The Überseestadt district in Bremen is one of the largest urban development projects in Europe. By 2025, the 300-hectare former harbour site will have been transformed into a diverse, modern neighbourhood. A vibrant mix of offices, hotels, retail, restaurants/cafés and residential accommodation has already emerged, with the district currently providing 14,500 office jobs. The total is set to rise to 17,000 by completion.
Property quality is key
As a real estate investment manager, Union Investment has this and other economic developments firmly in its sights, seeking out opportunities that add value for its investors. The example of Bremen shows that secondary cities offer highly attractive prime locations which promise stable returns over a sustained period. Of crucial importance is the quality of the properties and of the surrounding infrastructure.
Union Investment recognised the exciting potential of Bremen's Überseestadt early on, and in 2013 acquired the 82-metre-high Weser Tower, the tallest building in the city, with 18,000 sq m of office space. The prestigious property forms part of the portfolio of the UniInstitutional European Real Estate fund.
New additions in an attractive waterside location
The Hamburg-based real estate investment manager has now gone one better and acquired two neighbouring properties, WQ1 and Haus am Fluss. Together they comprise 11,500 sq m of rental space and combine offices with popular eating establishments on the ground floor. The highlights include terraces directly overlooking the river Weser. Here again, it is institutional investors who will benefit from the future returns delivered by these properties, which belong to sister fund UniInstitutional German Real Estate.
A clear and discernible trend
Bremen's Überseestadt is just one example of the growing attractiveness of secondary cities in Europe. In the 21 months from January 2015 to the end of September 2016, Union Investment acquired 55 commercial properties worth a total of EUR 5.9 billion. 16 of these properties are located in so-called secondary cities, i.e. some 30 per cent. In the two years from 2013 to 2014, by contrast, only 19 per cent of real estate acquisitions involved prime locations in secondary cities.
Good opportunities across all property types
Opportunities in European secondary cities can be found across all property types, as illustrated by a number of Union Investment’s recent acquisitions since 2015. Like the Uferstadt Fürth complex, which comprises some 54,000 sq m of flexible office space with the kind of modern campus ambience that typifies the new digital workplace. Backed by additional on-site services and amenities, the overall proposition is compelling.
In Aachen, the four-star Meliá hotel attracts many leisure and business travellers, thanks partly to its proximity to neighbouring Belgium and the Netherlands.
Another classic example is the Riviera shopping centre in Gdynia, Poland, which offers over 70,000 sq m of retail space and enables Union Investment’s investors to benefit from steadily increasing consumer spending in medium-sized Polish towns.