ZEW/gif-Office Market Forecast - Rents For Offices in Prime Locations Strongly Increase

Prime rents at the five largest German office real estate markets Berlin, Hamburg, Frankfurt, Düsseldorf and Munich will considerably increase by two to five per cent in 2011 and 2012. At the same time, the vacancy rate will still be decreasing. These are the findings of a survey among real estate market experts, which was conducted from mid-August to mid-September 2011 by the gif-Arbeitskreis Marktanalysen und Bedarfsprognosen (gif market analysis and demand forecasting working group) in cooperation with the Centre for European Economic Research (ZEW) in Mannheim.

According to the experts, rents in Munich and Berlin will increase the most. Rents in the Bavarian capital could increase by around five per cent in 2011 and by around four per cent in 2012. Following the expectations, the vacancy rate will also be reduced. With little completion, the vacancy rate on all markets should be gradually decreasing. Concerning the rent level and the vacancy rates the majority of surveyed analysts named Düsseldorf as the weakest of all five German office real estate markets.

"The strong economic recovery in 2010 and in the first half of 2011 is shown by the growing demand for offices that pushes up the rents. However, the question arises to which extend the current economic risks and the ongoing European debt crisis will counteract this trend. Therefore it is exciting, which will be the results of the next office market forecast", says Prof. Dr. Felix Schindler of ZEW.

The interviewed experts base their answers on the assumption of a decreasing initial return. A reduction of between five (Hamburg and Munich) and 20 (Berlin) basis points is expected before the end of this year. “This is a sign of a high demand by German and international investors for high-class properties in Germany. Many see the German office real estate market as the safe harbour of Europe”, says Dr. Jaroslaw Morawski, one of the organizers of the survey.  In 2012 steady low returns are expected. But some experts already expect a reversal of this trend and a slight increase.

"The survey was joined by real estate market forecasters of the leading German and international real estate companies. This is what makes the survey especially valid", says Ullrich Werling, the initiator of the survey. "We plan to maintain this high standard for the future". Thomas Beyerle, head of the gif-Arbeitskreis, agrees and considers the project as an important contribution for the transparency of the German real estate market.

For further information please contact

Prof. Dr. Felix Schindler, Phone +49 621/1235-378, E-mail schindler@zew.de