July 11, 2012, Munich – The German investment market achieved a transactions volume of roughly € 9.4 billion during the first half of 2012 and as such was approximately 15% below the previous year’s result. “It was already clear at the end of the first quarter that a lower number of large volume transactions in comparison with the previous year was the predominant reason for this decline”, says Andreas Trumpp, head of research at Colliers International in Germany. “Whilst sales in excess of € 100 million achieved a volume of approximately Euro 5.2 billion in the first half of 2011, this amount was only Euro 3.1 billion this year”, he adds. Foreign investors had a share of roughly 35 % of the volume of transactions (approximately € 3.3 billion), which enabled them to keep their market share almost at the same level as in the previous year. On the other hand, the share of portfolio sales declined to 23% in 2012 compared with 29% in the previous year. During the first six months of 2012, approximately € 4.6 billion, corresponding with almost 49% of the volume of transactions, was invested in the six most important investment centres (Berlin, Düsseldorf, Frankfurt am Main, Hamburg, Munich and Stuttgart).
Highest demand for office properties
Approximately € 4.5 billion, that is almost half of the volume of transactions in commercially used property, was invested in office properties in the first half of 2012. This is approximately € 1.6 billion or 57% more than in the same period of the previous year. “The positive situation that has prevailed on the office letting market during the last 18 months as regards surface turnover and the reduction in vacant space are also reflected on the investment market”, states Andreas Trumpp. The second most popular type of real estate was retail trade properties that so far this year have had a share of almost 28 % (approximately € 2.6 billion) of the volume of transactions. “”Nevertheless, considerably fewer large-volume retail centres were sold than in the previous year”, is how Andreas Trumpp describes the situation. “For this reason, not only the total volume of transactions was reduced but also the share of real estate used by the retail trade was halved”, he adds.
A broad investor base
Two investor groups were able to set themselves apart from other investors in the form of open-ended real estate funds and special funds that recorded a share of 17% or € 1.6 billion of the volume of transactions and investors with a risk-oriented investment profile with a market share of approximately 13% (€ 1.2 billion). But since the “mid-field” was occupied by a total of seven principally risk-oriented investor groups with market shares of between 7 % and 10 %, no industrial segment was truly dominant. The continuing, predominant core fixation on the demand side is very clearly expressed here.
Volume of transactions in top locations at the same level as in the previous year
During the first half-year, investors invested approximately € 4.6 billion, or 2% more than in the same period in the previous year, in top locations. “As regards the volume of transactions, there were three winners and three losers”, says Andreas Trumpp. “Whilst in Düsseldorf with approximately Euro 360 million almost double and in Munich with roughly Euro 1.6 billion more than double the previous year’s half-yearly volume of transactions was achieved, in Stuttgart, with roughly Euro 435 million, even more than three times as much was invested in commercially used real estate compared with the previous year.” In Frankfurt (- 46 %) and Hamburg (- 44 %) on the other hand in each case only half of the volume of transactions in 2011 was achieved, because so far none of the previous year’s large-volume deals (including Green Towers in Frankfurt and Hamburger Meile in Hamburg) have been carried out there. Berlin, with roughly € 800 million was 10% below the value of the previous year.
Little movement on top returns
There were only minor changes in the top returns on first-class office properties in comparison with the first half of 2011. It increased in Stuttgart by 10 base points to 5.30 % and in Düsseldorf by 5 base points to 5.20 %. The two most expensive locations remain Hamburg with a top return of 4.70 % and Munich with 4.50 %, due to continued high demand and simultaneously hardly any supply of properties, whereby both remain stubbornly at a low level. The top return remained stable at 5.00% in Berlin, as it did in Frankfurt with 5.20 %.
Outlook: lively second half-year to be anticipated
Due to continued good turnover figures in the markets for office space, investors are currently focussed on office real estate, which is also reflected in the large number of concrete negotiations on the sale of suitable properties. “We therefore anticipate several transactions in this sector during the coming months of around and in excess of Euro 100 million “, says Andreas Trumpp. Although a few large retail centres (e.g. Ruhr Park, Europa Galerie) were sold in the retail trade sector, similarly high volumes to those seen in the previous year are not anticipated. “The main demand tends to be more concentrated on specialist market centres with a volume up to € 50 million, whereby here too supply constitutes the main bottleneck”, Andreas Trumpp explains. The limiting factors on the volume of transactions are on the one hand the comparatively small number of newly-constructed properties and, on the other, the price and return expectations of the market participants.