Property Report 2013 STRONG FOUNDATIONS FOR NEW PROSPECTS BUSINESS PROMOTION

Transcription

1 Property Report 2013 STRONG FOUNDATIONS FOR NEW PROSPECTS BUSINESS PROMOTION

2 HANNOVER SUB-MARKETS AT A GLANCE Office property market Office rents in Hannover 2003 to 2013* 14,0 Hannover is easily the largest and most dynamic regional market in Germany. The location boasts over 4.9 million m 2 1 office space, and therefore the largest office property inventory after the seven A-locations. More than 1.1 million m 2 office space has been turned over in Hannover since 2003; with an average of 145,000 m 2 per year in the last five years. One of the characteristics of Hannover as an office property location is less economy-dependent letting turnover and rents, as well as more competitive yields. The investment risk is relatively low compared to the average figures for B-cities, because of the small amount of vacant space (5.9 % compared to 6.4 %) and higher market transparency. Lettable space office portfolio 2012 in m 2 MF-G* of which Hannover city 4.9 million 4.45 million in /qm MF-G 13,0 12,0 11,0 10,0 9,0 8, Peak rent city centre Peak rent city centre periphery 2007 * The reported figures for 2013 are based on the details provided by market players on developments in the first half 2013 Source: RIWIS@bulwiengesa AG: Hannover Region surveys; cross-checked details provided by market players Peak rent office centres of which surrounding towns of Garbsen, Laatzen and Langenhagen 0.45 million Office space turnover 2012 in m 2 MF-G* 150,000 of which lettings 2012 in m 2 MF-G* 115,00 Office space turnover* and vacant space** 2003 to Vacant space 2012 in m 2 MF-G** 265,000 Vacant space ratio 2012** 5.9 % Peak office rent city centre 2013 in /m 2 MF-G Peak office rent, city centre periphery and office centres 2013 in /m 2 MF-G in thousand m Net initial return in prime locations to 6.1 % Space turnover Vacant space * Figure for Hannover, Garbsen, Laatzen, Langenhagen ** Only state capital Hannover Source: RIWIS@bulwiengesa AG: Hannover Region surveys 1 Pursuant to MF-G, rental space definition according to the Gesellschaft für immobilienwirtschaftliche Forschung gif e.v. The value for Hannover, Langenhagen, Laatzen and Garbsen. As at end 2012 according to office space total survey by bulwiengesa AG and Baasner Stadtplaner

3 HANNOVER SUB-MARKETS AT A GLANCE Retail property market The Hannover Region is one of the five retail locations in Germany with the strongest sales.* The pedestrian precinct in the state capital Hannover is one of Germany's top A1 locations. Centrality 2 is high, the catchment area extends westwards as far as North Rhine-Westphalia. Retail sales space Hannover Region in m million of which Hannover city in m 2 877,00 of which Hannover city centre in m 2 290,000 Peak rent city centre A1 locations 2013 in /m 2 ** 190 Average rent city centre A1 location 2013 in /m 2 ** 140 Net initial return in A1 locations 2013** 5.0 to 5.2 % * with reference to retail sales at a district level ** Bahnhofstraße, Große Packhofstraße, Georgstraße Residential property market* The residential property market in Hannover is currently enjoying a significant upswing. Since the low in the construction of new housing in 2011, there has been much more dynamic development in the construction of new housing by major housing companies and project developers, as well as the trade in residential property. This development is boosted by the rise in the population of the state capital and neighbouring municipalities. Residential rent, new builds 2013, peak rent in /m 2 Residential rent re-let property 2013, peak rent in /m Purchase price for owner-occupied apartments in new builds, peak group 2013 in /m 2 3,875 Purchase prices owner-occupied apartments in 2,875 new builds, average 2013 in /m 2 Multiplier for apartment blocks/investment properties, average Logistics property market* Multiplier for apartment blocks/investment properties inventory, peak group 2013 Multiplier for apartment blocks/investment properties in new builds, peak group to to 22 Against the background of the eastwards expansion of the EU, the Hannover Region has become the European hub for goods flows and traffic. Hannover is second only to Hamburg as the most important logistics location in north Germany. Around 260 ha of logistics plots have been sold since 2003, and more than 1.1 billion invested in new construction projects new jobs have been created. * Values refer to the state capital Hannover Logistics space turnover 2012 in m 2 235,000 Peak rent (new builds with excellent building services and optimal transport connections) 2013 in /m Average rent 2013 in /m to 3.40 Net initial return prime buildings in prime sites to 7.1 % * Figures valid for the Hannover Region 2 According to the Gesellschaft für Konsumforschung centrality metric of for 2013 (D=100) Source for all additional details (if not specifically stated): RIWIS@bulwiengesa AG; calculations by the Hannover Region; cross-checked details from market players from the project round of the Hannover Region Property Report

4 THE MOST IMPORTANT FIGURES AT A GLANCE million inhabitants in the Hannover Region /m 2 peak rents for office space in the city centre ,000 m 2 office space turnover / m 2 peak retail rent 1.1 million m 2 new-build warehouse space for logistics since 2007 TOP 5 ranking of Germany's retail locations with the strongest sales (GfK) 1.1 billion investment volume in the logistics location since ,000 new housing units by ,000 more inhabitants in the city of Hannover by 2025

5 CONTENTS 3 Foreword Strong foundations for new prospects Page 4 Hannover Region location Space for innovations Page 6 Office property market Solid development, stable turnover Page 14 Retail property market Well frequented, in strong demand Page 32 Logistics property market Logistics hub with potential Page 44 Residential property market Homes for all: Challenge and opportunity Page 54 Hannover in comparison Page 64 Imprint Page 66

6 Johnson Controls invested more than 20 million in the refurbishment and modernisation of its main administration building on the banks of the Leine in Hannover. Originally built in the 1960s, the building was converted according to the designs of Schulze & Partner Architektur to enable the office building to gain the LEED green-building-standard gold certificate.

7 FOREWORD 5 Strong foundations for new prospects Dear Readers, In the last decade, Hannover has established an impressive reputation as the most important regional location in the commercial property market in Germany. Investors praise the region for its solidity and robustness across all market segments from retail to logistics properties, as well as residential and office properties. Peak rents are less volatile than in comparable prime locations around the country. The stable market in Hannover is also supported in part by the minor amount of speculative building. First published in 2003, the regional Property Report has helped to establish a high degree of market transparency. Key metrics on all the relevant sub-markets across the region have been compiled and comprehensively prepared for more than a decade by the Regional Business Promotion Department working in co-operation with a growing number of partners from the property sector. This, the eleventh issue, was prepared jointly with nineteen partners. The regional business promotion experts ensure that the high standards of the Gesellschaft für immobilienwirtschaftliche Forschung (gif) (the Property Industry Research Corporation) are observed, and engages the well-known consulting company bulwiengesa AG to examine and supplement the findings. By contributing to this report, the market players in Hannover not only make a valuable contribution ensuring a high level of market transparency, they also highlight their strong commitment to the location. The companies involved in the property market in Hannover have worked together actively and dependably for many years on location marketing and communication. This provides an optimal platform for implementing successful projects in Hannover. Ulf-Birger Franz Head of the Business, Transport and Education Department Hannover Region Sabine Tegtmeyer-Dette Head of the Business and Environment Department First Town Councillor State capital Hannover

8 The Hochschule Hannover took over the former Planet M of the Bertelsmann Group constructed for the EXPO 2000 World Exposition and turned it into Planet M where it educates creatives in the media, information and design faculties.

9 HANNOVER REGION LOCATION 7 Space for innovations The Hannover Region is the leading business location in Niedersachsen. Strongly influenced by the dynamic structural transition from an industrial to a knowledge economy, the region has established itself as a robust business area in recent years compared with the rest of the country. The property market is sustainably underpinned by the continuous growth of the regional economy. Growth in jobs despite crisis The regional economy did not even falter during the most recent global financial market crisis, and continued to demonstrate its robustness and lack of any significant volatility. Despite a reduction in jobs in some business sectors such as the manufacturing industry or the financial services sector which was particularly badly hit by the crisis the region succeeded in continuously expanding the number of jobs in the area since the middle of the last decade. The number of jobs grew by around 25,000 between 2008 and The Hannover Region profits here from its position as a major university and education location, as well as the high number of start-ups in the high-tech sector. Thanks to the eastwards expansion of the European Union, Hannover is now located more strongly in the centre of Europe, and is increasingly enjoying its major hub function within the European transport infrastructure. Targeted: Research locations bundle their innovation strength Hannover's strong position in the regional rankings is considerably boosted by its research and scientific activities. On the one hand, the aim is to encourage more innovative and strongly science-based companies from promising future sectors to locate their operations in Hannover to tie additional capital and jobs to the Hannover Region locations. On the other hand, eye-catching locations with high profiles are to be created for strongly science-based sectors. Iconic examples include the campus for the media, information and design faculties of The new TECHNOLOGY CENTRE (TZ) opened in the Science and Technology Park Hannover in Marienwerder in June The aim is to assist the launch of technology-centric start-ups by providing tailored rooms in the 3,800 m 2 building. Hochschule Hannover created in recent years at the Expo Plaza around the futuristic Expo pavilion constructed by Bertelsmann AG. At the Science and Technology Park Hannover in Hannover's north, new plots are available for companies working in the engineering sector. After the stream renaturisation of the Rossbachgraben, and landscaping to create a park, this former industrial brownfield site covering around 20 hectares has been turned into a campus with its own very special identity, offering very attractive working environments. The new Technology Centre (3,800 m 2 ) offers space tuned to the needs of technology- centric start-ups. Building plots covering approx. 100,000 m 2 are available within the Science and Technology Park Hannover.

10 8 HANNOVER REGION LOCATION Construction started in July 2013: the Innovation Campus of the audio technology manufacturer Sennheiser electronic GmbH & Co. KG includes offices as well as an events centre. The administration building faced with sandstone bricks typical of the area contrasts with the modern aluminium skin of the event building. The total investment for the approx. 7,000 m 2 building complex is approx. 20 million. The relocation of the mechanical engineering faculty to Garbsen, scheduled to be completed by 2017, will open up a new campus for the Leibniz University. Around 5,300 people will study, work and do research at the future Mechanical Engineering Campus. The state of Lower Saxony will invest around 90 million in several buildings directly opposite the already existing Production Technology Centre (PZH). The new building complex will cover almost 21,000 m 2. In addition to test centres, lecture theatres, laboratories, seminar rooms and offices, the plans also include a refectory as well as opportunities for students to work all clustered around a central area with a modern open-space design. Non-university research institutes and regional research companies are also investing in the infrastructure. The Test Centre for Load-bearing Structures is currently being built in Garbsen directly opposite the campus. The approx. 20 m high test building with a 10 m deep pit filled with sand and water will enable the Fraunhofer Institute for Wind Power and Energy System Technologies (IWES) and other institutes from the Leibniz University to recreate offshore conditions and test realistic components designed for offshore wind parks. The total costs for this project, which is unique in Europe, will be around 25 million. The research centre is scheduled to start its work in the middle of Historical flair and state-of-the-art event technology are all incorporated within the re-built Herrenhausen Palace in the Great Garden of the Royal Gardens of Herrenhausen one of Hannover's biggest tourist attractions. The shell of the building is a complete reconstruction of the summer palace of the Guelphs, designed in the neo-classic style by Laves in the 19th century. Other important construction projects for research activities will also be completed in the following year. The Research Centre for Biomolecular Active Substances (2,000 m 2 ) is being built at Schneiderberg to house scientists doing research on active and natural substances to improve their utilisation in medical applications. Biologists and botanical engineers aim to penetrate the tiniest structures in plants at the laboratory incorporated in the Centre for Molecular Plant Science (2,500 m 2 ) scheduled for completion by the end of 2013 on the Herrenhäuser Straße directly opposite the Great Garden. The Clinical Research Centre (6,000 m 2 ) is being erected on the same site as the Fraunhofer Institute for Toxicology and Experimental Medicine. This study centre for medical research will be the first of its kind in Germany. In co-operation with the Hannover Medical School (MHH)

