Leipzig steps up to become European investment hub

Driving around Leipzig, it soon becomes apparent that past and present live harmoniously side by side – from the ancient Old City Hall and brutalist architecture of the German Democratic Republic-era Gewandhaus concert hall to the slick public transport system and modern buildings housing futuristic production lines.

Leipzig’s long-standing reputation as a centre for trade holds true today as it offers cross-sector opportunities for companies and workers. The German city, which has a population of 1.7 million, has seen employment grow by 22% since 2005. Its GDP rose by 3.4% in 2016, well above the German national average of 1.7%.

Leipzig also fares well in the rankings. In June 2017, it was number one for population growth in Germany and came second in a ranking for ‘German Cities with the Best Prospects’ (Hamburg Institute of International Economics and private bank Berenberg, September 2017). HHL Leipzig Graduate School of Management was also ranked sixth for master degrees in management provided by the world’s leading universities (The Economist, May 2017).

A host for growth

Located at the intersection of the Via Regia and Via Imperii trade routes, Leipzig is home to several growth industries. These include automotive; plastics; chemicals; energy and environmental technology; food and packaging; manufacturing; IT and e-commerce; life sciences and biotechnology; logistics; media and creative; and start-ups.

It also has a strong education sector, being home to 11 universities and about 40,000 students. Major names with bases in the region include Amazon, Basf, Siemens, BMW, Porsche, DHL, Vattenfall, Verbundnetz Gas and Arvato Systems.

Unsurprisingly, trade fairs are an important part of Leipzig’s business environment. “Leipzig won its city and market charter some 850 years ago, beginning one of the world’s greatest and oldest trade fair traditions, and setting the rhythm of the city since that time,” says Steffen Jantz, executive director and spokesperson of trade fair company Leipziger Messe.

“Trade continues to define Leipzig’s economic, political, architectural and social development. Leipziger Messe – together with its five subsidiaries and the Congress Center Leipzig – is among the 10 leading trade fair companies in Germany, and one of the top 50 worldwide,” he adds.

About 280 trade fairs, conventions and other events attracting up to 12,000 exhibitors and more than 1.2 million visitors take place in Leipzig every year. “The most important events include the Leipzig Book Fair, which includes Europe’s biggest reading festival, Leipzig Liest; the Intec and Z twin fairs – leading European trade fairs for the metalworking industry and supplier industries; the world’s leading industry event for orthopaedic and rehab technology, OTWorld; and Denkmal, Europe’s leading trade fair for conservation, restoration and old building renovation,” says Mr Jantz.

The portfolio also includes the annual International Transport Forum, the world summit of transport ministers, which takes place annually at the Congress Center Leipzig, and important medical conventions such as Leipzig Interventional Course.

The right connections

The city enjoys a well-developed road network with direct connections to three major motorways. Since the start of the 21st century, investment has continued to improve the transport infrastructure. Projects include the creation of a high-speed rail link for Berlin-Leipzig/Halle-Erfurt-Nuremberg-Munich; the completion of the Wahren Multimodal Terminal; the completion of the A72 motorway between the Borna and Leipzig intersection; and the expansion of Leipzig/Halle International airport, including the opening of an air-freight transshipment station. Funds have also been put into other transport network schemes.

Such investments are boosting the city’s logistics industry. The airport handles cargo 24 hours a day, and high-speed rail services on new and upgraded tracks ensure good regional and national connections. Since 2008, DHL has used Leipzig/Halle Airport as its European hub, with some 60 flights daily.

However, while the city has good air and rail links to other German cities, some believe its international airport connections could be improved to make travelling easier and faster. “Our employees frequently travel to our international offices via plane,” says Peter Reitz, chief executive at the European Energy Exchange. “Often the flight connections to these locations are not ideal because no direct flights are offered.”

Leipzig’s popularity is reflected in its expanding property market. In 2016, property sales totalled €2.9bn – the highest since the city's valuation committee began recording the figures in 1992 and a 3% increase on 2015’s total.

The city is also becoming increasingly attractive to tourists. In 2016, total turnover for tourism was €1.33bn for the region compared with €1.11bn in 2015, according to the Leipzig Chamber of Commerce. Tourist arrivals were also up. “For the 11th year in a row, Leipzig surpassed the figures of the previous year in 2016,” says Volker Bremer, CEO at Leipzig Tourism and Marketing. “With a total of 1.57 million arrivals, the city recorded an increase of 2.4% compared with 2015. The total number of overnight stays was 2.89 million, an increase of 2.5%.”

Portal to the east

The city’s location as a gateway to the new EU accession states of eastern Europe, its links to the markets of both western and central Europe and its educated workforce have all encouraged businesses to invest here. Leipzig now plays host to Bucher Emhart Glass’s sales and service centre for northern Europe, while furniture maker USM Haller is moving its assembly operation from Baden-Württemberg to the city. The move should be complete by 2018, and will initially result in 300 new jobs.

Security tech company Giesecke & Devrient has also shown its confidence in the region, investing an eight-figure sum in a new building in Leipzig into which it moved in September 2016. Insurer Generali opened its new offices in Leipzig in October 2016 with a workforce of 30, which grew to about 100 by mid-2017.

Other firms investing in the area include Bosch, which opened a centre for business services here in May 2016; HL Komm, which is constructing a new data centre in Leipzig; IT2 Solutions, which is investing €3m in its new office block in the north-eastern district of Heiterblick; and Deutsche Telekom, which is building an ultra-modern four-storey office complex in the city.

Support for investors includes the Joint Scheme for the Improvement of Regional Economic Structures, which is aimed at investment in the manufacturing industry and production-related services. SMEs can tap into non-reimbursable investment grants, plus there are several grants available via state schemes, such as the European Social Fund, and low-interest credit from the state of Saxony.