“The brisk activity on the market continued between April and June following an energetic start into the year. We recorded a transaction volume that was 39 percent higher compared to the same period of time last year,” says Ignaz Trombello, Head of Investment at Colliers International Germany. “These results mean that both German and international investors continue to place more trust in the German market than in any other country in the EMEA region except for Great Britain,” he adds. Almost €3.5 billion, or 27%, of the capital invested throughout Germany came from international investors. Commerzbank’s sale of the Frankfurt high-rise office complex, Gallileo, for more than €250 million in Q2 to an IVG special fund set up for several South Korean institutional investors deserves special mention. The volume of package sales also totaled at around €3.5 billion at the end of the first half of the year. The Prime Portfolio sold at a volume of approx. €480 million during the first quarter, making it the largest commercial transaction in Germany so far this year. The largest individual sale so far this year was the Kö-Bogen complex in Dusseldorf, which was sold to Art-Invest Real Estate for more than €400 million. The Skyper office complex, which was bought by Allianz Real Estate in Q2 for over €300 million, is also among the largest transactions of 2013.

There's no ignoring office real estate
Office properties were at the top of investors’ shopping lists during the first half of 2013 as well. Some €5.9 billion, or 45%, of the transaction volume throughout Germany was invested in office real estate. In the six cities under review, Berlin, Dusseldorf, Frankfurt am Main, Hamburg, Munich and Stuttgart, the market share of office real estate was considerably higher for the most part, ranging from 45% in Dusseldorf to 84% in Frankfurt. Retail property came in second with a Germany-wide market share of around €3.6 billion, or 27%. Approximately €1.1 billion was invested in logistics and industrial real estate, almost twice as much as one year ago, bringing in a solid 8% market share.

Real estate funds and private investors with highest investment volume
Open-ended real estate funds and special funds, in particular, invested around €3.3 billion in German commercial real estate during the first six months of the year. That is the equivalent of a 25% market
Colliers International Pressemeldung share. Special funds, which were involved in a number of transactions, often acted on behalf of state and pension funds. However, they also invested directly in real estate, bringing in a market share of approx. 9% with an investment volume of around €1.1 billion. Private investors and family offices as well as project developers came in just ahead with around €1.5 billion and some €1.1 billion, respectively. “The attractiveness of German commercial real estate, particularly for security-oriented investors from Germany and abroad, continues to remain strong in view of the lack of high-yield alternatives,” says Ignaz Trombello.

More than half of investment volume poured into prime locations
The transaction volume in the six real estate hubs under review came to around €6.9 billion at the end of
the first half of 2013. “These results show that the investment volume rose by around 51% even though
the offer of premium real estate in prime locations is limited and expensive due to high demand,” stresses
Andreas Trumpp, Head of Research at Colliers International Germany. Most of the money invested by the
closely-rated top groups poured into Frankfurt at around €1.6 billion (+124% year-on-year). The German
financial center particularly benefited from the share of the Prime Portfolio sold in Frankfurt as well as
from the above-mentioned sale of the Skyper and Gallileo complexes. Berlin (+91%) and Munich (-6%)
came in close behind Frankfurt at around €1.5 billion each. The transaction volumes in Hamburg (+39%)
and Dusseldorf (+161%) were considerably higher than previous year values at €970 and €940 million,
respectively. The increase in Dusseldorf can particularly be attributed to the Kö-Bogen sale as well as to
the sale of the Stadttor high-rise building. In Stuttgart, the transaction volume remained approximately
level with that of the previous year at €427 million (-2%). “First-rate office properties in prime locations in
the six cities we reviewed are hard to come by. That’s why they have become even more expensive in
some cases compared to last year,” says Andreas Trumpp. Top yield was recorded at 4.25% in Munich (-
25 base points). Top yield in Dusseldorf (5.10%) and Stuttgart (5.20%) was recorded at 10 base points
lower and at 5 base points lower in Frankfurt (5.15%). In contrast, there were no changes in Hamburg
(4.70%) and Berlin (5.00%).

Outlook: Deal pipeline well-stocked in second half of 2013 as well
“As expected, transaction activity remained very brisk during Q2 and the signs point to this trend
continuing throughout the rest of the year,” summarizes Ignaz Trombello. “Market activity will particularly
be affected by the persistently low interest rates and uninterrupted excess demand for core real estate.
Thanks to a well-stocked pipeline of large-volume properties and portfolios, which we expect to be sold in
the second half of the year, we feel that a Germany-wide transaction volume of more than 25 billion euros
is realistic,” he adds.