11 HANNOVER REGION LOCATION 9 The competition for designing the future Mechanical Engineering Campus of the Leibniz University was won by the architects firm Auer+Weber+Assoziierte from Munich. Eleven institutes will move to Garbsen from the present campus in Hannover's Nordstadt. The new buildings (21,000 m2) are grouped around a central piazza boasting a modern open-space design. The state of Niedersachsen is investing 90 million in this project, which is intended to be implemented over several years from 2015 to the end of and the Helmholtz Centre for Infection Research, new and still unapproved medicines can be investigated to assess their safety and effectiveness. The Niedersachsen Centre for Biomedical Technology, Implant Research and Development (7,000 m 2 ) bundles the research competence of the medical technology and engineering experts at the MHH, the University of Veterinary Medicine Hannover, and the Leibniz University, with the aim of developing better functioning and much more durable implants. The Sennheiser Innovation Campus is scheduled for completion in the Wedemark by the end of Sennheiser is one of the world's leading manufacturers of microphones, headphones and wireless transmission systems. The modern building with a floor space of around 3,200 m 2, houses offices as well as a theatre with seating for up to 199 people. The theatre provides an ideal test bed for testing and further optimising new products under real conditions. A flagship store will have been invested in the latest Sennheiser products. Around 20 million is being invested in the new building complex by the end of Investments in the trade fair and congress infrastructure strengthen market position The city of Hannover boasts the world's largest show grounds with around 470,000 m 2 of covered exhibition space (halls), making it one of the foremost international trade fair locations. This is highlighted in particular by Hannover's leading fairs: CeBIT, the leading international show for information and communications technology; the Hannover Messe as the broad-based forum for industry; and Agritechnica the world's largest agricultural technology show. The exhibition grounds are an important factor publicising and raising the awareness of Hannover as a business location, and give a positive boost to its image: Deutsche Messe AG is currently planning the construction of a multifunctional arena (approx. 50,000 m 2 ) to replace show halls 19 and 20. This will also enable it to optimally cater to the growing market for combined trade fairs and congresses ("Confairs"). Herrenhausen Palace has been the new magnet for congresses since the beginning of The Volkswagen Foundation invested 20 million in the reconstruction of the building and the new integrated underground conference infrastructure. The wings of the palace provide additional exhibition space for the city of Hannover's Museum of History. The new "old" palace which stands exactly on the footprint of the original building destroyed during the second world war in 1943 enjoys an eye-catching position at

12 TRENDS IM ÜBERBLICK Home ground of the Hannover 96 football team Germany's third biggest insurance group Talanx with its HDI brand took over the name sponsorship for the stadium for at least seven years starting from the 2013/2014 season. The sport's arena, which was converted extensively for the 2006 World Cup, is also one of the most important open air concert venues in North Germany. The eye-catching stadium architecture, with the arches of the roof construction covering the stands, is already an integral part of the silhouette of the city and the region.

13 HANNOVER REGION LOCATION

14 12 HANNOVER REGION LOCATION In recent years, Munich-based DIBAG has invested around 27 million in the renovation and extension of the listed "96" factory building at the HANOMAG site in Linden-Süd. High quality modern architecture in the courtyard attractively complements the industrial buildings. Approx. 14,000 m 2 of office space has been created in total in the ensemble, and the companies renting space here include Windwärts Energie GmbH and the creative and start-up centre Halle 96 run by hannoverimpuls GmbH. the head of one of the most beautiful baroque gardens in Europe. Revitalisation and sustainability are the leading principles Sustainability in Hannover is placed within an even broader context: the focus is not only on individual buildings urban and regional development take into consideration all city districts, the town as a whole and even the complete region in its planning activities. The property market in Hannover has been dominated for many years by the revitalisation of brownfield sites. Space for new sustainable property concepts is created in the existing property portfolio and brownfield sites in Hannover. An excellent example is the Podbielskistraße. The development of office space and residential accommodation has succeeded in revitalising the premises of well-known traditional Hannoverian companies such as Bahlsen, Pelikan, Geha and Deutsche Grammophon. They now enjoy reputations as major office and residential sites within the city. 180 million has been invested here so far. Another 190 hectares of brownfield sites have also been identified as having potential for commercial use within the city and the surrounding area. In addition to being a major challenge, these sites also represent a major opportunity for urban and regional development, as well as the regional (property) sector. The revitalisation of the former HANOMAG site in the west of the state capital has finally hit the finishing straight. In the last four years alone, over 30,000 m 2 of new office space has been created here ambitiously integrated within the old industrial architecture. The so-called U-boat factory (interior height approx. 26 m) has been refurbished in accordance with its listed building status. The 20,000 m 2 factory building is now used by a number of retailers. And loft-style apartments covering approx. 4,000 m 2 have already been developed in one wing of the over 100-year-old industrial building and more apartments and office spaces (new buildings and conversions) and even a kindergarten, are being planned or already in construction. More than Face lift - the Hannover police headquarters in a building on the HANOMAG site is home to the permanent crime unit investigators, CSI, and the specialist criminal investigators responsible for dealing with commercial criminality and fraud. It also houses the so-called Exhibits Chamber where pieces of evidence are stored all in the office building originally built in the 1980s.

15 HANNOVER REGION LOCATION 13 Map // Current developments in sub-markets km 2 km 3 km N 11 Research and science 1 Clinical Research Center 2 Niedersachsen Centre for Biomedical Technologies, Implant Research and Development Offices 8 Deutsche Hypo 9 Deloitte 10 expert AG Residential 16 An der Gartenbauschule 17 Büntekamp Kirchrode 18 Klagesmarkt 26 Science and Technology Park Hannover (former Varta Stöcken) 27 Wasserstadt Limmer (former Continental factory Limmer) 28 former HANOMAG Logistics 32 NETRADA logistics centre ESPRIT 33 Toyota Material Handling Deutschland 3 Technology Centre in the Science Park 11 Deutsche Rentenversicherung Braunschweig-Hannover 19 Mosaik Eilenriede 20 Vier 29 Südbahnhof (former freight depot Hannover-Süd) 4 Test Centre for Load-bearing Structures 5 Relocation of the mechanical engineering institute Garbsen campus of Leibniz University 6 Centre for Biomolecular Active Substances 7 Centre for Molecular Plant Retail 12 A2-Centre Altwarmbüchen 13 Specialist retail centre Südbahnhof 14 HANOMAG U-boat hall 15 Kröpcke-Centre 21 zero:e-park Conversion 22 Podbi-Park (ehem. Bahlsen) 23 Pelikanviertel 24 Grammophon office park Trade fairs and congresses 30 Multifunction arena Deutsche Messe AG 31 Herrenhausen Palace Airport Hannover Exhibition Grounds Main Station / intercity Sciences 25 Geha Carré

16 Insurance group with a strong commitment to Hannover: Talanx, whose HDI brand sponsors the Hannover 96 Bundesliga football team, moved into its new headquarters at Riethorst in 2011, and subsequently refurbished the existing building next door. The energy and resource consumption in both buildings, with a total space of 75,000 m 2, has also been minimised.

17 OFFICE PROPERTY MARKET 15 Solid development, stable turnover The office property market in Hannover continues to be reliable: 150,000 m 2 was turned over in Hannover and the neighbouring cities of Laatzen and Langenhagen in Reputation as an extremely solid office market "The opposite of jittery" was how the June 2013 issue of the "Immobilienmanager" magazine confirmed Hannover's reputation as an extremely solid office market. Despite a decline in turnover in 2012 compared to 2011, the office property market has established itself at a very high level. 150,000 m 2 was turned over in Hannover and the two neighbouring cities of Laatzen and Langenhagen in Total turnover declined significantly as expected by around 17 % following the record year in However, the turnover in 2012 was still slightly above the average for the last five years (145,000 m 2 ) and one third higher than the 10-year average (110,000 m 2 ). Of the total turnover of 150,000 m 2 in 2012, around 115,000 m 2 were accounted for by letting, approx. 35,000 m 2 were acquired or constructed by companies for their own requirements. Shortage of office space in the city centre Space in the city centre of Hannover and the major arterial roads proved particularly attractive in In the city centre alone, new contracts were closed for approx. 22,000 m 2 of office space. At the periphery of the city centre and on the Podbielskistraße, Hildesheimer Straße and Vahrenwalder Straße arterial roads, slightly more than 44,000 m 2 of office space attracted new tenants or purchasers. The development of the Klagesmarkt is one of the results of the "City 2020+" urban development process for Hannover. Offices and several residential and retail buildings will be constructed in the southern part of the Klagesmarkt by The Gesellschaft für Bauen und Wohnen Hannover mbh (GBH) also plans to construct a seven-storey office building for its own headquarters. The development in turnover in the last two years very clearly highlights the shortage of office space in central locations. Turnover in the city centre declined significantly by almost half compared to 2011.

18 16 OFFICE PROPERTY MARKET A Gold certificate from the Deutsche Gesellschaft für Nachhaltiges Bauen e. V. (German Sustainable Building Corporation) is one of the ambitions for the new headquarters of Deutsche Hypo which is currently under construction. The design for the six-storey building in Osterstraße was created by the Berlin firm kleihues + kleihues, who also designed the new Kröpcke Centre. The office complex is scheduled for completion in the middle of The share of the annual turnover in Hannover as a whole sank from 28.5 % in 2011 to 16 % in Undeveloped and immediately developable spaces in the city centre are currently almost completely absent or not available until the medium-term, for instance, as part of the "City 2020+" urban development concept, where spaces will become available on the Klagesmarkt, Am Marstall, Köbelinger Markt and Am Hohen Ufer. Peak city centre rent: stable to slightly rising The demand for space was even higher on average in 2011, and continued to reveal a very solid foundation in The newbuild activity, however, was relatively low. This was also one of the factors behind the rise in rents in almost all locations in 2012 as well. By the end of 2012, peak rents were at 14 /m 2, corresponding to a rise of 3.7 % within only one year (end 2011 to end 2012). Market players also confirmed the peak rent in the middle of 2013, and expected a stable to slightly rising trend in the market to the end of the year. Peak rents in the office centres, and in peripheral city centre areas in particular were at approx /m 2 at the end of 2012 (up 3 % compared to the end of 2011). Higher rents can also be achieved for top quality new buildings, or old buildings refurbished to a high standard, in all locations compared to the reported peak rents maximum rents 3 in the city centre in 2012 were approx /m 2 and at 16 /m 2 at peripheral city centre locations. Average rents also developed positively by the end of 2012: with a calculated value of approx /m 2 in the city centre. Players in the Hannover market agree unanimously that peak rents in all locations will remain stable or rise slightly during the course of Investors casting an eye on regional markets Because of the low market risk and the good growth prospects, Hannover is an interesting target for domestic and foreign investors who are keen on securing the best core buildings. The market in Hannover endows these buildings with the required high quality which in good locations can be let on long-term agreements to strong, credit-worthy tenants. 14 /m 2 Peak rents in the city centre The maximum rent achieved refers to the maximum registered nominal net rent excluding utility bills, independent of local sub-markets, qualities and size of the let area, as concluded during the respective reporting period. This not only takes into account letting contracts concluded and considered part of letting turnover, but also includes letting contract extensions which are not part of letting turnover.

