The connection between law, zoning, and market value

The example of entertainment properties in Frankfurt/Main

Prof. Dr. Fabian Thiel

Professor of Real Estate and Property ValuationFrankfurt University of Applied Sciences

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Content

Regulations for entertainment properties

Exclusionary areas by zoning and influence on market values

Valuation problem of “trading-down”

Appraisal of entertainment properties (example), and hidden data

Summary

Spatial Planning in Germany

ComprehensiveSpatial Planning

Sectoral Spatial Planning

Federal Level

State Level

Regional Level

Legally-bindingLand-use planning

Land relatedsectoral planning

Set up of Protection Areas(Land Use Restriction)

Official Approvalof Plans

e.g. Land consolidation

Landscape P.Traffic P.Energy P.

e.g. Water Protection,Nature Protection,

Military Use

e.g. for streets,Airports,

Land fill sitesMunicipal Level

European Level

PreparatoryLand-use planning

Building plan

City DevelopmentConcept

Informal planning and instruments(e.g. City Development or Integrated

Rural Development Concepts)

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Regulations for entertainment properties in Germany

Law on Prostitution (2002) Federal Building Code Land Use Ordinance Tax laws (e.g., amusement tax) Local fees Industrial Code Programs on urban restructuring and

upgrading Decrees for exclusionary zones in

Frankfurt

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What is an „entertainment property“?

Unclear legal definition of an “entertainment property”; following the Federal Administrative Court:

discotheque – yes nightclub – yes swinger club – yes betting agency – no (because it´s retail) brothels and massage salons – no (because it´s business) … and “apartments”?

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Entertainment properties in Frankfurt: examples (1)

Own Images

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Entertainment properties in Frankfurt: examples (2)

Problem of agglomeration of entertainment properties, gambling halls and „betting-cafes“ within the center of Frankfurt

Valuation and planning problem:„trading-down“

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Appraisal of entertainment properties (1)

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Appraisal of entertainment property (2): Specialist Valuation

Total rooms available per annum: 172 lettable rooms

45% room occupancy rate Average achieved room rate: 120 € per

night, excluding cost for service, clothes, food

Running property expenses: 60.000 € for heating, 12.000 € for marketing and security

Unknown data on revenue, food, beverages

Unknown YP in perpetuity Unknown turnaround

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Appraisal of entertainment properties (3): general data

1,2 Million (male) customers in Germany; turnover: 14 billion € p.a., 50% part of GDP; 50 % for danegeld, rent, clothing, and security

Estimation of “market activity”?

Definition of “market value” for entertainment properties?

Ownership arrangements, leases, danegeld, (hidden) “operating costs”?

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Summary

Current amendments of the Prostitution Law will influence (intervene) in market activities

Normative pluralism of planning law

Problem: Tolerance of uses

„Non-aggression“ agreement between police and owners of entertainment facilities

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Contact

Prof. Dr. Fabian Thiel

Frankfurt University of Applied Sciences

bodenrecht@fabian-thiel.de

www.fabian-thiel.de