Residential City Profile Cologne 2 nd half of 2017 Published in February 2018 Cologne
Socio-economic trends Cologne 2 nd 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. Families are moving to the surrounding region; influx of young adults continues The high level of population growth in Cologne from the previous year continued in 2016, albeit at a slightly reduced rate. The population increased by 1.2% or 12,509 to 1.082 million. The main reason for this growth was inward migration into the cathedral city, resulting in positive net migration of 9,745 people. Cologne is growing mainly due to a high inward migration in the 18 to 30 age group, whilst all other age groups have reported a fall in population due to outward migration. This is attributable to the attractiveness of the city as a place to study and start careers. There is a tendency amongst 30 and 45-year-old couples, especially those starting families, to purchase condominium apartments and relocate to the surrounding region, as evidenced by the many Cologne residents looking for properties suitable for young families and condominium apartments just outside the city limits. Nonetheless, Cologne s population is expected to continue to grow with the City Council forecasting a continual population increase to 1.187 million by 2040. Economy and demographics by comparison Residential City Profiles February 2018 2
Housing Market in Cologne 2 nd 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 * Completions of units through new buildings New concepts for Cologne s housing market The increasing scarcity of residential space in Cologne over the last few years has prompted the public sector to consider taking more control of the housing market. The Cologne Model involving the co-operative development of building land has not been successfully implemented to date and no subsidised apartments have been constructed although it has been in force since 2013. The intention is to implement its proposals over the next few years. This includes a requirement for new developments to comprise 30% publicly subsidised apartments and for investors to contribute to infrastructure costs resulting from these projects. At the same time, the public sector will make use of the town planning instruments at its disposal. For example, conservation areas will be designated to prevent the conversion of rental apartments to condominium apartments, and there will be a review of the guidelines relating to the provision of car parking spaces. A new urban development concept is intended to determine geographical focuses for residential new-build projects. Residential property market stakeholders and the city s residents are to be consulted on the new general principles in urban planning policy which fall under the Kölner Perspektiven 2030 banner (Cologne Perspectives 2030), with the intent of reaching agreement in 2019. Cologne is well behind other growing cities in the systematic implementation of a residential planning policy and this offers many opportunities to realign the city. After numerous years in discussion, the Kölner Wohnbündnis (Cologne Residential Alliance) between players in the residential economy and the City Council was signed at the end of 2017. Its objective is to release residential building potential and to strengthen the city of Cologne as a residential location in the period up to 2030. This is a non-binding agreement for the purposes of co-operation between participants, with the hope of increased residential development in Cologne. Residential City Profiles February 2018 3
The City Council s new-build target for 2019 is unachievable Housing supply and demand for new buildings The number of newly completed apartments fell significantly in 2016 compared to the previous years. There were just 2,100 new apartments constructed during the year. By contrast, the number of new building permits remained at the high level of almost 3,800, consistent with previous years. However, according to the City Council, there are many apartments nearing completion, which should signify a substantial increase in new apartments on the residential market in 2017. However, the City Council s target of approximately 6,000 new apartments p.a. in the period up to 2019 will not be achieved. In view of the forecast population growth, around 48,000 new apartments will be needed in the period up to 2025, requiring a dramatic increase in new-build activity to at least 5,000 new residential units p.a. Residential building completions 2015 and 2016 Residential City Profiles February 2018 4
Rental Housing Market in Cologne 2 nd half of 2017 Rental price bands for offered apartments of rental prices Median in /sqm/month Significant rent increases continue Over the past six months, there has been a downturn in asking rents observed for the first time since 2009, with rents falling by 2.6% or 0.30/sqm/month to 11.20/sqm/month over this period. This is the greatest half year rental decrease since 2004. It also signals an end to the upswing of the past three half years, in which rents have risen by 5% per half year. However, the current rental decrease must be treated with caution, bearing in mind the significant rental price hike of 37% over the past 10 years. Demand for residential space remains high in Cologne and new-build activity is below requirements for the time being, indicating that further marginal increases in rent are likely over the next few half years. Residential City Profiles February 2018 5