19 OFFICE PROPERTY MARKET 17 Selected office market transactions 2012/2013 Building/address Quarter Year Seller Buyer Building space* Grammophone-Büropark Podbielskistraße / Raffaelstraße Q Activum SG Capital Management/ Stam Europe Dundee International Reit 19,600 m 2 Solvay Pharma Office Center Landwirtschaftskammer Niedersachsen Hans-Böckler-Allee 20 Q Solvay Peakside Capital 23,700 m 2 Bahnhofstraße 8/ Ernst-August-Platz 6 Q CENTRUM Grundstücksgesellschaft mbh D&R Investments B.V. 6,400 m 2 Wiesenauer Straße Q n. k. BEOS Projektentwicklung GmbH 6,000 m 2 Paderborner Straße/ Wülfeler Straße Q n. k. n. k. 5,500 m 2 Bemeroder Straße 91 Q Merchant Place Corporate Finance Family Office 2,560 m 2 Hildesheimer Straße 98/ Devrientstraße Q ARMINIUS Berlin Immobilien GmbH & Co. KG Aberdeen Immobilien Kapitalanlagegesellschaft mbh 4,130 m 2 Am Lindener Hafen Q Bertram Projektmanagement GmbH Schillerstraße 32 Q MIB AG Immobilien und Beteiligungen Projekt Octava GmbH 4,200 m 2 n. k. 3,400 m 2 Gutenbergstraße 15, Laatzen Q Gotic Epsilon B.V. Schramm & Schoen Immobilien AG 6,316 m 2 Hanomagstraße/ Bredenbecker Straße Q n. k. n. k. 700 m 2 Am Klagesmarkt BAUM- Unternehmensgruppe Barmenia Lebensversicherungs-AG 9,000 m 2 Osterstraße 31/ Röselerstraße 2 Kurt-Schumacher-Straße Rote Reihe 12, Garbsen 2012 Bertram Projektmanagement GmbH Q Curzon (Caisse Nationale des Caisses d Epargne) Q Curzon (Caisse Nationale des Caisses d Epargne) LHI Leasing 14,000 m 2 Hannoversche Volksbank eg 3,480 m 2 Hannoversche Volksbank eg n. k. Hans-Böckler-Allee 11 Q Versicherungsgruppe Hannover (VGH) Inovalis 9,500 m 2 Fuhrberger Straße 5 Q Valad Europe Privater Investor 3,300 m 2 Minister-Stüve-Straße 22 Q Europäischer Real Estate Investmentmanager Investor 3,890 m 2 *Also includes non-office space in some cases

20 A specialist court complex is being built in the middle of Hannover to house five specialist courts. The new building is connected via a bridge over the Leonhardtstraße to the historic district court building. The project is being realised as an investor letting solution: the investor, who was allowed to acquire the leasehold on the plot, will construct the building and initially let it to the State of Niedersachsen until The building designed by the Düsseldorf-based architects HPP, is scheduled for completion in 2015.

21 OFFICE PROPERTY MARKET

22 20 OFFICE PROPERTY MARKET Map // Office projects Lahe Cityrand Expo-Gelände 1 km 2 km 3 km N 10 New builds Completed Under construction / construction preparation Planning, current Planning, medium-term 1 Gemeinschaft Deutsche Altenhilfe, German headquarters 2 aha (Zweckverband Abfallwirtschaft Region Hannover) 3 Deutsche Telekom service centre (extension) 4 TÜV Nord Group headquarters 8 Deutsche Hypo 9 Deloitte 10 Deutsche Rentenversicherung Braunschweig-Hannover 11 Adult Education College Hannover 12 Stichweh Leinepark (3 rd CP) 17 expert AG 18 Federal Labour Office regional administration building Niedersachsen-Bremen 19 Gesellschaft für Bauen und Wohnen Hannover mbh (GBH) 20 Health centre, office and retail building Groß-Buchholz 21 Stichweh Leinepark (4 th CP) (former vocational college) 22 City Gate North 23 Pferdeturm office project (former car showroom) 5 Stadthöfe Langenhagen 13 Niedersächsische Wach- und 24 Pferdeturm office project 6 Technology Centre in the Science Park 7 MEGA eg, central warehouse and location administration Schließgesellschaft 14 Residential and retail building Kirchrode 15 Hamburger 50 (former AOK) 25 Friedrichswall office project (former adult education college) 16 Niedersachsen Justice Centre

23 OFFICE PROPERTY MARKET Map // Office projects (city centre details) Marktkirche m 200 m 300 m N Refurbishment Completed Under construction / construction preparation Partial zones / districts (see p. 26) 26 Specialist crime investigators 36 Forum Herrenhäuser Markt City centre 27 Klagesmarkt office and retail building (former ZÜRICH insurance building) 28 Federal Labour Office Hannover 29 Johnson Controls Power Solution 30 Office and retail building Heiligerstraße 31 Stichweh Leinepark (2 nd CP) 32 HANOMAG Front building on the Deisterpark 33 Talanx-HDI specialist insurance group 34 Office and retail building Bahnhofstraße (former Palast cinema) 37 Kröpcke Centre 38 Office and retail building Nordstadt 39 Linden Town Hall 40 Sparkasse Hannover, head office Flughafen Exhibition Grounds Main Station / intercity Tram City centre periphery Office centres Office centres Laatzen, Langenhagen 35 Office and retail building Kirchrode City boundary

24 22 OFFICE PROPERTY MARKET New builds completions* No. Building Address Investor, developer, owner Space in m 2 MF-G Status, completion 1 Gemeinschaft Deutsche Altenhilfe German head office Hildesheimer Str. 187 Gemeinschaft Deutsche Altenhilfe 1,500 m 2 owner-occupied Q1/ aha (Zweckverband Abfallwirtschaft Region Hannover) Karl-Wiechert-Allee 60c aha Zweckverband Abfallwirtschaft Region Hannover 4,770 m 2 owner-occupied (floor space) Q1/ Service Centre Deutsche Telekom (extension) Göttinger Straße 14 DIBAG Industriebau AG 5,500 m 2 Q1/ TÜV Nord Am TÜV 1 TÜV Nord Group 4,420 m 2 owner-occupied Q2/ Stadthöfe Langenhagen Langenhagen Konrad- Adenauer-Str. 15 meravis 1,000 m 2 office and health services Q2/ Technology Centre in the Science Park Hollerithallee 17 hannoverimpuls GmbH 3,800 m 2 office and laboratory space Q2/ MEGA eg, central warehouse and site administration Kugelfangtrifft 30 MEGA eg 1,700 m 2 office 14,000 m 2 logistics owner-occupied Q2/2013 New builds in construction / construction preparation* 8 Deutsche Hypo Osterstraße 31 Bertram Projektmanagement GmbH 13,200 m 2 office 1,200 m 2 retail Q2/ Deloitte Aegidientorplatz 2a Quantum Immobilien AG 10,500 m 2 Q3/ Deutsche Rentenversicherung Braunschweig-Hannover Laatzen, Lange Weihe 2 Deutsche Rentenversicherung Braunschweig-Hannover 18,500 m 2 owner-occupied Q3/ Adult education college Hannover Am Hohen Ufer 3 City of Hannover 7,000 m 2 owner-occupied Q3/ Stichweh Leinepark (3 rd CP) Wunstorfer Str. 38 / Färberstraße 1 Stichweh Leinepark GbR 3,500 m 2 office 1,700 m 2 retail Q4/ Niedersächsische Wachund Schließgesellschaft Vahrenwalder Str. 136 Niedersächsische Wachund Schließgesellschaft Eggeling & Schorling KG 2,700 m 2 office 2,700 m 2 warehouse owner-occupied Q4/ Residential and office building Kirchrode Tiergartenstraße 114/116 Gundlach GmbH & Co. KG 950 m 2 office, retail, health services 660 m 2 residential Q4/ Hamburger 50 Hamburger Allee 50 Weser-Wohnbau GmbH & Co. KG, Zimmermann Real Estate GmbH 1,800 m 2 office 400 m 2 retail 4,000 m 2 hotel 2,400 m 2 residential Q2/ Niedersachsen Justice Centre Augustenstr., Ferdinandstr., and Hinüberstraße Gothaer Asset Management AG 11,800 m 2 office Q3/2015 * The numbers refer to the maps on pages 20 and 21.

25 OFFICE PROPERTY MARKET 23 New builds in planning* No. Building Address Investor, developer, owner Space in m 2 MF-G Status, completion 17 expert AG Langenhagen, Bayernstraße 4 expert AG 4,000 m 2 owner-occupied Q4/2014 Start of construction Q3/ Federal Labour Office regional administration office Niedersachsen-Bremen Röpkestraße Rahifs Immobilien GmbH 4,000 m 2 Q4/ Gesellschaft für Bauen und Wohnen Hannover mbh (GBH) Klagesmarkt / Otto-Brenner-Str. Gesellschaft für Bauen und Wohnen Hannover mbh 4,000 m 2 owner-occupied Q4/ Health centre, office and retail building Groß-Buchholz Podbielskistraße 382 STRABAG 10,000 m 2 office and health services plus gastronomy and retail 21 Stichweg Leinepark (4th CP) (former vocational teachers' college) Wunstorfer Straße 14 / Limmerstraße 150 Stichweh Leinepark GbR 17,000 m 2 floor space - 22 City Gate Nord Vahrenwalder Str. 236 Projektentwicklung HRG & Delta Bau GmbH & Co. KG up to 28,000 m 2 office, retail possible - 23 Pferdeturm office project (former car show room) Hans-Böckler-Allee 49 City of Hannover (owner) 12,500 m 2-24 Pferdeturm office project (former AOK) Hans-Böckler-Allee 30 City of Hannover (owner) 10,000 m 2-25 Office project Friedrichswall (former adult education college) Theodor-Lessing-Platz 1-2 / Ebhardststr. 1 City of Hannover (owner) 1,500 m 2 plot, up to 5,000 m 2 office, retail, gastronomy and/or residential possible - New buildings new builds In construction/construction preparation in planning medium-term planning * The numbers refer to the maps on pages 20 and 21.

26 24 OFFICE PROPERTY MARKET Refurbishment Completions* No. Building Address Investor, developer, owner Space in m 2 MF-G Status, completion 26 Specialist criminal investigators Marianne-Bäcker- Allee 11 DIBAG Industriebau AG 3,360 m 2 office Q1/ Klagesmarkt office and retail building (former ZÜRICH insurance building) Am Klagesmarkt 29/30 CPUM-Unternehmensgruppe 4,500 m 2 office 1,200 m 2 retail Q1/ Federal Labour Office Hannover Brühlstraße 4 / Escherstraße 17 Agentur für Arbeit 21,375 m 2 office Q2/ Johnson Controls Power Solution Am Leineufer 51 Johnson Controls Systems & Service GmbH 3,000 m 2 office Q3/ Office and retail building Heiligerstraße Heiligerstraße 3 Investor association 900 m 2 office 900 m 2 gastronomy Q3/ Stichweh Leinepark (2 nd CP) Wunstorfer Straße 38 / Färberstraße 1 Stichweh Leinepark GbR 3,200 m 2 office and health services Q3/ HANOMAG Front building on the Deisterpark Hanomag-Hof 4 DIBAG Industriebau AG 5,000 m 2 office 2,000 m 2 gastronomy Q3/ Talanx-HDI specialist insurance group Riethorst 2 Talanx Immobilien Management GmbH 21,000 m 2 owneroccupied Q3/ Office and retail building Bahnhofstraße (former Palast cinema) Bahnhofstraße 5 Görgens Gruppe Köln 1,120 m 2 office 1,000 m 2 retail Q4/ Office and retail building Kirchrode Tiergartenstraße 118 Großer Hillen 2-4 Gundlach GmbH & Co. KG developer 700 m 2 office and health services 1,700 m 2 retail 1,270 m 2 residential Q4/2013 Refurbishment under construction / construction preparation* 36 Forum Herrenhäuser Markt Herrenhäuser Markt 1-3 WGH Wohnungsgenossenschaft Herrenhausen 1,200 m 2 office and health services Q4/ Kröpcke Centre Karmarschstr Union Investment Real Estate GmbH 3,130 m 2 office 16,000 m 2 retail Q1/ Office and retail building Nordstadt Arndtstraße 1 alstria Office REIT AG 10,700 m 2 Q2/ Linden Town Hall Lindener Marktplatz 1 City of Hannover 3,500 m 2 owner-occupied Q2/ Sparkasse Hannover, head office Raschplatz 4 Sparkasse Hannover 27,500 m 2 owner-occupied Q2/2015 Refurbishment completed in construction / construction preparation * The numbers refer to the maps on pages 20 and 21.

