According to international real estate advisor Savills German investment volumes in H1 2014 increased by 28% year on year with a half year volume of € 16.9 billion. Between April and June transaction volumes recorded were € 6.3 billion.
Andreas Wende, COO and Head of Investment at Savills Germany, comments: “The non-core and portfolio investment markets are currently the most active. For example we have seen seventy commercial real estate portfolios totaling approximately € 7.5 billion transacted compared to fifty in 2013 totaling approximately € 3.3 bn. The increased activity in the non-core element is expressed by the relatively low share of prime cities in the transaction volume which amounted to just 40% in the first half of the year compared to 54% in H1 2013.”

Savills reports that classical core investors are shifting to alternative risk classes due to a lack of opportunity in the core markets, particularly private equity investors, which has contributed to the increased activity in the non-core segment. Accounting for an investment volume of over € 2.6 billion they represented the most active group of buyers after special funds (circa € 3.0 billion). In net terms, looking at the purchase volume after deduction of the sales volume, private equity buyers were the by far leading group of investors.

Matthias Pink, director of research at Savills Germany, adds: “The strong commitment of opportunistic investors illustrates that Germany is by far not only attractive to risk-averse investors but increasingly attracts risk-embracing investors looking to take advantage of the extreme excess demand in the core and core-plus element.”
This also means that contrary to the preceding years the market meanwhile is dominated by foreign investors again. The share of foreign buyers in the total turnover was 57% (H1 2013: 33%). Apart from private equity investors (e.g. Blackstone) listed property companies / REITs (e.g. Unibail-Rodamco) and Family Offices particularly from the Middle East were among the most active foreign buyers.

Wende adds: “In overall terms the market activity is increasingly broadening with properties of all types of use and risk classes transacted, new players emerging and the markets outside the top locations increasingly moving into the focus. We therefore predict that despite the slightly weaker second quarter we expect an annual turnover of as much as €35 billion.”