Thanks to a strong second half of the year Munich’s commercial real estate market generated a transaction volume of € 4.765 billion, which has been the largest result since 2007. 2013 is the fourth year in a row closing with a turnover growth, this time 25.6% compared to the previous year’s result. The high liquidity in the market as well as the Munich’s ongoing gain of importance particularly for international investors resulted in a run for commercial properties in Munich at the end of the year. In the fourth quarter SZ-Tower was sold to the insurance group AXA and the Norwegian sovereign wealth fund, “Forum am Hirschgarten”, which will be completed in the short term, was sold to Union Investment and the office ensemble “Nymphe 3” was acquired by two Swedish pension funds, to name just a few examples of the large investment transactions. Also the sales of “Hofstatt” – last year’s by far largest transaction – and “Alte Akademie” in the pedestrian zone took place in the fourth quarter of 2013, during which 45% of the total annual turnover were generated. “Over 63% (a good € 3 billion) of the volume was invested in office buildings followed by mixed used and retail properties, so that office buildings remain the preferred type of property.” states Tobias Seiler, Research Analyst at Colliers International Munich.
Open real estate and special funds as well as insurers dominate the buyers’ side
Open real estate and special funds defended their leading position with 28% (€ 1.3 billion) of the total capital invested in Munich, followed by insurers, which appeared more and more often as buyers in the course of the year, with just above 15% (€ 721 million). Due to single large-scale transactions project developer and building promoter rank third with 12% (€ 570 million). The enormous influx of funds from many institutional investors pushed the usually very strong private investors down to fourth place with still remarkable € 482 million. Compared to the previous year, they omitted large single investments were missing. “The investment pressure on national and international investors still remains very strong, so that by far not every institutional investor focusing on Munich has had its turn yet.” notes Tobias Seiler.
The sellers’ sector ranking is clearly led by project developments accounting for one fourth (€ 1.2 billion) of the sales volume. But also special funds and open real estate funds (12%) as well as opportunity funds and private equity funds (11%) benefited from the advantageous market conditions and sold properties at higher prices that were optimized in the past few years.
Munich is increasingly becoming a focus of international investors’ interest
The Bavarian capital is high on the shopping list of international investors. Almost 37% of the invested capital comes from abroad, which is more than € 1.74 billion. International investors accounted for well over 30 transactions on the buyer side and for even more than 40 on the seller side. The sales volume of international market players adds up to € 1.89 billion, a share of 40%. The internationalization of Munich’s market is particularly illustrated by the increasing number of transactions between foreign sellers and buyers. In total 16 transactions were made without the involvement of any national market player; this accounts for a volume of € 714 million. “The demand on the part of international investors will last through the coming year, as Munich continues to be considered Germany’s save haven and its position as global investment location gains further importance.” says Tobias Seiler.
Conclusion and forecast
At present Munich’s market is very active and it constantly has gained momentum since 2010. Although the forecasts at the beginning of 2013 assumed such development it exceeded the expectations. “Many money-collecting institutions like pension funds or insurance companies remain under high investment pressure and need to add corresponding properties to their portfolio.” explains Béla Tarcsay, Managing Director at Colliers International Munich and responsible for the investment sector. “Despite the supply running short, still numerous major transactions are at an advanced stage of negotiations at present and expected to be closed in the course of the first months of the new year.” Béla Tarcsay continues. As long as the basic conditions do not change severely, an additional rise of the transaction volume can be expected, which could mount up to five billion Euros.