DORMAGEN: SUCCESSFULL DISTRICT DEVELOPMENT
The district development Dormagen Horrem
The city of Dormagen is located in the Rhineland between Cologne and Düsseldorf. It offers a central location, combined with advantages such as a quiet but attractive city. Around 65,000 people live in a total of 16 districts. Dormagens economy is mainly shaped by the chemical industry.
In October 2015, Noratis AG purchased a real estate package totalling 755 apartments, 7 commercial units as well as 243 garages and 155 parking spaces in the district of Horrem. The lettable area comprised of around 50,000 m². The vacancy rate of the property built in the mid-1960s was over 30 %, indicating the district‘s lack of attractiveness. However, following a comprehensive inspection by Noratis the site showed considerable potential, which could be achieved through active asset management, even in the short term.
For years Horrem had fallen behind because of urban isolation due to a railway line, and a lack of center development. But now there were initiatives involving the city to make Horrem more attractive again. The location itself was significantly burdened by a lack of investment. The element had fallen into disrepair, petty crime was the order of the day.
Noratis launched a package of around 10 million euros to revitalize the district. Dark corners were illuminated, facades renewed, balconies and house entrances renovated. Added to this, the city developed plans to improve access to the buildings so that apartments were more directly accessible. The maintenance of the outdoor facilities rendered the entire district with a more liveable feeling. In addition to the city, other parties were also involved in the implementation. Together with the fire brigade and the rescue service, directions and escape routes were drawn up.
Upgrading the site location was carried out with the participations of tenants. Only vacant apartments benefitted from interior renovations, the tenants of the residential complex were given the option of moving into one of the renovated apartments or staying in their apartment. When the project was completed, the measures led to a complete reduction in the site’s vacancy rate. Noratis did not enforce rent increases with the existing tenants, but instead took over existing rental agreements. Still rental income of the portfolio increased significantly thanks to the new rentals.
The result: the entire complex became more interesting not only for the tenants, but also for investors. A first block sale of 137 residential units was successfully concluded just 12 months following the purchase. Three months later, in January 2017, a second large block sale followed, comprising 309 residential units. In September 2017, around 2 years after the property was purchased, a final block sale made it possible to sell 221 residential units without vacancies to a long-term investor. At the same time, the individual privatization of 88 apartments was initiated.
The development of Dormagen was the largest real estate project in Noratis’ company history to date. The property sales were one of the key drivers of earnings in the 2017 financial year, a testament to the successful development and value-creating asset management. However, not only Noratis AG benefitted from this development. The entire district of Horrem has become a more attractive area, so the city of Dormagen is also one of the beneficiaries. And last but not least, the tenants have benefitted from affordable, high-quality living space.
The Dormagen Horrem district development: A win for everyone involved.
|Address||Am Rübenweg 7-23 | Heesenstraße 4-8 | Am Rath 13-58|
|Properties||Residential complex with 755 apartments (incl. 8 commercial premises), 240 garages and 155 parking spaces|
|Rental area||50,900 m²|
|Strategy||Block sale (667) | sale of individual apartments (88)|
|Sales completion||October 2016 to December 2017 | August 2018|
|Project duration||12 to 26 | 34 months|
- Complete and partial renovation of vacant apartments
- Renovation of balconies, house entrances, staircases and common basement
- Installation of intercoms in the apartments
- Painting of facades
- Redesign of the outdoor facilities incl. lighting