27 OFFICE PROPERTY MARKET 25 The "Chocolate tower" is a thing of the past: the administration centre of Sparkasse Hannover built on Raschplatz in the 1970s will be completely refurbished by The office complex housing 800 employees will undergo thorough energy-refurbishment at a total cost of 110 million; the brown facade will be replaced by a silver-grey skin.

28 26 OFFICE PROPERTY MARKET An example of a successful combination of old industrial architecture and a modern office building: a new three-storey extension was built at the HANOMAG site for Windwärts Energie GmbH as a wing of the completely gutted old factory building. The company rents approx. 3,000 m 2 of office space in the partially listed ensemble. The office sub-markets in Hannover (see also map of office projects on p. 20): With approx. 4.9 million m 2 lettable office space (MF-G) the office market in Hannover comprises the city of Hannover and the neighbouring cities of Garbsen, Langenhagen and Laatzen, which border the state capital directly to the north or south, and to which it has close functional ties: Map Sub-zones, location City centre: bordered by the city ring road. This area comprises Georgstraße, Georgsplatz, Raschplatz, Friedrichswall, Aegidientorplatz and Schiffgraben. City centre periphery locations and arterial roads: High-quality office locations are situated in the north and southeast of the city centre with the main traffic axes comprising Vahrenwalder Straße in north, Podbielskistraße in the northeast, Marienstraße/Hans-Böckler-Allee in the east and Hildesheimer Straße in the south. Roderbruch office centre/karl-wiechert-allee: This location hosts the large sites and facilities of the Hannover Medical School and the adjacent Medical Park, and particularly, owner-occupied office complexes for groups involved in the finance, insurance and tourism sectors. Office centre Lahe: Location in the north-east of Hannover boasting excellent transport connections to the A 2 and to the tram system. A number of rezoning and restructuring activities offer considerable scope for further developing the potential at this location. Expo-Park: High-quality office buildings oriented towards IT, design and media, partially comprising some of the original buildings and open spaces constructed for the EXPO 2000 World Exposition. The buildings constructed on the nearby Kronsberg (Kattenbrookstrift) are outstanding examples of modern architecture. City of Garbsen: office buildings concentrated around the centre of the city: at its western edge bordering the northern fringe of Hannover, construction starting on a new mechanical engineering campus for the Leibniz University. Outstanding transport connections including light rail transit, and direct proximity to the A 2 and B 6. City of Laatzen: office buildings concentrated around the centre of Laatzen. Directly adjacent to the Hannover Exhibition Grounds and the A 37/A 7, outstanding local public transport connections. City of Langenhagen: Office buildings concentrated in the town centre and around the LRT station Langenhagen-Mitte. Also outstanding transport connections to the motorways and the airport. Additional office properties in Godshorn and Airport business parks.

29 OFFICE PROPERTY MARKET 27 The original headquarters were no longer big enough: expert AG, the trade association from Langenhagen, is now Germany's second largest electronics trade organisation and continues to grow further. The new administration building for 170 employees is being constructed in Langenhagen next to the old headquarters. Quality instead of quantity Analysis of the pipeline and the relatively low ratio of vacant space which has existed for many years, not to mention the continuing stable demand, highlight the fact that speculative construction projects have very little significance in this market. Market players confirm the conclusion that Hannover basically plays no role at all for speculative building projects, and that all project developments are initiated with high ratios of preletting contracts. The biggest owner-occupied project at the moment is the new building being constructed by Deutsche Rentenversicherung Braunschweig-Hannover which began in Laatzen at the end of last year (18,500 m 2 ). expert AG is expanding its headquarters in Langenhagen (4,000 m 2 ). The strongest demand for office properties in the market traditionally comes from the financial and insurance sectors, as well as the public sector, followed by information and telecommunications service providers. The projects realised in Hannover are developed under good sustainable conditions quality instead of quantity appears to be the paradigm in Hannover, and is characteristic of the market. Project developments in the city centre are currently underway on Osterstraße (13,200 m 2 office, 12,000 m 2 retail) where the main tenant is Deutsche Hypo. Another beacon project is that of Quantum Immobilien AG for the accounting firm Deloitte (10,500 m 2 ) on Aegidientorplatz. The new headquarters of Deutsche Rentenversicherung Braunschweig- Hannover is being constructed to the south of Hannover in Laatzen. The office complex with room for about 1200 employees will be completed next year at a cost of approx. 67 million. With a gross floor space of approx. 30,000 m 2, the new building will only be around half as big as the current headquarters. 150,000 m 2 Office space turnover in 2012

30 Linden Town Hall was destroyed in the second world war and reconstructed in Refurbishment was completed in summer 2013 at a cost of 9.5 million. The public administration offices were refurbished, and the building was converted into an education centre at the same time.

31 OFFICE PROPERTY MARKET 29 Market development polarisation The conditions are good: the new office spaces being built boast a high pre-letting ratio, and there are practically no speculative new construction projects in the Hannover location. Moreover, the number of office employees have risen in the city of Hannover (by approx. 10,000 since 2008). This also increases the demand for additional office space. The vacant space ratio 4 in the city of Hannover was 5.7 % at the end of 2011, which is considerably lower than the B-city average (6.7 %). Because of the very good turnover in 2011, bulwiengesa AG initially forecast a further decline in the amount of vacant space in 2012 and thus a possible further drop in the ratio. In reality though, a slight rise in the vacant space ratio to 5.9 % was determined in the office market at the end of Unlike the A-locations (vacant space 2012 averaging 8 %) and the largest German regional locations (vacant space 2012 averaging 6.4 %), this value can still be considered as low. There are many reasons for the moderate rise in vacant office space: the demand for modern and energy-efficient office space, and the use of owner-occupied space, has tangibly increased the proportion of difficult to let office properties in the last two years. Owners find it increasingly difficult to place large inefficient office spaces onto the market without undertaking comprehensive conversion and refurbishment work if the quality does Office space portfolio 2004 to not meet this demand even in good locations, the buildings remain empty and negatively influence the market as long as they remain vacant. Modest start to 2013 The office property market began fairly modestly in the first two quarters of 2013 with an office space turnover of only around 50,000 m 2. Despite the general weakness in the office market overall on the German and international office markets, players in the Hannover market are optimistic that they will achieve a solid level of turnover again this year. The average in the past five years was around 145,000 m 2. The biggest deal in the first half of 2013 was the letting agreement for around 12,000 m 2 between the state of Lower Saxony and Fubos Beteiligungs GmbH, a subsidiary of LHI Leasing, for the construction of a new justice centre in Hannover-Mitte. The building is currently being constructed by investor Gothaer Asset Management AG based on the design from the Düsseldorf firm of architects HPP. At a cost of over 31 million, the project is scheduled for completion at the end of 2015, and will then be leased for at least 30 years by the state of Lower Saxony. Total office employees 2003 to 2014 in thousands Year City of Hannover ratio** Hannover Region Ratio** In thousand m * 2005 * 2006 * 2007 * 2008 * 2009 *** 2010 * 2011 * 2012 *** Hannover office market** of which city of Hannover * * * * at the end of year in each case ** with Garbsen, Laatzen and Langenhagen *** Year of a total office space survey by bulwiengesa AG and Baasner Stadtplaner GmbH * Estimate or forecast based on reports provided by the Niedersachsen State Office for Statistics and Communications Technologies ** Ratio of office employees to total workforce in per cent Source: RIWIS@bulwiengesa AG 4 Based on an updated total survey of office space portfolio and vacant space by bulwiengesa AG at the end of 2012/beginning of This provided a much tighter database. Because of this change in methodology, the figures for the office space portfolios and vacant spaces reported in previous years market reports - which were calculated - are either not comparable or only partially comparable with the figures derived from the total survey. All of the vacant space figures are derived from the forecast and model calculations by bulwiengesa AG. The time series were adapted retrospectively in the current report.

32 30 OFFICE PROPERTY MARKET Gundlach is building a residential/health services and retail building in the centre of the Kirchrode district at Tiergartenstraße 114/116. This family-run Hannoverian company is also planning to build an underground car park to relieve the parking situation in the centre of Kirchrode. Hannover office market completions 2003 to In thousand m * 2014* 2015* New build completions Refurbishments * based on autumn forecast of bulwiengesa AG; Hannover Region surveys; cross-checked details provided by market players; data status Q3/2013

33 OFFICE PROPERTY MARKET 31 Gundlach is investing around 10 million in the conversion of the building on the corner of the block Tiergartenstraße/Großer Hillen in the Kirchrode district. The face lift and energy refurbishment is scheduled for completion in autumn Office space Shortage versus vacant space The development of the market is characterised by polarisation: on the one hand, the demand for high-quality office space has risen, and on the other hand, there has also been a rise in the availability of properties which no longer satisfy today's standards. The result: a shortage of high-quality office space at the same time as vacant properties, even in prime locations. In the long term, peak rents which market players consider to be relatively low in Hannover will probably rise. On the one hand, the palpable rise in construction costs in recent years will have a knock-on effect and lead to increases in rent levels, and on the other hand, the overall development also reflects the rise in demand for high quality office space. These developments also open up opportunities to push ahead with new construction projects, revitalisation and modernisation measures to satisfy the increasing demands of the players in the property market. The Ernst-Winter-Saal in which the SPD was reformed after the second world war was originally used by HANOMAG as the factory canteen. This listed room with around 700 m 2 of floor space is now the canteen of the Deutsche Telekom Service Centre.

34 Revitalisation scheduled to be completed by the end of 2013: Golf House, HAMMER Heimtex-Fachmärkte and REWE have now occupied the last remaining 6,600 m 2 of the listed U-boat hall at the HANOMAG site in Linden Süd. The bicycle retailers STADLER and the furniture specialist company RS-Möbel have already been in the large brick building with a total area of 20,000 m 2 since the end of 2011 or mid 2012, respectively.

