Office properties

In the office segment of the real estate market in the Ruhr metropolitan area, modest demand is shown in the first six months of 2022, which is due to various factors. While the tight availability of spaces in Bochum and Duisburg, especially when it comes to spaces of new building quality, dampens the sales result, large-volume rental agreements and owner occupancies are missing in Essen and Dortmund in the first half-year. In addition, there are the economic
uncertainties triggered by the Russian attack on Ukraine, which is why companies increasingly plan for the near-term only. Vacancies in comparison to the year‘s end values of 2021 increased slightly. This primarily relates to the four large office markets of Ruhr metropolitan area in which especially Essen stands out. The good news is that peak rents have so far shown stable to slightly rising trends against this background. Ruhr metropolitan area essentially replicates the development of the top seven cities, meanwhile the development of the rent and vacancies have decoupled as well. This was also decisively influenced by higher demands for the building and equipment quality by the users, besides the risen construction costs. As in the seven A-rated cities, project developments are in higher demand in the Ruhr area, even without relevant prior renting, and financing is checked in more detail before it is ultimately
initiated. In light of the risen financing costs, which hit the market in the second quarter and which have led to significantly fewer transactions, the Ruhr metropolitan area can look back on a solid result for the first half-year. The yield compression in this context, however, found an early end. In the highly priced sub-market of Essen, the yield climbed by 15 base points to 4.15%. Investors are no longer willing in the current market environment to pay the high prices that were still prevalent in the beginning of the year. To what extent price corrections will still happen in the course of the year remains to be seen. At any rate, however, gains on the yield will probably be more modest than in the much more expensive A-rated cities.