Savills latest research on portfolio investment finds that more than €26 billion was invested in German residential and commercial property portfolios during the 12 months from December 2013 to December 2014, 2% higher than that invested in single assets during the same period.

Savills reports that the residential portfolio market has enjoyed the greatest momentum, with the transaction volume growing almost five-fold from approximately €3 billion in 2009 to circa €15 billion last year. The commercial property sector has also seen significant growth in recent months, particularly with regard to office, hotel and logistics property portfolios. Transactions for office portfolios specifically has almost doubled compared to 2013 from €2.5 billion to approximately €4.8 billion.

Property companies and REITs were the most active investor in 2014, accounting for 31% of the overall portfolio transaction volume, followed by private equity funds at 13%. Both groups favoured portfolios last year, investing only 6% and 3% respectively in the single asset market.

Karsten Nemecek, managing director for corporate finance and valuation at Savills, comments: “Private equity investment activity in Germany has been particularly interesting and we have identified three key patterns. First, investment tends to follow more pronounced cycles than the portfolio market as a whole and cycles are shorter. We have also seen that activity tends to be counter-cycle. Recently this has been particularly apparent in the residential sector where funds were active purchasers between 2009 to 2012 and active vendors since that period, opposite to other investors in the market. Lastly, the sector does not appear to be of decisive importance for private equity funds. They do not invest in anyone sector exclusively but rather in all when the time is right.”

Marcus Lemli, head of European investment at Savills, adds: “We have seen strong interest from international investors in portfolio assets accounting for circa 44% since 2009 compared with just 31% in the single-asset market during the same period. One reason for this differential is that portfolio acquisitions allow investors to rapidly secure a significant share of a regional market or to obtain a certain amount of exposure to a national economy.”

Savills notes that there has been a significantly lower average sale price per square meter; €1,700 in 2014 compared to €2,100 in 2013. The firm attributes this to more non-core assets being included as part of the portfolios.

Matthias Pink, associate director of research at Savills, explains: "Since opportunistic investors such as private equity funds are significantly more active in the portfolio segment than in the single-asset market, the proportion of non-core assets changing hands is also significantly higher. The average sale price has fallen consistently since 2011 and particularly during the current year. This indicates that the risk tolerance of investors has continuously risen - a trend that is likely to continue in 2015.”