Just over 200 commercial real estate transactions were completed in Germany in Q1 2023 according to Savills, which is less than half the average figure across all quarters from 2020 to 2022. The transaction volume was also correspondingly low, with the investment total of €4.7bn representing the weakest quarter for almost eleven years. Against this background, Savills has lowered its projected annual transaction volume for German commercial property to approx. €30bn (previously: “less than €50bn”).

In terms of deal sizes, Savills recorded just six transactions above €100m in Q1, including just one de facto portfolio transaction in Deutsche Euroshop’s investment in its own shopping centre portfolio.

Marcus Lemli, CEO Germany and Head of Investment Europe at Savills, says: “While we are starting to see more properties being prepared for sale, we do not expect a significant increase in investment volumes until the end of the year, given that a transaction normally takes several months from initiation to completion. Another prerequisite is further price corrections. Yields must soften to attract new capital.”

Matthias Pink, Head of Research Germany for Savills, adds: “There are certainly many potential buyers and even more potential vendors in the market. However, in many cases, the parties cannot agree on pricing.”

“The longer the stalemate continues, the more likely it is that yields will soften further. Many owners are holding back properties earmarked for disposal in anticipation of a better market situation. This risks a selling wave building up that will, at some stage, unravel and cause prices to fall.”

“For owners intending to sell, this could mean that those who cannot wait another couple of years will probably fare better if they bring their properties to the market now rather than hoping for a cyclical change in the near future,” says Lemli.

Find out more: Market in Minutes: Investment Market Germany