|
News
No: 09pr059
Date: 11 February 2009
| Knight Frank’s Munich office letting and investment market research |
Munich, Germany The Munich office market saw office space
let in 2008 total 775,000 sq m and the letting volume was 6.5 per cent
lower than the year before (2007: 830,000 sq m), according to global property
consultancy Knight Frank. Owner-occupiers accounted for about 55,000
sq m of the letting volume in 2008 (2007: 130,000 sq m).
The total volume of lettings of 5,000 sq m and above decreased
by approximately 20% from 2007 to 165,000 sq m. Two thirds of all signed
contracts were for areas below 500 sq m. A 10 per cent increase was also
noted for lettings between 500 sq m and 2,000 sq m to a total of 230,000
sq m.
Daniel Czibulas, head of the letting department of Knight
Frank in Munich commented: “Excluding owner-occupiers, effective take-up
increased by 3%.“
Approximately 50 per cent of all lettings were in the city
centre and its immediate vicinity. Czibulas said: “Activity was particularly
noteworthy in Arnulfpark and its surroundings where 120,000 sq m was let
in 2008.“
The strongest demand came from consultancy companies and
law firms with a total take-up of about 120,000 sq m. Computer and
IT companies, industrial firms, and advertising and publishing companies
leased an area of approximately 85,000 sq m.
As per Knight Frank’s 2007 rental forecast, the Greater
Munich market remained stable and increased slightly during 2008. The
effective prime rent was Euro 32.00 per sq m per month and increased by 5%
year on year. Average rents were Euro 23.50 per sq m per month in inner city
areas, and Euro 15.75 per sq m per month for the entire city. In the Greater
Munich area average rents achieved Euro 10.20 per sq m per month, a decrease
of 6.5 per cent in comparison to 2007.
The overall vacancy rate, including new available accommodation
which is near to completion, was at the previous year’s level of 9.5
per cent, equating to 1.8 million sq m of vacant space in Greater Munich.
Czibulas added: “The current economic developments
in Germany will effect the Munich office letting market in 2009. The demand
for office space will decrease.“ Knight Frank predicts a decrease in
take-up of 20 to 30 per cent. The market in 2009 will be characterised by
stagnating prime rents, decreasing average rents, a significant reduction
in lettings above 5,000 sq m and increased tenant incentives.”
The Munich Investment Market
The transactional volume in the Munich investment market
decreased year on year by 70 per cent to Euro 1.9 billion from 2007, remaining
slightly above the volume reached in 2005 (2007: Euro 6.5 billion, 2006:
Euro 5 billion, 2005: Euro 1.7 billion). Ralf Mejovsek, director of investment
at Knight Frank in Munich explained: “The difficulties in the financial
markets and the global bank crisis have had a strong impact on the German
investment market. In the second half of the year, especially Q4, shortages
of financing affected investments from all investor groups.“
Retail properties were the most favoured asset class of 2008
turning over Euro 600 million – an unusually high return for the Munich
market. Whereas retail properties were in the focus of investors in the first
half of 2008, office properties accounted for the majority of the turnover
in the second half. Single transactions dominated the investment market in
2008. Portfolio transactions, which had a high significance in 2006 and 2007,
only accounted for 20 per cent of the turnover in 2008.
Mejovsek said: “Project developers and non-property
companies have been the most important buyers.“ The importance of national
investors rose significantly. International real estate funds and property
companies, who were the dominant buyers in 2006 and 2007, were less
prominent in 2008.
Prime yields in top locations in Munich moved out slightly
from 2007 and are currently at a level of 4.9 per cent.
At the moment, investors are mainly looking for properties
in prime and super prime city locations with long-term letting prospects,
a high letting volume and stable cash flow. The demand meets a restricted
supply. Meanwhile, non established and isolated office locations as well
as older and more out of date office buildings are seeing a reduction
in demand . Mejovsek observed: “Furthermore, there is a lot of uncertainty
about the future development of prices. Accordingly, there is often a difference
between the price expectations of buyers and sellers.“
Despite the weak prospects of the economy at the beginning
of 2009, national and international investors with a strong private equity
base still focus on large commercial centres such as Munich for investment
opportunities. Knight Frank expects an investment turnover of between Euro
1.2 billion and Euro 1.5 billion in 2009, which is around the average level
achieved between 2000 to 2005.
For further information, please contact:
Ralf Mejovsek, Knight Frank Munich GmbH & Co. KG, +49 / 89 / 83
93 12 – 111
Daniel Czibulas, Knight Frank Munich GmbH & Co. KG, +49 / 89 / 83 93
12 – 122
Liane Mletzko, Press and Public Relations Germany, +49 / 69 / 61 00 28 53
und +49 / 171 / 477 22 85
Ends
Notes to Editors
Knight Frank LLP is the leading independent global property consultancy. Headquartered
in London, Knight Frank and its New York-based global partner, Newmark Knight
Frank, operate from 196 offices, in 38 countries, across six continents. More
than 6,770 professionals handle in excess of US$700 billion (almost £355
billion) worth of commercial, agricultural and residential real estate annually,
advising clients ranging from individual owners and buyers to major developers,
investors and corporate tenants. For further information about the
Company, please visit www.knightfrank.com.
|
