Listed historic buildings – a glimmer of light in the current transaction market?

The transaction market has almost come to a standstill. Under what conditions are deals currently being concluded?

Even in a difficult market – or rather, especially in a difficult market – it is the classic and proven criteria that count and work best. Current deals are taking place almost exclusively in prime locations, be it in CBDs, trendy districts or exclusive locations with traditionally high prestige, such as around the banks of the Alster in Hamburg. After all, it is precisely there that values rise sustainably and remain stable in the long term – and asset preservation is currently one of the driving investment factors. Private (U)HNWI investors and family offices in particular, who have often missed out on deals in recent years, are sensing their opportunity while institutional investors are hesitant to act.

Slowly but surely, we are also observing a rapprochement between seller and buyer. Both sides are becoming more flexible, and the price level is increasingly adjusting to reflect the new circumstances and conditions.

Why are listed properties particularly worthwhile for investors currently? 

Due to the organic growth of historic urban structures, listed properties are usually located in the prime locations of a city or region. And even within these locations, they are highly visible and prestigious. Their architecture – whether Wilhelminian, Art Nouveau or International Modernist – makes each of these buildings unique. And, in addition to the location, it also ensures long-term value stability, which is one of the greatest investment advantages, especially in the current market situation. 

Investors also benefit from a generally high demand from highly-solvent and renowned occupiers who are interested in long-term leases. Owner-occupiers obtain an extraordinary environment which augments their own prestige. In addition, there are the not inconsiderable tax advantages that a listed property brings with it. 

What are the challenges for owners?

Clearly, a listed property is not an off-the-shelf practically-planned box, but a product of special architecture. The focus is on the history of use, artistic detail and prestigious representation, both externally and internally. Requirements for modern use must be retrofitted. And it is precisely in this balancing act between the preservation of uniqueness and modernity that the challenge lies. How do I ensure flexibility in terms of use and space? How do I strike a balance between economic efficiency and artistic value? How do I reconcile my own ideas and requirements with the requirements of monument preservation? And how do I manage to make the properties, most of which are more than a century old, ESG-fit or at least implement those aspects that have become essential? All of this requires creativity, sensitivity, a high willingness to compromise – and, of course, a certain passion for the property, its history, architecture and uniqueness.

Those who take on these challenges will be rewarded with a property that is truly unique, that is clearly perceived from the outside, that breathes a very special atmosphere inside and with which its occupiers can build up a high degree of identification. The latter in particular increases the attractiveness of a company located there enormously - and this is an advantage that should not be underestimated in the light of the current shortage of skilled workers and the trend towards working from home.

Let's take look at a real example: The former U.S. consulate in Hamburg is currently for sale. Why is it worth investing in it?

The former U.S. consulate, located directly on the waterfront of Hamburg's Aussenalster lake, definitely lives up to its status as a very special historic building. "The building is one of the most beautiful and valuable villas, as well as one steeped in history. Solid marble columns grace its interior, a grandiose floor, wonderful ceilings, wall friezes –worth millions even then," wrote the Hamburger Abendblatt newspaper only a few years ago. And this description hits the nail on the head. Originally planned and built by the architect Martin Haller as a two-part neo-baroque building ensemble, the United States used it as a consulate from the 1950s onwards and had extensions added in the neoclassical style, especially to the facade, in order to appear as similar as possible to its big brother in Washington: the building is renowned as the "Little White House on the Alster". 

Anyone who invests in this property acquires this outstanding history as well as the associated public image, prominence and charisma. In a very high-visibility unobstructed location directly on the Shore of the Aussenalster in Rotherbaum. The building has been there for more than a hundred years and will still be there in another hundred years – which is rarely the case with newer buildings. In addition, a variety of uses ranging from offices and large law firm premises to hospitality are possible, which – as the building is already empty – can be implemented immediately. 

Investment opportunities offering this highly attractive combination are exceptionally rare, even when the market is booming.