35 RETAIL PROPERTY MARKET 33 Well frequented, strong demand The Hannover Region is one of Germany's top five retail locations. The city centre of Hannover continues to attract large numbers of shoppers. There are also attractive retail locations in the surrounding area which are enjoying considerable investment. The Gesellschaft für Konsumforschung (GfK) (Consumer Research Corporation) forecasts a retail turnover of approx. 6.6 billion in the Hannover Region in This represents a growth of over 100 million compared to This puts the Hannover Region in position five of the municipalities and cities in Germany with the highest turnovers (cf. Table below). Top-10 retail locations in Germany based on total turnover Ranking City/municipality Inhabitants Retail turnover in billion Proportion in % of total national stationary retail turnover 1 Berlin 3,501, Hamburg 1,789, Munich 1,378, Cologne 1,017, Hannover Region 1,135, Düsseldorf 592, Frankfurt am Main 691, Stuttgart 613, Nuremberg 510, Essen 573, Source: GfK, retail turnover 2013

36 34 RETAIL PROPERTY MARKET The most expensive German retail cities according to rent level* Peak rent in /m 2 * National ranking City Top sites H H Munich Kaufinger Straße/Neuhauser Straße Frankfurt/Main Zeil Berlin Tauentzienstraße Düsseldorf Königsallee Hamburg Spitaler Straße Cologne Schildergasse Stuttgart Königstraße Dortmund Westenhellweg Hannover Georgstraße/Bahnhofstraße/ Große Packhofstraße Nuremberg Ludwigsplatz/Hefnersplatz/Karolinenstraße Münster Ludgeristraße Mannheim Planken Freiburg Kaiser-Joseph-Straße Wiesbaden Kirchgasse Aachen Adalbertstraße Heidelberg Hauptstraße Leipzig Petersstraße Mainz Am Brand/Schusterstraße/Stadthausstraße Ulm Bahnhofstraße/Hirschstraße Würzburg Dominikanerplatz/Schönbornstraße Bielefeld Bahnhofstraße Bonn Remigiusstraße Bremen Sögestraße Darmstadt Schuchardstraße/Ernst-Ludwig-Straße Dresden Prager Straße Osnabrück Große Straße Trier Hauptmarkt/Simeonstraße * Peak rents for new let of a 100 m 2 standard shop Source: Jones Lang LaSalle 2013, Region Hannover

37 RETAIL PROPERTY MARKET 35 The Japanese lifestyle brand MUJI opened a branch in the Große Packhofstraße in September The brand is characterised by products with minimalistic design, produced in the most ecological way. Convincing prime sites Peak rents in the prime locations Georgstraße, Bahnhofstraße and Große Packhofstraße, remain stable in Rents of up to 190 /m 2 5 are achieved at these locations. Rents in the Karmarschstraße are slightly lower at up to 165 /m 2. Over the last ten years, peak rents in all four top locations have risen by around a quarter. A ranking of the most expensive city centre locations in Germany in 2013 placed the Hannover Region in position nine (cf. Table, left). Comprehensive retail availability in all locations A comprehensive range of offers is available in the city centre of Hannover from all of the sectors. The sales area in the four top locations is almost 170,000 m 2. In total, the city centre has a retail space of approx. 290,000 m 2. The state capital Hannover has a total retail space of around 877,000 m 2. The retail space in the Hannover Region is estimated at more than 1.92 million m 2. 6 International chain stores swarm to Hannover Germany remains the most important target for expansion in European retailing for international chain stores. Hannover has also increasingly caught the eye of expanding foreign companies in recent years. New arrivals this year include the Japanese lifestyle retailer MUJI (Große Packhofstraße, 400 m 2 ), the Dutch fashion brand Scotch & Soda (Georgstraße, 275 m 2 ), and the US-American corporation Apple (Bahnhofstraße, 1000 m 2 ). 190 /m 2 Peak rent in A1 locations The peak rent figures refer to a shop of approx. 100 m 2 in size with a corresponding shop window facing an A1 location (6-8 m). Larger or smaller areas may be higher or lower than this peak rate depending upon specifics. 6 Cf. Jones Lang LaSalle, City Retail Guide Hannover and Braunschweig 2012, and calculations by CIMA Beratung+Management GmbH on behalf of Hannover Region 2012.

38 36 RETAIL PROPERTY MARKET The conversion of the Kröpcke Centre is scheduled to be finished by the beginning of The redesign positively influenced the current development of the city centre in the state capital Hannover. Centrum Grundstücksgesellschaft from Düsseldorf has invested around 210 million in the Kröpcke Centre following the design created by the well-known Berlin architects kleihues & kleihues. The city administration has also invested a great deal of money in refurbishing the open spaces all around the Kröpcke Centre.

39 RETAIL PROPERTY MARKET 37 Kröpcke Centre nears completion The revitalised Kröpcke Centre is finally taking on its final form at Hannover's largest inner-city construction site. CENTRUM, the project development company from Düsseldorf, has been converting the central building since 2009 to create a modern retail building with around 16,000 m 2 of retail space. Approx. 210 million have been invested in total. The key tenant will continue to be Peek & Cloppenburg (which will expand to 11,000 m 2 ). It is joined by another 15 individual shops with approx. 5,100 m 2 retail space in all. The men's wear retailer Eckerle will open in the part of the building facing the Platz der Weltausstellung by the end of 2013 (1,400 m 2 ). Kiehl's (50 m 2 ) has already opened, and The Body Shop, Rituals and Tchibo will also move into retail space in the new Kröpcke Centre. However, the unchallenged A 1 location in Hannover is and remains the section between the Kröpcke Centre and the Limburgstraße. In this part of the Georgstraße top location, all of the market players verify the stable and high demand for retail space. Only very few shops close or relocate to other positions the fluctuation in this part of the Georgstraße is vanishingly small. Bahnhofstraße nearing the end of the conversion work Construction fences will probably disappear within only a few months from the central axis linking the central station and the Kröpcke Centre. The long awaited Apple flagship store (approx. 1,000 m 2 ) is scheduled to open at the end of 2013 in the retail area formerly occupied by Olymp & Hades. Union Investment Real Estate acquired the building from CEN- TRUM at the beginning of September 2013 for an open property fund a measure which further highlights the high attractiveness of Hannover as a retail location. The Kröpcke Centre will be completely finished at the beginning of Georgstraße remains the most important top location Almost all of the main shopping streets in Hannover meet in the zone around the Kröpcke Centre or cross the Georgstraße. Kröpcke divides the Georgstraße into two parts the section facing the opera house is characterised by a particularly highquality range of outlets and is continually upgraded by new tenants such as Brigitte von Boch (300 m 2 ), Christ German Leather Fashion (100 m 2 ) or Scotch & Soda (100 m 2 ). In the middle of the city centre, on the sixth floor of the former Brinkmann- Haus in the Heiligerstraße, the 6Sinne-Sky-Bar presents a panoramic view of the city centre of Hannover. Comparison of Hannover's top locations Chain store ratio in per cent* Passerby frequency** A 1 location Sales area in m 2 * Peak rent in /m 2 According to sales space According to number of shops Level of internationalisation* Tuesday Saturday Georgstraße*** Bahnhofstraße Große Packhofstraße Karmarschstraße**** No survey figures

40 38 RETAIL PROPERTY MARKET The US company Crocs which specialises in colourful shoes made out of Croslite opened an approx. 200 m 2 chain store in the Karmarschstraße directly adjacent to Kröpcke in September Karmarschstraße evolution The section between Leinstraße and Osterstraße with the Platz der Weltausstellung already boasts broad pavements inviting passers-by to window shop. The open space is currently being upgraded in the area around the Old Town Hall and the Market Hall, and the construction work to complete the Kröpcke Centre will be finished by spring This part of the Karmarschstraße will almost certainly experience another positive jump in attractiveness when these two construction measures have been finished. Peak rents in the A1 location of 165 /m 2 at the moment are still well below those of the other three big shopping streets. There are several vacant shops at the moment because of the reconstruction measures, but these empty outlets will soon be filled with life again. The Quicar-Shop is moving together with the Volkswagenbank to the retail space on the corner of Karmarschstraße/ Schmiedestraße. Oska, Mey and Mephisto are moving into Karmarschstraße 37 to 39 as the new tenants. Große Packhofstraße: successful conversion The successful conversion and new builds have proved effective in recent years. The opportunity in the middle of the city centre was used to attract the new concepts of international retailers to Hannover. This has permanently strengthened the southern end of the city centre. The latest arrival in the Große Packhofstraße is the Japanese lifestyle label MUJI (400 m 2 ). Although the Osterstraße is actually a secondary location, it profits from the crowds drawn by Primark. There is an unmistakable increase in the flow of customers from the Georgstraße via the Kleine Packhofstraße as well as from the Große Packhofstraße via the Heiligerstraße to the entrances of the Irish fashion house. Top locations and centre areas complement one another The Ernst-August-Galerie at the central station and the smaller arcades complement the city centre shopping locations in Hannover. The retail location profits from the balanced ratio between the different kinds of retail outlet, and people window-shop uniformly throughout all of the A 1 locations. New gastronomy concepts are also arriving in larger numbers in Hannover. A Vapiano restaurant opened at Heiligerstraße 3 in July (900 m 2 ), and the Dean & David gastro chain will follow in the Osterstraße. Both of these companies pursue a fast-casual concept. Unlike the traditional fast food outlets though, they prepare their food directly before the eyes of the customers using as many fresh and local ingredients as possible. The 6Sinne-Sky-Bar has been serving its guests since the end of 2012 on the upper storey above Lehmanns bookshop, where the customers enjoy views over the city centre rooftops.

41 RETAIL PROPERTY MARKET 39 The third Alnatura chain store in the state capital opened for business in the Schmiedestraße in June Customers enjoy a comprehensive range of organic food in an area covering almost 440 m 2. Attractive transaction market Hannover's top locations are extremely attractive and in enormous demand as confirmed by the many transactions which have been negotiated in recent years. Market players estimate that investors have enjoyed an increase in value of almost one third with prime buildings in the last ten years. The estate agents and project developers in recent years have observed a strong demand from international chain store companies for retail outlets in Hannover. And the demand for investment properties is increasingly influenced by foreign investors. At the same time, the number of available properties in the city centre is limited. This restricts the market even further. This year's biggest transaction was announced at the beginning of September. CENTRUM from Düsseldorf sold the Kröpcke Centre (16,000 m 2 retail, 3,000 m 2 office space) to Union Investment Real Estate shortly before the end of the revitalisation programme (beginning of 2014). In addition, a few other properties changed owners, such as the commercial properties at Georgstraße 23 (Karstadt, 14,000 m 2 ) and Karmarschstraße 16 (Reformhaus Bacher, 1,080 m 2 ). Both of these properties were acquired by North German family offices in the first half of the year. Große Packhofstraße 37 (main tenant Görtz) was acquired by Aachener Grund in Cologne at the end of Major investments: Specialist retailers and retail centres Most of the retail space in the listed U-boat hall on the HANOMAG site in Hannover Linden has already been developed. The southern part of the 20,000 m 2 factory building has already been occupied by Zweirad-Stadler since 2011, and the furniture retailers RS and Yellow since The northern part of the brick building is currently being modernised ready for the opening of the REWE chain store on 2,000 m 2. The golf equipment and clothing retailer Golf House is renting an area around half that size, having moved from its former chain store in the middle of Hannover. HAMMER, a superstore for home textiles, is relocating from an older chain store in Davenstedt to a retail space of over 3,500 m 2 in the U-boat building. Top 5 German retail locations with the biggest turnover (GfK)

42 The A2-Centre in Altwarmbüchen which opened at the end of the 1960s is being converted into a modern shopping mall with a golden metal facade and an energetically optimised building concept. The Krieger Group from Berlin is investing 130 million in the refurbishment of the area. The grand opening of the A2-Centre including the second construction phase, which replaces the current old building, is scheduled for September Möbel Höffner hopes to finish its superstore in December 2014.

43 RETAIL PROPERTY MARKET

44 42 RETAIL PROPERTY MARKET Werner Christ GmbH, manufacturer of high-quality leather and lambskin fashions, opened a chain store in one of Hannover's top locations at Georgstraße 44. The company has around 100 m 2 of retail space and presents its products under the label "Christ German Leather Fashion since 1954". Mr. Wash Auto-Service, a company based in Düsseldorf, acquired an empty plot in the HANOMAG complex directly opposite the U-boat building and fronting the Göttinger Straße back in More than 18 million are being invested in the construction of a new car wash complex and other services, with the opening scheduled for Möbel Höffner is building 37,400 m 2 of retail space on the directly adjacent furniture store brownfield site. The specialist retail centre is managed by CMC Center Management, a Krieger Group subsidiary. The overall project is scheduled for completion by the end of In Hannover's Südstadt, the Franzen Group completed a specialist retail centre on the site of the former Südbahnhof in autumn The main tenants are Edeka (5,500 m 2 ), Hagebau (9,500 m 2 ) and a dm-drogeriemarkt. An Alnatura SuperNaturMarkt has taken over the retail space formerly occupied by Edeka in the direct vicinity of the Südbahnhof. There are also locations boasting outstanding retail centrality in the surrounding area, such as in the medium centres Langenhagen and Laatzen. Shopping malls with approx. 30,000 m 2 sales space each are available in the centres of both of these towns. They have both seen a great deal of investment in recent years. Major specialist retail centres are also to be found in Garbsen and Isernhagen-Altwarmbüchen, for example. The A2-Centre, a superstore centre in Isernhagen-Altwarmbüchen situated around the real-markt, is now being completely refurbished to the tune of 130 million by the Krieger Group, more than 40 years after first opening its doors to the public. The refurbishment will create a shopping centre with 25,300 m 2 of retail space. The main tenants are already confirmed as real, Saturn and Toys'R'Us who were already present at the centre before the current refurbishment measures were undertaken. Smaller retailers occupy another 40 shops. RS-Möbel-Handelsgesellschaft from Münster opened shops with its Yellow and RS-Möbel labels in the listed U-boat building at the Hanomag site in 2012, where they sell solid wood furniture and other products in 4,200 m 2 of retail space.

