt tel +49 (0) 69 2003 1196 sebastian.grimm@eu.jll.com Author Julius Stinauer Associate Director Berlin tel +49 (0) 30 203980 184 julius.stinauer@eu.jll.com jll.de Information regarding JLL and our services jll.de/research All research reports on current market figures and special topics jll.de/immo Commercial real estate properties for sale or to let throughout Germany Copyright JONES LANG LASALLE GmbH, 2017. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them.