Orco acquired via its German subsidiary the site of former Wertheim complex in the centre of Berlin which plans to be developed into 88,000 sqm area of office, retail and as well as residential units and hotels. The area spreads between centres of East and West Berlin and is considered as new “Mitte” (Berlin center), the top address for national and international companies. The price for the acquisition is EUR 75m and Viterra Development will be responsible for the project management.
Our view:
Orco sticks to its strategy and vision about German market, especially Berlin, where it sees upside potential as local real estate market hasn’t seen the boom similar to other European cities. There was 10.4% vacancy rate in Berlin office segment at the end of 3Q06, while prime rents currently stands at EUR 20.5/sqm/month and are stable. Orco has a good track of selective acquisition process on German market for favorable prices. The price per constructible sqm stands at EUR 850, which is 20% below similar transaction in the area. As Wertheim complex site provides various opportunities for development, we see this news positively.