Rental price bands for offered apartments (2 nd half of 2017 in /sqm/month) All apartments New build (since 2013) District 10% Median rent* (50%) since H2 2016 in % 90% Median rent* (50%) since H2 2016 in % Innenstadt 10.55 13.75 0.8 22.00 15.80-2.3 Rodenkirchen 9.00 11.65 1.3 15.10 12.50-0.7 Lindenthal 9.70 12.40 2.1 16.35 13.65-0.1 Ehrenfeld 8.85 12.00 0.3 16.75 13.75 7.9 Nippes 9.00 11.05 6.7 15.55 13.55 18.3 Chorweiler 7.00 8.65 2.5 11.50 10.55 20.7 Porz 7.65 9.00 0.9 11.65 10.30-3.3 Kalk 7.60 9.60 4.9 12.40 11.15 14.2 Mülheim 8.05 10.00 5.9 13.60 11.35 3.0 Cologne 8.20 11.20 1.8 16.50 12.90-0.2 * Median rent: 50 per cent of the listings are above 50 per cent below this figure Most significant rental price decreases in the upper market segments In contrast to the first half of the year, which saw rents rise significantly in the upper half of the market (75 th and 95 th percentiles), there was a particularly dramatic fall in rents in the same segment over the second half of the year. It appears the market was testing the upper limits of the price range to breaking point. The rental level in the prime segment (95 th percentile) dropped by 19% compared to the first half of the year. Rents in the upper mid-priced segment (75 th percentile) fell by 6%. There was a marginal rental decrease of 1% in the mid-priced segment (median) compared to the first half of the year. Rents only remained stable in the lower market segment (10 th percentile) over this period. The fall in rents in the higher-priced market segments is also reflected in the year-on-year growth rates across the various submarkets. Whilst rents in the City Centre rose marginally, higher rent rises continued in the district of Nippes to the west of the Rhein and the districts of Kalk and Mülheim to the east of the river. These districts offer more reasonably-priced rental apartments and benefit from the shift in focus of potential apartment tenants. Rents in the new-build segment fell for the second half year in succession due to the increased supply in less highly-priced locations and lower building specification, and therefore cannot be regarded as a real price collapse. At the same time, the increase in new-build activity in districts such as Ehrenfeld, Nippes and Chorweiler has driven up rents in areas where there was historically little new construction of rental apartments. Residential City Profiles February 2018 6
The residential property market Cologne Asking rental prices in the second half of 2017 ì A 57 ì A 542 ì A 1 ì A 59 ì A 3 ì A 1 Chorweiler ì A 1 ì A 3 ì A 1 Nippes Mülheim Ehrenfeld ì A 57 ì A 3 ìa 4 Lindenthal Innenstadt Kalk ì A 4 ì A 559 ì A 4 ì A 59 ì A 3 ì A 4 ì A 559 ìa 1 ì A 4 ì A 555 Rodenkirchen ì A 3 Porz ì A 61 ì A 553 ìa 555 0 5 10 Kilometers ì A 59 Rent Level Average in /sqm/month on postcode level < 10.00 10.00 < 11.50 13.00 < 14.00 >= 14.00 Water Area Green Area Industrial or Traffic Area Other Area 11.50 < 13.00 Residential City Profiles February 2018 7
Condominium Market in Cologne 2 nd half of 2017 Purchase price bands for condominiums of purchase prices Median in /sqm Significant price increases for condominium apartments continue In contrast to the rental market, the upswing in purchase prices for condominium apartments continued apace in the second half of 2017. The asking price for condominium apartments rose by 11.1% to 3,480/sqm, making Cologne one of the fastest growing markets amongst the eight cities under review. However, prices in Cologne only started to increase substantially from 2012 and have risen by an average of 10.5% p.a. since then. The 10-year average growth rate is 6.7% due to a number of years in which prices stagnated. There is still a shortage of apartments available to purchasers, especially in highly sought-after locations and it is therefore likely that the upswing will continue in 2018, albeit at a slower pace given the significant growth rates of the past few years. Residential City Profiles February 2018 8
Purchase price bands for condominiums (2 nd half of 2017 in /sqm) All apartments New build (since 2013) District 10% Median price* (50%) since H2 2016 in % 90% Median price* (50%) since H2 2016 in % Innenstadt 3,470 4,680 3.8 7,210 5,530 4.9 Rodenkirchen 2,430 3,870-0.8 5,990 5,730 20.3 Lindenthal 2,170 4,340 10.0 6,090 5,490 5.1 Ehrenfeld 2,130 3,900 13.4 4,990 4,530 7.5 Nippes 2,600 3,540 10.3 5,000 4,780 10.0 Chorweiler 1,030 2,370 28.8 3,600 3,350 10.0 Porz 1,610 2,420 14.0 3,380 3,190-8.8 Kalk 1,590 2,670 18.5 3,880 3,640 16.1 Mülheim 2,050 2,820 16.7 3,790 3,680-17.3 Cologne 1,890 3,480 11.1 5,590 4,770 7.3 * Median rent: 50 per cent of the listings are above 50 per cent below this figure Widespread price growth across all market segments The upward trend in purchase prices has spread to all price categories in Cologne. There were price increases of 4% 6% in all market segments across the city compared to the first half of the year, depending on the market segment. However, there have been some wide divergences in growth rates between the various districts, mainly due to the different proportions of new-build apartments and variations in the level of supply. The highest year-on-year increase in asking price was reported in the district of Chorweiler. This was due to the availability of higher-priced apartments in the first half of the year, which had a great effect on price growth in the district s relatively small submarket for condominium apartments. Ignoring this effect, the growth rate in Chorweiler is the same as for the city of Cologne as a whole. In the district of Kalk, asking prices rose due to a 100% increase in the number of new-build apartments offered at significantly higher prices than in the previous year (+16%). The opposite is true in the highly sought-after City Centre submarket and the district of Rodenkirchen, where there appears to be marginal price increases. There are one third fewer new-build apartments available in these areas, where prices for both new-build and existing apartments have risen by between 4% and 20% year-on-year. By contrast, prices for existing apartments have fallen by up to 7% in the district of Lindenthal. The 100% increase in the supply of new-build apartments has resulted in a weaker demand for existing apartments in the district. Residential City Profiles February 2018 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 February 2018 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 Tobias Köhler Team Leader Residential Investment Düsseldorf Düsseldorf tel +49 (0)211 13006 670 tobias.koehler@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, 2018. 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.