According to the latest research from international real estate advisor Savills, non-domestic investment accounted for 56% of total volumes at €4.9 billion in Q1 2015, up slightly from 53% in 2014 and is expected to continue to rise throughout the year. The firm reports that the most dominant non-domestic investors were from France, the UK and the US, investing circa €1.5 billion, €800 million and €500 million respectively.

Matthias Pink, director and head of research at Savills Germany, comments: “Due to the pronounced decrease of the euro exchange rate, real estate in Germany has become even more attractive to investors from other currency areas. This will most likely result in increased investment in 2015 from non domestic investors.”

Savills predicts that due to continued interest from international parties, yield pressure will continue to be high with further decreases of between 20 to 30 basis points across the sectors. This compares to almost no yield compression in Q1 2015 across the seven main markets. With the exception of Dusseldorf and Cologne, the other seven markets recorded an increase in investment, with Berlin seeing the greatest increase at 114% to over €1.3 billion compared to €617 million in Q1 2014. However, the firm does note that overall commercial property investment in Germany was down slightly from €10.4 billion in Q1 2014 to €9.2 billion.

Andreas Wende, head of investment at Savills Germany, adds: “Whilst the total investment volume has dropped slightly there are still a lot of good opportunities in the market. Those investors only focused on specific types of investments, like fully occupied grade A offices, maybe disappointed as demand far exceeds supply, but beyond this very tight core market there are numerous strong assets on the market.”

Savills reports that the retail sector preformed particularly well in the first three months of 2015, with total transaction volumes reaching almost €3.3 billion, an increase of one third year on year. The strong Q1 figures were boosted in part by a number of portfolio transactions, including the takeover of Corio by Klépierre. The firm predicts that boosted by the strong start the retail investment market should perform well throughout the year. The office market also recorded transaction volumes of €3.3 billion, which for that sector mark a 29% decrease year-on-year. However, Savills forecasts that with a number of large-scale office properties and office portfolios due to come to the market this year volumes should improve going forward.