Strong demand for German commercial property, research shows
January 27, 2012
Transaction volumes for Germany’s commercial real estate market will exceed €20 billion in 2012 with continued strong demand from both domestic and foreign investors, it is claimed.
According to research by international real estate advisor Savills real estate worth €22.6 billion changed ownership in Germany in 2011, marking a 20% increase on 2010.
‘The final quarter of 2011 recorded the second best investment volume of the year at approximately €5.8 billion, showing little evidence in the investment market of a deteriorating macro economic environment,’ said Lars-Oliver Breuer, head of investment at Savills Germany.
‘Given a number of uncertainties it is difficult to provide an outlook to 2012 but what will be crucial is whether the situation in the financial markets stabilizes and if the eurozone succeeds in convincing investors of its stability,’ he explained.
‘Financing will be the predominant issue this year but if the continuously strong demand for German real estate can be translated into deals the 20 billion mark is realistic for 2012,’ he added.
Savills research shows that as in previous quarters the retail sector dominated German markets in the last quarter of 2011. Overall retail generated an investment volume of over €11 billion, making up almost half, 49%, of total transactions in 2011 and representing an increase of 60% on 2010.
According to Matthias Pink, head of research at Savills Germany the reason for the increase in retail investment is partly due to the higher rental stability of retail properties. ‘Investors who continue to focus on secure investments appreciate this characteristic. Another reason is the stable and currently very good consumer sentiment in Germany,’ he said.
Overall almost half of Germany’s 2011 total transaction volume was invested in the leading five markets of Frankfurt, Berlin, Hamburg, Düsseldorf and Munich. Increased activity saw Berlin’s volumes were up 11% and in Hamburg they were up 14%.