According to the latest research from Savills, Q3 2012 was the best performing quarter of the year so far with a total transaction volume of €5.3 billion, bringing the overall total investment volume in Germany for the first nine months of 2012 to €14.4 billion. While this represents a year-on-year decrease of 13.1% the international real estate advisor expects a strong final quarter, forecasting a total investment volume of €20 billion by year-end.

Marcus Lemli, CEO of Savills Germany and Head of European investment, comments: “We have seen a real increase in activity over the last quarter, which has been dominated by our domestic investors who have accounted for 67% of transactions. In fact, the growth in investor appetite is such that it is only due to a lack of quality supply that the transaction volume was not even higher.”

While domestic buyers dominated activity, the firm reports that the share of continental European investors in the German market has also increased, accounting for €2.26 billion of the country’s overall investment activity so far in 2012.  This represents an 8% increase year-on-year.

In terms of sectors, Savills confirms that retail continues to dominate investment transactions accounting for 40% of the overall volume in Q1 to Q3 12, at €5.71 billion. The office sector generated a turnover of €4.20 billion, which reflects 29% of the total investment figure.  Also notable in this time period is the 90% increase in activity in the industrial sector, which recorded total investment at €1.15 billion at the end of Q3, up from €0.60 billion in 2011.
When assessing transaction volumes by location, Savills finds that the six major cities of Berlin, Cologne, Düsseldorf, Frankfurt, Hamburg and Munich accounted for around 46% of the total transactions. Of these six markets Berlin performed particularly well with an increase of over a third leading to the highest transaction volume of €1.8 billion. Munich also recorded a significant increase in the transaction volume year-on-year by 27%.  The remaining key German investment markets by contrast saw declines of between 19% and 41%.

Outside the top six markets transaction volumes rose by 18% according to Savills.  Matthias Pink, head of research at Savills Germany, comments: “Some investors have looked towards the economically strong regional markets due to there being a lack of prime product in the core cities. However, location remains fundamental in their criteria and is often prioritised over lease term and covenants.”

Investment market Q1 - Q3 2012