According to international real estate advisor Savills the German commercial real estate market recorded the highest volume of investment transactions for the past five years at €25.31 billion in 2012.  This marks an 8.5% increase compared to an already strong 2011 and the firm attributes this largely to rising levels of foreign investment. International buyers accounted for 46% of the total investment volume in Germany in 2012, up from 31% in 2011, while investors from continental Europe were by far the most active, investing approximately €5.7 billion.  The most active nationalities were Austria (€1.3bn), France (€1.3bn), Netherlands (€0.6) and Italy (€0.5).

The firm notes that turnover was also boosted by the sale of a number of large packages in the final quarter of 2012, including TLG’s commercial portfolio and 17 Karstadt properties worth €1.1 billion each including KaDeWe in Berlin. In addition, the office schemes Kranzler Eck in Berlin and the Welle in Frankfurt changed hands in transactions amounting to approximately €784 million in total.
Marcus Lemli, CEO of Savills Germany and head of European investment, says: “The German investment market was strong in 2012 with approximately €4.7 billion generated in December alone, which is almost as high as each of the first three quarters.

“More than ever Germany is seen as a safe haven by many foreign investors because it is one of the most stable European economies at the moment with above-average growth prospects in the medium term, high market liquidity and a moderate public debt ratio compared to most other Eurozone countries.  Foreign buyers remain strongly committed to the market and are the main reason that the €25 billion mark was surpassed in 2012. These investors tend to focus on the major cities as they offer the necessary liquidity.  We expect this international interest to continue to grow in 2013, particularly from sovereign wealth funds and public pension funds.”

Overall €12.9 billion was invested in the top six German markets of Berlin, Cologne, Düsseldorf, Frankfurt, Hamburg and Munich according to Savills research, marking a 20% rise year-on-year (yoy). This increase is largely due to the rise in foreign investment with 52% (€6.7 billion) of the money invested in these markets in 2012 coming from abroad, compared with 35% (€3.7 billion) in 2011.
Broken down, in Berlin the firm records a total investment volume of just over €4.3 billion (+65% yoy) in 2012, ahead of Frankfurt and Munich, which achieved total transaction volumes of €2.9 billion (+14% yoy) and €2.8 billion (+38% yoy), respectively. In contrast in the remaining three key cities investment volumes decreased yoy by 22% in Hamburg, 15% in Düsseldorf and 11% in Cologne.

In terms of sectors specifics, all areas recorded a rise in activity in 2012 with the exception of retail. Savills research shows that €8.03 billion was invested in German office properties in 2012, marking a 9% increase yoy. Investment into logistics and industrial real estate increased by 51% to €1.66 billion, while €1.51 billion was invested in new developments sites (+47% yoy).  Overall the retail sector recorded €9.17 billion of investment transactions, representing a decrease of 17% yoy.  The firm attributes this decline to a lack of product rather than falling demand, particularly in regards to shopping centres.  The remaining investment went into the hotel sector (€1 billion) as well as mixed-use, social welfare and leisure properties.

Matthias Pink, head of research at Savills Germany, comments: “Given the favourable market conditions we anticipate that interest in German commercial real estate to remain strong in 2013. The prime sector demand will continue to exceed the available supply and more risk-embracing segments are likely to see increased transaction volumes as financing conditions are expected to gradually improve.  Therefore, we forecast that transaction volumes in Germany will reach a similar level in 2013 to that achieved in the two preceding years.”

German investment market 2012