45 RETAIL PROPERTY MARKET Map // City centre retail c stellung m 100 m 150 m N 26 Selected project developments, conversions or openings ( ) 1 Alnatura SuperNaturMarkt 2 Apple 3 Auktionshaus Kastern 4 BoConcept 11 MUJI 12 Mephisto 13 Mey 14 Oska 15 Peek & Cloppenburg 16 Repeat Shopping centres / arcades 22 Ernst-August-Galerie 23 Galerie Luise 24 Kaufland shopping centre 25 Kröpcke-Passage Large retailers / department stores 29 C & A 30 Galeria Kaufhof am Ernst-August-Platz 31 Galeria Kaufhof an der Marktkirche Gastronomy (openings/expansion/conversions) 36 6 Sinne Sky-Bar 37 Vapiano 38 Dean & David 26 Markthalle 32 Karstadt P Multi-storey car park/parking 5 Brigitte von Boch 17 Rituals 27 Niki-de-Saint-Phalle-Promenade 33 Karstadt Sports U Tram 6 Christ German Leather Fashion 18 Scotch & Soda 7 Crocs 19 Tchibo 28 Promenade im Hauptbahnhof 34 Primark Main Station / intercity 8 Eckerle Herrenmoden 20 The Body Shop 35 Saturn A1 location 9 Kiehl s 10 Lumas 21 Volkswagen Bank & Quicar Pedestrian precinct Old Town

46 NETRADA Europe GmbH, the leading full service e-commerce service provider for the fashion and lifestyle sector, uses the Hannover Region as its central B2C hub for textile logistics in Europe. The strongly expanding company already has four other sites in the Hannover Region.

47 LOGISTICS PROPERTY MARKET 45 Logistics hub with potential Located at the intersection of major road, rail and waterway transport axes and equipped with an airport of national importance, the Hannover Region is rated by the logistics sector as a major location for bundling and distributing goods flows and transport. The logistics industry has developed very dynamically over the last 10 to 15 years nationally and internationally. As a consequence of the eastwards expansion of the EU, the "centre of gravity" of the logistics business has shifted from the Benelux countries in the direction of Eastern Europe. Germany has become Europe's fastest growing logistics location in the last decade 7. Because of its optimal location factors, the Hannover Region has profited considerably from this development: according to a national market survey undertaken by Fraunhofer SCS, the Hannover Region is one of the most attractive logistics locations in Germany. Fraunhofer SCS rates the Hannover location as "having a very balanced combination of all of the relevant relocation factors" and "a very competitive cost situation compared to other West German locations" 8. Hannover second only to Hamburg as northern Germany's most important logistics location Approximately 50 % of the commercial real estate sold in the last ten years within the region was acquired for logistics projects. Around 260 hectares of logistics plots have been sold since 2003, and more than 1.1 billion invested in the construction of new buildings. More than 240 million has been invested in logistics-oriented major projects in the Hannover Region since 2011 alone. Hannover is therefore second only to Hamburg as the most important logistics location in northern Germany. More room for maintaining aircraft engines: MTU Maintenance Hannover GmbH optimised its logistics processes with a 7,500 m 2 warehouse in Langenhagen. 4,70 /m 2 Peak rent for new buildings in top locations Koepke, Rainer; Frahne, Karin (2012): The market for logistics properties in Germany. In: Münchow, Malte-Maria: Compendium of logistics properties - Development, utilisation and investment, Wiesbaden. 8 Fraunhofer IIS Working Group for Supply Chain Services SCS (2011) [Publisher]: Logistics properties - Market and locations 2011, Germany, Austria, Switzerland. Nuremberg Authors: Nehm, Alexander; Veres-Homm, Uwe; Kübler, Annemarie.

48 46 LOGISTICS PROPERTY MARKET N 17 7 B 3 M R L Karte ist zu niedrig aufgelöst. Retuschen von Ortsnamen nur mit sehr viel Aufwand zu bewerkstelligen. Gibt es die Karte nicht als Vektor-EPS? 15 8

49 LOGISTICS PROPERTY MARKET Map // Logistics locations 47 Commercial / Industrial areas (suitable for logistics) The numbers refer to the table on page 48 1 Barsinghausen/Bantorf approx. 7.5 ha 2 Barsinghausen/ approx. 35 ha* Groß Munzel-Holtensen 3 Burgwedel/Großburgwedel approx. 12 ha 4 Garbsen/ approx. 15 ha westlich Gutenbergstraße 5 Hannover/Anderten approx. 10 ha 6 Hannover/Schwarze Heide approx. 8 ha 7 Isernhagen/Kirchhorst approx. 5 ha 8 Laatzen/Ost approx. 40 ha 9 Langenhagen/ Airport Business Park Ost approx. 15 ha 10 Langenhagen/ Flughafen-Erweiterung West approx. 45 ha* 11 Lehrte/Aligse approx. 20 ha 12 Lehrte/Everner Straße approx. 6 ha 13 Lehrte/Mielestraße approx. 8 ha 14 Lehrte/Sievershausen approx. 6 ha 15 Sehnde/Höver approx. 30 ha* 16 Wedemark/Gailhof approx. 15 ha 17 Wunstorf/Gewerbepark Süd approx. 90 ha* * Development area Area potential up to 5 ha up to 10 ha up to 30 ha up to 90 ha Selected logistics projects Logistics centre Kaufland (1 st CP) Airport 2 MTU Maintenance 3 MEGA eg central warehouse 4 Sonepar (1 st CP) 5 Toyota Material Handling Deutschland 6 Logistics centre NETRADA (1 st CP) 7 Expansion of the Lidl logistics centre 8 Freight post centre 9 Sonepar (2 nd CP) L M N B R Exhibition Grounds Hannover-Lehrte goods transhipment centre Lindener Hafen inland port Misburger Hafen inland port Nordhafen inland port Brinker Hafen inland port Seelze marshalling yard 10 Nordpack 11 Laverana Main Station / intercity 12 Logistics centre Kaufland (2 nd CP) Waterway Motorway 0 km 2 km 4 km 6 km N completed under construction in planning Main road, dual carriageway Main road Railway line medium-term planning

50 48 LOGISTICS PROPERTY MARKET Key logistics space potential 2013 in the West* No. Logistics locations Space potential Supra-regional connections Sectors and major resident companies 1 Barsinghausen/Bantorf approx. 7.5 ha BP Directly on A 2 motorway (Bad Nenndorf) Suitable for logistics and wholesale, resident: Lyreco (office wholesale), logistics centre Kaufland 2 Barsinghausen / Groß Munzel Holtensen approx. 35 ha development area Directly on A 2 motorway (Kohlenfeld) Development area as part of the logistics focus west 17 Wunstorf / business park south approx. 90 ha development area 3 km to A 2 motorway (Kohlenfeld) Suitable for logistics, wholesale, industry; resident: Lidl central warehouse, Syncreon (automotive), Marley, hauliers Oskar Neukirch, Langhorst, Franke, Kraftverkehr Nagel, MUK Logistik; development area for trimodal logistics (road/rail/ inland shipping connections) as part of Logistics Focus West * Numbers refer to the maps on pages 46 and 47. Over 80 logistics-centric relocations to the area or expansions by regional, national and international companies, primarily in trade, automotive and industrial sectors, have led to the creation of 7,500 new jobs since All top 10 logistics companies in Germany have branches in the Hannover Region. In addition, all of the major courier, express and package service providers, as well as system logistics companies, are also present in the region. Major relocations to the area in recent years include NETRADA (110,000 m 2 ), syncreon (80,000 m 2 ), VW/ Panopa (83,000 m 2 ), Hermes (80,000 m 2 ), Delticom AG and the Rewe Group (each 110,000 m 2 ) 9. Compared with the average for the period covering 2007 to 2011, 15 % less space was turned over in the logistics property market in Space turnover in the first half of 2013 has developed very modestly so far (approx. 100,000 m 2 turnover), but more dynamically than in the same period the previous year. The main demand is for plots with optimal location qualities which can be built on immediately, or existing properties which can be prepared for immediate use. Experts are therefore forecasting a space turnover of around 250,000 m 2 for the whole of 2013 assuming the economy remains stable and the land is available. Demand continues at high level The Hannover Region has caught the eye of relevant companies, project developers and investors. The demand for suitable land in the whole region remains at a very high level: as confirmed by all of the market players. There is a particularly high demand for plots for developing new logistics projects. The problem: although the Hannover Region is highly attractive thanks to its geographical position, there is a shortage of available land. This had a major impact in 2012: total turnover in the sector was down almost a quarter on the two preceding years, with just over 235,000 m 2 space which was either re-let, sold or built on for owner-occupation. Logistics property turnover in the Hannover Region * * Estimate Source: Surveys and calculations carried out by the Hannover Region 9 The space figures refer to the size of the plots, not the buildings

51 LOGISTICS PROPERTY MARKET 49 Major logistics space potential 2013 in the North* No. Logistics locations Space potential Supra-regional connections Sectors and significant resident companies 3 Burgwedel/ Großburgwedel 12 ha BP (business park) directly on the A 7 motorway Resident: Rossmann regional warehouse (drugstore) Logistics centre Pickerd Dekor 4 Garbsen/west of Gutenbergstraße 15 ha BP directly on the A 2 motorway ( Garbsen) Suitable for logistics, automotive, wholesale 6 Hannover/Schwarze Heide approx. 8 ha BP Directly on the A 2 motorway (Hannover-Herrenhausen) Suitable for automotive, logistics; resident companies: automotive subcontractor, Decoma, VW commercial vehicles (Amarok-logistics centre), immediately adjacent to VWN, Continental, Johnson Controls 7 Isernhagen/Kirchhorst approx. 5 ha BP directly on the A 7 motorway(kirchhorst) Suitable for wholesale, customer services, manufacturing industry 9 Langenhagen/ Airport Business Park East 15 ha BP and SO airport directly on the A 352 motorway, via B 522 (Flughafenstraße) 2 km to A 2 Suitable for logistics and aviationcentric business 10 Langenhagen/airport extension West approx. 45 ha development area via B 522 (Flughafenstraße) 3 km to A 2 motorway Suitable for internal-airport usage, logistics and aviation-centric business 16 Wedemark/Gailhof approx. 5 ha and 10 ha development area 2 km to A 7 motorway (Mellendorf) Suitable for logistics, wholesale, customer care, manufacturing industry; resident companies: Spedition Ebeling, Autohof Major logistics space potential 2013 in the East* Hannover/Anderten 10 ha BP 1 km via B 65 to A 2 motorway (Hannover/Anderten) Laatzen/East 40 ha BP Via B 6 and A 37 approx. 5 km to A 7 motorway (Laatzen) Lehrte/Aligse approx. 20 ha BP Directly on the A 2 motorway (Lehrte) Lehrte/Everner Straße 6 ha BP 2 km to A 2 motorway (Lehrte-Ost) Lehrte/Mielestraße approx. 8 ha BP Directly on the A 2 motorway (Lehrte-Ost) Lehrte/Sievershausen approx. 6 ha BP Directly on the A 2 motorway (Lehrte-Hämelerwald) Suitable for industrial scale business, wholesale; resident: DHL post freight centre, Frachtenkontor Directly adjacent to the Exhibition Grounds, suitable for logistics, wholesale Suitable for logistics, wholesale, customer service, manufacturing industry Suitable for wholesale, manufacturing industry; resident: Hornbach logistics centre Suitable for logistics, wholesale and manufacturing industry; resident: Meyer & Meyer, Schäfer's industrial bakery, NETRADA logistics centre Suitable for logistics, wholesale and manufacturing industry; resident: central warehouses for Aldi Nord, REWE and Penny 15 Sehnde/Höver approx. 30 ha BP Directly on the A 7 motorway (Hannover-Anderten); 4 km to/from Hannover-Ost intersection to the A 7 motorway * The numbers refer to the maps on pages 46 and 47. BP = Business park Suitable for logistics, wholesale, industry; resident: Holcim (cement factory), Landgaard flower wholesale market, Spicers, Köster & Hapke, Trans-o-flex, Brand Logistic, Delticom AG

