Tobias Seiler, Research Analyst at Colliers International Munich: “A number of transactions could be closed just shortly before the end of the quarter, so that this is the third quarter in a row with the sales volume exceeding the € 1 billion mark.” The Bavarian capital remains one of the top destinations for national and international investors trying to win their piece of the limited core product supply. Unlike the previous year office properties led the field with only 38% of the total volume (50% in the year before) as more investments were made in retail and mixed-used properties (24% and 19%). However, this is considered a snap-shot after three months and it can be assumed that, despite the supply running short, the portion of traded office properties will noticeably increase again in the course of the year.

Open Real Estate Funds, Special Funds as well as Insurance Companies open up their wallets the most
Investing € 243 million open real estate funds and special funds acquired roughly one fourth of the sold properties, which is approximately their previous year’s share. Insurance companies followed with an invested total of € 223 million. As a consequence, the two investor groups alone accounted for over 45% of the transaction volume. „German as well as international insurers remain under high pressure to invest, hence further purchases can be expected for the coming quarters.” Tobias Seiler explains. Investors with an opportunistic background, private investors and family offices followed generating a volume of € 180 and € 169 million. Among the largest office transactions were the sale of the office and commercial building “Battello” at Arnulfpark to a Deka fund and the office ensemble “An den Brücken” also purchased by Deka.

International Buyers’ Presence remains strong – Non-Core Products are purchased, too.
€ 419 million, roughly 41% of the transaction volume came from abroad, which led to an again slightly increased percentage (by 4%) of international investors compared to 2013. However, international sellers also build an important pillar of Munich’s market having sold real estate amounting to € 365 million (35% of the total turnover).

Already in 2013 it could be noticed that as a consequence of excess demand for core products investors also examined properties with vacancies and value-add potential, provided that the micro location was rated as good. “In the first quarter properties with only a limited marketability, which were in need of revitalization or a new utilization concept, were sold at particular city locations and in the suburbs.” says Tobias Seiler.

Conclusion and Forecast
The market had a fulminant start into the year, although there have not been spectacular large-scale transactions yet. “We are pleased about the brisk market of the first three months, which we actually expected to this extent. Regarding the pipeline of deals currently in progress, activities will increase even further.” Béla Tarcsay, Managing Director at Colliers International Munich summarizes the present market situation. “Many investors want to expand their portfolio or search for an entry into the market which results in sufficient demand for all volume sectors. It is realistic that the very good result of the last year is topped and a volume of € 5 billion can be achieved.” he concludes.

Fast Facts Investment Markt Q1 2014:
Transaction volume: € 1.033 million (+19 % compared to Q1 2013)
Largest buyer category: Open real estate funds/special funds: 24 %
Largest seller category: Open real estate funds/special funds: 28 %
Most demanded type of use: Office: 38 %
Prime yield office: 4.25 %