Instone, Commodus both buy Bavarian developers
Listed German residential property developer Instone Real Estate made two significant moves in August, further consolidating its in-house competencies and geographic reach.
It also gained admission to Germany’s SDAX index for small companies, effective August 29th, making it the only residential developer in one of the DAX selection indices.
After a topping-out ceremony earlier in the month for its “Luisenpark” project of 235 apartments in the heart of the former no-man’s land in Berlin Mitte, one of the last large-scale neighbourhoods on the land previously occupied by the Berlin Wall, the company bought a site in Leipzig to build 330 apartments worth €110m. The price paid for the 13,000 sqm site at Rosa-Luxemburg-Strassse was undisclosed; construction work is expected to begin in 20121.
Instone’s Torsten Kracht said, “At this location, we are planning a lively mix of classic condominiums with two to five rooms, age-appropriate apartments as well as apartments for students and professionals.” A listed multi-family building on the site will also be refurbished by the group.
With the latest deal, Instone now has more than 1,600 apartments in the Leipzig area either in the building or the planning phase, including the largest residential project in the city, the Heeresbäckerei. All together, the Essen-headquartered Instone had 45 different development projects on the go at the end of Q1, comprising more than 11,000 units and a total expected sales volume of €4.8bn.
Leipzig is suffering a serious housing shortage, as highlighted in a recent study by the Institut der deutschen Wirtschaft in Cologne (IW Köln), which showed that between 2016 and 2018 a total of 1,900 apartment units were completed annually, although at least 4,200 units are needed (2016-2020). In other words, completions are barely covering 45% of the current housing demand.
The second big move the company made was buying the residential property development company S&P Stadtbau, an arm of the Nuremberg-based Sontowski & Partner Group, which is a strong regional player in northern Bavaria. The move will involve more than 20 professional staff moving to Instone along with Stadtbau’s management and six project developments within the Nuremberg metropolitan area. The projects are said to encompass more than 1,000 apartments at an expected sales volume of €300m.
Instone’s CEO Kruno Crepulja said of the strategic move, “With the S&P Stadtbau activities, Instone is acquiring one of the premier property developers in the rapidly growing metropolitan region of Nuremberg; one that realises complex residential properties through the entire value chain. We are also complementing our existing activities in the greater Berlin, Düsseldorf, Frankfurt am Main, Hamburg, Cologne, Leipzig, Munich and Stuttgart areas.”
Klaus-Jurgen Sontowski of Sontowski & Partner said it plans to keep a long term position in national project development by buying Instone shares for a single-digit million amount in the current year, and developing close cross-company co-operation with Instone by promoting third-party sales across mixed commercial and residential developments.
Another company making a move into Bavarian project development is investment firm Commodus, which has offices in Munich and Berlin and focuses on offices properties with value-add potential in Germany’s larger cities. Commodus has bought the residential construction division of the Fürth-base P&P Group, formerly known as P&P Wohnbau GmbH, in a joint venture with Munich entrepreneur Daniel Günthert.
The division is now known as Bayerisches Immobilien Kontor GmbH (BAYIKO), and has 15 projects running, in Nuremberg, Fürth, Herzogenaurach, Zirndorf and Schweinfurt. The Schweinfurt project, Askren Manor, is a former US military housing estate, with 144 new aparttments being created.
Dr. Matthias Mittermeier, managing partner of Commodus, said “We have acquired an established regional firm with a long and successful track record and an outstanding team of experts. Together we want to develop BAYIKO into an independent platform for real estate investors with a focus on private equity investment. Target customers are primarily private investors. BAYIKO should enable these investors to invest in real estate in a simple and transparent way. We are lowering entry barriers and giving private investors broader access to the property investment market. In times of no or negative interest rates, this seems to us to be a promising growth segment.”