52 50 LOGISTICS PROPERTY MARKET MEGA Group has invested over 20 million in its biggest project: the logistics centre for the system provider of remediation, renovation and modernisation work has been developed on the site at Kugelfangtrift. The total complex provides around 18,000 m 2 office, sales and warehouse space. Rising rent returns good returns in the investment market The rents for logistics properties in the Hannover Region lie in a relatively narrow window between 3.20 /m 2 and 4.70 /m 2. Peak rents for outstandingly equipped new buildings with optimal location connections rose only slightly by around 2 % in The average rents for good logistics buildings are around 3.20 /m 2 depending on location and quality. Peak returns also developed in a stable fashion and lay between 6.7 and 7.1 %. High logistics competence The Hannover Region not only boasts an outstanding infrastructure for logistics services, but also resident companies with an extremely high level of competence. The companies with the highest business turnovers in the courier, express and packet services segment for instance (totalling 28 in number) already have branches in the region. All of the major system alliances such as Systemalliance, IDS, 24plus and Cargoline, use Hannover as their central distribution hubs for their north German goods flows. This service and networking quality is a major location and competitive advantage, which is already harnessed by many companies to handle their logistics. An attractive potential for logistics services has also developed beyond the north German market itself because of the high export-centricity of the companies at the location. The Hannover Region has therefore established a major status within the European and global logistics business as well. Trading logistics drives demand in 2013 Traders and the e-commerce sector in particular have also been the prime user group for the development of new construction projects in 2013.

53 LOGISTICS PROPERTY MARKET 51 The first construction phase of NETRADA's fashion logistics centre at the Exhibition Grounds in the south of Hannover: NETRADA is investing more than 50 million in the first construction phase and will create at least 1,000 permanent new jobs in the long term. The new location is scheduled to start operations in the second half of NETRADA Europe GmbH will develop a plot (approx. 220,000 m 2 ) directly adjacent to the Exhibition Grounds in the south of Hannover in the next few years as its central B2C hub in Europe. The company is the European market leader in e-commerce for fashion and lifestyle, and already sends out more than 22 million packages to customers throughout Europe every year from its established logistics locations in Garbsen, Langenhagen and Lehrte. The project developer and investor Verdion, will construct an almost 50,000 m 2 big shed on a 110,000 m 2 part of the plot in the first construction phase on behalf of the logistics company. NETRADA has two purchasing options for plots covering another 70,000 m 2 (up to 2017) and 30,000 m 2 (up to 2020) to the east of the Weltausstellungsallee on the Kronsberg district in Hannover. Deutsche Post AG is expanding its post freight centre in Anderten in 2013/2014 with the aim of more than doubling the number of packages it handles. The existing freight centre will be enlarged with a mechanised delivery point and additional manoeuvring and deployment areas for trucks. 1,100,000 m 2 New big sheds for logistics since 2007

54 52 LOGISTICS PROPERTY MARKET Selected logistics project completions* Building Location Investor, developer, or user Size Status 1 Kaufland logistics centre (1 st CP) A 2 junction Barsinghausen-Bad Nenndorf, Business Park Barsinghausen-Bantorf Kaufland Stiftung & Co. KG 350,000 m 2 plot 70,000 m 2 big shed Q4/ MTU Maintenance A 352 junction Hannover-Flughafen, Airport Business Park East Langenhagen Wirtschaftsförderungsgesellschaft Langenhagen Flughafen GmbH for MTU Maintenance GmbH 30,000 m 2 plot 7,500 m 2 big shed Q1/ MEGA eg central warehouse and site administration Kugelfangtrift, Alter Flughafen Hannover Business Park MEGA eg 14,000 m 2 big shed 1700 m 2 offices Q1/ Sonepar (1 st CP) A 2/B 6 junction Hannover-Herrenhausen, Garbsen Sonepar Deutschland GmbH 13,000 m 2 Q2/ Toyota Material Handling Deutschland A 7 junction Isernhagen Altwarmbüchen, Hannoversche Straße Business Park Toyota Material Handling Deutschland GmbH 35,000 m 2 plot 20,000 m 2 big shed 3,000 m 2 offices Q4/ NETRADA logistics centre ( 1st CP) A 37 / Messeschnellweg junction Messe-Nord, Business Park East of the Weltausstellungs-allee NETRADA Europe GmbH 112,000 m 2 plot 60,000 m 2 big shed Q2/ Lidl logistics centre extension A 2 junction Wunstorf- Kohlenfeld, Wunstorf- South Business Park Lidl Stiftung & Co. KG 17,000 m 2 big shed Pipeline 2013/ Freight post centre A 7 junction Anderten, Kleiner Holzhägen Business Park Deutsche Post AG 34,000 m 2 plot, 11,000 m 2 manoeuvring and deployment area 4,700 m 2 big shed (mechanised delivery point) 420 m 2 offices Q1/ Sonepar (2 nd CP) A 2/B 6 junction Hannover-Herrenhausen, Garbsen Sonepar Deutschland GmbH 17,000 m 2 Pipeline by Nordpack A 7 junction Berkhof, Berkhof Business Park Nordpack GmbH 100,000 m 2 plot Pipeline by Laverana A 2 junction Barsinghausen Bad Nenndorf, Barsinghausen Bantorf Business Park Laverana GmbH & Co. KG 40,000 m 2 plot (1 st CP) 30,000 m 2 plot (2 nd CP) Pipeline by 2017 Kaufland logistics centre (2 nd CP) A 2 junction Barsinghausen Bad Nenndorf, Barsinghausen Bantorf Business Park Kaufland Stiftung & Co. KG 30,000 m 2 big shed new builds In construction/construction preparation in planning medium-term planning * The numbers refer to the maps on pages 46 and 47.

55 LOGISTICS PROPERTY MARKET 53 Toyota Material Handling, world market leading manufacturer of material handling vehicles, is constructing its new German headquarters in Isernhagen. After completion at the end of 2013, around 200 employees will work in the new building with 20,000 m 2 of space. This is the biggest investment so far in a European distribution company by the parent company Toyota Industries Corporation (TICO). Lidl Stiftung & Co. KG is expanding its existing central warehouse (24,000 m 2 ) in the region by around 17,000 m 2. Lidl markets throughout North Germany will be supplied from Wunstorf. Kaufland commissioned its logistics centre in Barsinghausen- Bantorf in October The company has an option of expanding the location with another 30,000 m 2 of big shed space. Other important completions and project developments are listed in the table on page 52 and shown on the map on pages Infrastructure development in the east The Lehrte goods transhipment centre boosts its importance further with the construction of a so-called mega-hub system (start of construction 2014, commissioning 2016). The 100 million project is a milestone in road/rail transport. When fully completed, the Lehrte mega-hub will have a design capacity of 130,000 containers p. a. Positioned as it is in the hinterland area of the sea ports, Hannover as a central intersection is predestined to carry out a hub and bundling function. Prime sites in the west Up to 120 ha logistics areas could be developed within the next ten years at the Logistics Focus West (Wunstorf/Barsinghausen along the A 2). Rapid execution of the first construction phases is expected in the next few years because of the demand for large logistics areas in the Hannover Region, and the continuing high demand for these attractive plots. Thanks to its excellent connections and the planned trimodality (road, rail, waterways) this location provides ideal conditions to position Hannover Region even more strongly as a seaport hinterland hub and a European logistics nerve centre. 1.1 billion Investment volume in logistics projects since 2003

56 Büntekamp is a popular location in Kirchrode close to Hannover's city forest, the Eilenriede. This new residential quarter will soon be hallmarked by avenue-like streets, a central piazza and mutually offset groups of houses. The construction site is currently being developed in phases by several investors. This visualisation shows a design presented by formart GmbH & Co. KG for planned apartment blocks along the Lange-Feld-Straße (see also p. 59, Delta Bau AG).

57 RESIDENTIAL PROPERTY MARKET 55 Homes for all: Challenge and opportunity Hannover is currently home to 520,000 people. It is forecast that this figure will grow further with the addition of up to 12,000 people by With its "Housing concept Hannover 2025" the state capital presented its action plan for up to 8,000 new homes. Demand for modern homes The local residential property market has enjoyed a significant boost in construction activity in recent years. Since the low level of residential new-builds in 2011, there has been a much more dynamic development in the construction of new homes by major construction companies and project developers, as well as the trade in residential property. The most important quality factors driving this trend are proximity to the city centre, local amenities, and very good transport connections. Regionally influenced and growing market The Hannover Region tends to play a minor role in the national residential property market, and is primarily dominated by local demand and supply. The demand for housing is boosted by the current and forecast increase in the population of the state capital and the immediately surrounding municipalities. The population in Hannover grew by almost 7,500 between the end of 2010 and 2012 alone. The current forecasts estimate that the state capital Hannover will enjoy a population growth of between 2 % and 6 % by This trend must be seen in parallel to the number of vacant residential properties which has been very low for a long time (less than 3 %) and demand can currently almost only be satisfied by the so-called fluctuation reserve created when people move home. An increasing shortage in the residential property market in Hannover is foreseeable given the increase in population and the still very low proportion of residential new-build projects. Small apartments in particular for single households, and large apartments for families are especially affected. Action plan in response to the challenges The city of Hannover is responding to current and future challenges facing the residential property market in coming years with its "Housing concept Hannover 2025" initiative. The concept presented in April 2013 comprises four areas of action, with the aim of intensifying the building of new homes. The forecast demand for 7,900 new homes by 2025 can apparently be covered by the concept. The potential for building new homes on empty plots is placed even higher at approx. 12,300. The concept also plans to further develop the existing housing portfolio. The third action point is a municipal subsidy programme to safeguard and create affordable housing. And finally, the interaction between all of the players is to be improved by continuous dialogue with the housing industry. The HANOMAG-Stadthaus is scheduled to be built directly adjacent to the already completed lofts on the Hanomagstraße in the old factory buildings previously belonging to HANOMAG. An owner-occupier association managed by the Hannover architects firm agsta plans to build eleven lofts with a total space of 1,200 m 2 in a six-storey building. The housing project is the final element in the urban planning project for the Hanomaghof.

58 formart GmbH & Co. KG is constructing the Mosaik Eilenriede residential area in Hannover's Zoo district comprising 175 high quality lets and owner-occupied apartments. The units are divided up amongst 18 apartment buildings lined up in five segmented "blocks". The apartments are scheduled for completion at the beginning of 2014.

