The strong decline in unemployment in Germany has increased interest in well-rented property so much that after the price increases in the narrow top segment, there is now talk an upturn also dawning at many B locations. This is the result of the recent IVG 'Market Report Germany 2011', based on a propriety scoring model for 75 office locations in Germany.
Increasing awareness of Germany and international investors for attractive real estate even outside the preferred locations in office strongholds such as Munich, Frankfurt, Hamburg or Berlin led the IVG Research Team headed by Dr. Thomas Beyerle and Dr. Oliver Voss to present not only the BIG 7 but also the most important B locations from an investment perspective. A chart shows the office rents and yields as well as the expected development trends from Kiel to Constance. Hamburg and Munich take the top rankings, while Halle an der Saale brings up the rear.
Dr. Beyerle commented: "For anyone walking or driving through German office locations one thing stands out - there are no cranes!" He regards restraint in the area of project development as a cyclical reaction to the implosion on financial markets.
However the picture would change during the year. Key questions dealt with by Beyerle and his colleagues in the IVG Market Report are: Where is upswing potential on the German real estate market? How long will the recovery phase which has started last? How do we deal with increasing vacancy levels? What is the role of B locations in national and international investment activities? Will 'value add', i.e. increased risk propensity, be the next investment stage for investors? Will leverage again be the fulcrum and synonym for the upturn in Germany?