Turnover of office space in top German locations (cities like Berlin, Frankfurt/Main, Munich and Stuttgart) increased by 19% in the first half of this year, compared to the same period last year, according to a report from Colliers International. It also said that other core real estate investments, including retail properties and hotels in the country are also benefiting from increasing demand.
Andreas Trumpp, head of research at Colliers International in Germany, said: "The robust economic development and full order books are influencing expansion and relocation plans that had been put aside over the last two years."
He added Colliers expected a "continued above-average demand" in the face of a mainly shrinking market of new buildings.
"Overall, we therefore see vacancy rates fall further and expect a slowly stabilising growth in rental prices," Trumpp said.
The report also says that the 19% growth in office turnover across the leading cities (Berlin, Frankfurt/Main, Munich, and Stuttgart) is the second highest half-year growth since 2005.
Munich saw by far the biggest growth, with office turnover hitting 50% in the city, well above the second highest 26% growth recorded in Berlin
But it is not just turnover that has increased in Germany, the report also details falling vacancy rates and rising rents during the period.
According to the report vacancy rates in the first half of 2011 were down to 9.7% across the main cities covered above. The fall of 10 basis points could well have been greater but for the 17% vacancy rate recorded in Frankfurt/Main. Rents grew by 3% to an average 12.30 Euros per square meter, driven largely by a 10% growth in Berlin taking rents to 20 Euros per square meter in the city. Dusseldorf was the only city where rents fell and vacancy rates increased during H1.
According to Colliers tenants administrators, associations and social institutions, made up the bulk of tenants in H1, followed by businesses from the information and telecommunication sector.
In terms of transaction volume Munich led the way during the first half of the year, with 35% of all transactions in the city being in the office sector, and with an average 4.5% initial yield. But retail trumped the office sector for the largest transaction sum, with a double-sale worth 270m Euros.
Finally Colliers said that first quarter demand in the German real estate sector was dominated by foreign investors, but that interest from domestic investors had increased in Q2, when they went from having one-fifth of purchases to one-third.
- Friday 15 July 2011