59 RESIDENTIAL PROPERTY MARKET

60 58 RESIDENTIAL PROPERTY MARKET Living near the Maschsee on Altenbekener Damm: Gundlach, a property company based in Hannover, bought the plot in summer 2012 previously occupied by the Federal Labour Office. The design by gruppeomp architects incorporates apartment blocks surrounding a courtyard with an eye-catching brick facade which harmonises with the architecture typical of the Südstadt district in the centre of Hannover. The challenge of affordable housing, increasing desire for home ownership The residential property market in Hannover faces the challenge of providing affordable family and mobility-compatible homes. There is also a rise in the demand for smaller apartments. In Hannover today, almost one third of the population lives in one-person households. Another factor is the increasing average age of the inhabitants. Moreover, rising employment, higher incomes, and the outlook of increasing salaries, promotes the willingness to invest generously in realising the dream of a perfect home of your own. On the other hand, the housing market in Hannover also has to satisfy the need for affordable and modern homes for those living on moderate incomes. And all forms of housing have to satisfy the increasingly stringent energy-efficiency criteria stipulated by purchasers and the government. districts with a mixture of housing, services and gastronomy are planned at central locations such as the Klagesmarkt, Am Hohen Ufer, Am Marstall and Köbelinger Markt. Larger construction sites for housing are also being developed in the more peripheral parts of the city and in the area surrounding Hannover. An absolute prerequisite for the realisation of these plans is the already outstanding local public transport links to the job centres in the state capital. Housing for different requirements The city's "Housing concept Hannover 2025" provides a spatially and qualitatively differentiated potential for housing plots to satisfy the wide range of housing requirements. Plots are scheduled for the construction of detached homes demanded by families and households on good incomes, as well as apartment blocks with apartments for letting and owner-occupation. The town council is particularly focused on housing in inner city areas. These plans are guided by the implementation of the "Hannover City 2020+" city centre concept. New city centre Europe's largest climate protection residential area is being built at zero:e Park in Wettbergen at the south-western edge of Hannover: around 300 terraced, semidetached and detached houses are being built in passive house manner to realise this zero emissions district. Around two thirds of these homes have already been built or marketed. In this construction site on the Hirtenbach, Hannover again sets the benchmarks for climate and environmental protection as in the past when it constructed the Expo housing area on the Kronsberg.

61 RESIDENTIAL PROPERTY MARKET 59 Büntekamp is proving to be a very popular residential area: Delta Bau AG is building 34 terraced and garden-courtyard houses here, as well as semidetached houses according to designs by the Hannoverian architects agsta (see also p. 54). Housing rents in the peak price segment in Hannover 2009 to 2013 Purchase price of owner-occupied apartments (new builds) in Hannover 2009 to /m /m * * Re-let New housing Average Peak group Source: RIWIS@bulwiengesa AG* Market player estimate Source: RIWIS@bulwiengesa AG* Market player estimate The residential property market details are determined by bulwiengesa AG on the basis of empirical surveys. This involves surveying estate agents, valuation boards, banks and business promotion organisations, evaluating newspaper articles, as well as assessing all publically accessible information concerning the property market. These include the price comparison index from the real estate associations, savings banks and some regional and supra-regional estate agents. The values are then cross-checked in Hannover at a workshop in the presence of the relevant market players. The valuation then takes place within the context of the overall development of the market and taking into consideration econometric model calculations. Figures are first summarised in a schematic diagram and cross-checked to determine their plausibility. Bulwiengesa AG does this by referring to a large number of building-related data in its own RIWIS database. Finally, all of the findings on the given values are condensed. The rental and purchase price figures given here are average values reflecting a typical or usual level they should not be seen as a strict arithmetic average, mode (most frequent value) or median (central value) in a mathematical sense. The peak price segment figures shown here are the prices which can only be achieved in Hannover in buildings with above average fixtures and fittings in very good locations, and which have already been achieved in Hannover in 2013 according to players in the Hannover market.

62 60 RESIDENTIAL PROPERTY MARKET Map // Selected residential projects km 1 km 2 km 3 km N Finalisation / completed 8 Büntekamp, Kirchrode Development and/or preparation in planning 36 Lister Blick, List 1 Stadthöfe Langenhagen 2 Lofts as you like, Calenberger Neustadt 3 Lofts am Deisterkreisel, Linden 4 Postkamp/Nordfelder Reihe, Nordstadt Under construction 5 zero:e Park, Wettbergen 6 Wietzeaue, Gemeinde Isernhagen 7 An der Gartenbauschule, Ahlem 9 Mosaik Eilenriede, Zooviertel 10 Johanniter-Quartier, Kirchrode 11 Vier, List 12 Forum Herrenhäuser Markt, Herrenhausen 13 StilLeben, Zooviertel 14 Anderter Höfe, Anderten 15 ehem. Albert-Schweitzer-Schule, Linden 16 Dannenbergstraße, Ricklingen 17 Leisewitzstraße, Zooviertel 18 HANOMAG Stadthaus, Linden 19 Kronsberg extension 20 Student halls-of-residence, Quarter Am Kläperberg, Nordstadt 21 Klagesmarkt, Nordstadt 22 Ihmeauen, Linden 23 Am Yachthafen, List 24 Welfenhof-Villen, Isernhagen-Süd 25 Hamburger 50, List 26 Wasserstadt, Limmer 27 Steinbruchsfeld, Misburg 28 Former Oststadt Hospital, Groß-Buchholz 29 Am Listholze, List 30 Altenbekener Damm, Südstadt 31 Badenstedt-West 32 Stockhardtweg, Limmer 33 Zweibrückener Straße, Kirchrode 34 Peiner Straße, Döhren 35 Lenbach-Höfe, List 37 Auengarten Limmer 38 Buchengarten Ahlem 39 Am Hohen Ufer, Mitte Airport Exhibition Grounds Tram Railway line City boundary good housing area normal good housing area normal housing area The breakdown into good and normal areas only provides a very rough guide. For detailed information about specific roads and rent levels in the Hannover Region, please refer to the Hannover Region Residential Rental Index 2013at search term: Mietspiegel

63 Selected residential objects Project name Number of units Developer/investor Stadthöfe Langenhagen 40 meravis Lofts as you like, Calenberger Neustadt 38 formart GmbH & Co. KG Lofts am Deisterkreisel, Linden 27 agsta Postkamp/Nordfelder Reihe, Nordstadt 24 Gundlach zero:e Park, Wettbergen 300 City of Hannover, meravis, NLG, Interhomes AG Wietzeaue, Gemeinde Isernhagen 290 Various housing companies and property developers An der Gartenbauschule, Ahlem 245 HRG Büntekamp, Kirchrode 180 formart GmbH & Co. KG, Delta Bau, Weber Massivhaus Mosaik Eilenriede, Zooviertel 174 formart GmbH & Co. KG Johanniter-Quartier, Kirchrode 57 Delta Bau Vier, List 166 Gundlach Forum Herrenhäuser Markt, Herrenhausen 24 WGH StilLeben, Zooviertel 24 formart GmbH & Co. KG Anderter Höfe, Anderten 20 Delta Bau Former Albert-Schweitzer-Schule, Linden 15 Stadtteilleben e. V. Dannenbergstraße, Ricklingen 16 Gundlach Leisewitzstraße, Zooviertel 14 Delta Bau HANOMAG-Stadthaus, Linden 11 agsta Kronsberg extension >400 Various housing companies and property developers Student halls-of-residence, Quarter Am Kläperberg, Nordstadt 300 Investors association, Quarter Am Kläperberg Hannover Klagesmarkt, Nordstadt 100 Gesellschaft für Bauen und Wohnen Hannover mbh Ihmeauen, Linden 80 HRG Dr. Meinhof GmbH & Co. KG Am Yachthafen, List 60 Gundlach Welfenhof-Villen, Isernhagen-Süd 41 Heinz von Heiden Hamburger 50, List 26 Weser-Wohnbau Wasserstadt, Limmer 600 GP AG, Various housing companies and property developers Steinbruchsfeld, Misburg 350 Various housing companies and property developers Former Oststadtkrankenhaus, Groß-Buchholz 220 HRG Am Listholze, List 150 Gundlach, Delta Bau Altenbekener Damm, Südstadt 75 Gundlach Badenstedt-West 65 State capital Hannover Stockhardtweg, Limmer 50 Spar- und Bauverein Hannover Zweibrückener Straße, Kirchrode 47 Gundlach Peiner Straße, Döhren 38 Gundlach Lenbach-Höfe, List 34 Liemak GmbH Lister Blick, List 23 Gundlach Auengarten Limmer 22 meravis Buchengarten Ahlem 25 Bauatelier Nord Am Hohen Ufer, Mitte 12 HELMA Wohnungsbau Finalisation/completed under construction Development and/or preparation in planning

64 62 RESIDENTIAL PROPERTY MARKET Am Listholze will probably see construction activity start on apartments and townhouses in autumn Urban planning designs were developed as part of an architectural competition for the joint project involving Gundlach and Delta Bau, two construction companies from Hannover. The winning design by blauraum architects from Hamburg comprises around 100 apartments with two to five rooms, and 50 terraced houses on the around 19,000 m 2 plot on the Mittellandkanal. The total investment volume is approx. 30 million. Action area Development of existing buildings The construction of new housing alone will not solve the problem. However, the refurbishment of old buildings will soon reach its limits once factors such as barrier-free movement and energy efficiency are taken seriously. Nevertheless, the shortage in supply in some areas of the residential letting market will only increase without implementing refurbishment, demolition and new construction activities. It is expected that there will be a trend in densely built up parts of town with block perimeter development such as the Südstadt, Mitte, Oststadt and List, to purchase industrial brownfield sites and older residential and commercial properties and replace them with new buildings. This development is also increasingly affecting urban districts such as Linden and Nordstadt. Buildings built after the war up to the 1970s are increasingly being considered for this purpose. Sustainable energy refurbishment is often unprofitable and many of these buildings are frequently unlisted, which means that heritage aspects do not have to be taken into consideration. Diverse residential offers There are already diverse residential models available in the city and the region differentiated for all target groups. The spectrum ranges from the development of empty inner-city plots and brownfield sites where the residential concepts tend to veer towards small-scale, high-quality and very individual schemes, right through to large project development activities concerning integrated residential areas. Activity on the market in this regard not only involves institutional project development organisations or residential construction companies: private building groups are increasingly hiring architects and project developers to manage projects of this kind. Although this is less interesting from the point of view of institutional investors, it does illustrate the high demand for customised and modern housing in central urban locations. Strong investor property market Hannover Region is an attractive and important market for residential and commercial properties, so-called investment properties. In this market segment, 344 apartment blocks were sold in 2012, some of them with a minor amount of mixed usage. The transaction volume overall was over 215 million. 206 buildings changed hands in the city of Hannover for a transaction volume of 153 million. 10 The increased demand in urban areas, particularly in the top locations, is very difficult to satisfy. Purchasers are increasingly casting their eyes further afield onto urban districts outside of the classic locations such as the Zoo district. 10 Data from the real estate market report 2013 (Expert panel on land values in Hannover).

65 RESIDENTIAL PROPERTY MARKET 63 In the traditionally sought after residential area of the Zoo district, formart GmbH & Co. KG developed the Stilleben am Zoo project with 30 high quality owneroccupied apartments. To develop the around 3,300 m 2 plot, it was first necessary to demolish an air raid shelter to create the space needed for the housing. Langenhagener Stadthöfe: meravis has built 38 comfortable owner-occupied apartments with 58 to 163 m 2 floor space directly opposite the town hall and the town centre in Langenhagen. The piazzas situated between the angled buildings provide recreation areas.

66 64 With approx. 530,000 inhabitants, the state capital Hannover is the largest of the 21 municipalities forming the Hannover Region, which is home to around million people in total. The Hannover Region has around 452,000 employees paying national insurance, making it a leading economic location in Niedersachsen.