The impact of the pandemic remains moderate half a year after the lockdown. Transaction volume (TAV) proved quite robust in Q3 at €12.5bn, even managing to top previous-quarter results. However, there has been a tangible drop in momentum compared to the record start to the year. Activity resumed on closing major deals initiated prior to the pandemic. The number of landmark deals recorded above the €200-mark has increased. These include two office portfolios, each priced in the €400m category (Selection, Medicus) and both featuring assets exclusively located in Germany's top 7 cities. However, single-asset deals continued to dominate market activity. The largest among these deals changed hands for €300m, including Hamburg publishing house Gruner + Jahr and sections of The Q development in Nuremberg. An extensive product range across all asset sizes, locations and classes combined with a strong domestic investor base also generated a crisisresistant base transaction volume. German investors were responsible for more than 75% of TAV generated in the price category of up to especially in Germany’s top 7 cities. The SOHO €100m. The flight to quality has pushed prices for core assets. We can expect to see prime yield compression by the end of the year, particularly for preferred office and logistics assets. We also expect to see discounts offered for risk-laden assets. The fact that the number of closings is on the rise combined with new listing activity are indications that we may already be past the peak of the crisis. Minimum transaction volume of €10bn posted again in Q4 would guarantee annual TAV results for 2020 in excess of €50bn.
Germany: Investment Q1-3 2020