Property investors in Germany follow a code comparable with the nation’s beer purity law. According to this creed, a property must consist of a single ingredient, i.e. use type. Each additional ingredient (use type) makes a property less “palatable”. Mixed-use properties are more labour-intensive, from due diligence through to asset management. Consequently, they are normally marked down in price or even completely omitted from a list of potential investment properties.
However, investors will find it increasingly difficult to maintain this stance going forward. Mixed-use properties are clearly on the rise while single use is in decline. An analysis of the current development landscape provides further context. In the top seven markets, almost half of buildings with office use completed or scheduled for completion between 2015 and 2021 will have at least one other use. The proportion of non-office space in buildings rises from 19% in properties completed in 2015-16 to 32% in properties scheduled for completion in 2020-21. Prominent examples of such mixeduse projects include Berlin’s Upper West (scheduled for completion in 2017), the Deutsche Bank Triangle in Frankfurt (2021) and the Stadthöfe in Hamburg (2017). All three projects have a mix of office, retail and hotel uses while the latter two also feature residential accommodation.
Source : Savills