German Commercial Real Estate Continues to Perform

The latest data shows that the German real estate investment market continues to perform well, continually quashing...

The latest data shows that the German real estate investment market continues to perform well, continually quashing fears of any bubble.

According to forecasts released by Savills investment in German real estate is expected to reach 30 billion Euros this year, well beating the 25.3 billion euros total recorded last year. The rise is attributed to the number of major transactions in the pipeline for the second half, not least fuelled by the rise in Berlin transfer tax on the cards next year, which will propel investors to act and beat the cut-off.

The report puts the total commercial real estate investment in the first half of this year at 12.5 billion Euros, which is already 36 percent higher than the same period last year, but is also the strongest half-year performance since the 12.9 billion Euros recorded in H1 2008.

“Germany’s exceptional economic position is increasingly reflected on the local investment market and real estate as an asset class is becoming increasingly attractive the longer the interest rates remain low”, comments Marcus Lemli, head of Savills Germany and head of European investment.

Savills notes that there is ongoing demand from risk-averse investors who are looking to buy assets that retain their value in economically challenging times. Insurance firms, pension funds and superannuation schemes, which represent direct real estate investments of 1bn Euros in H113, illustrate this trend. An even greater sum has been invested indirectly, predominantly through special funds.

Private investors and listed property companies also invested heavily with 1.3bn Euros of investment in H113. Developers were by far the most active party on the sell-side divesting property worth over 2.3bn Euros, three times the total of the first six months of 2012, highlighting the strong demand for core properties in Germany. With developers also highly active on the buy-side, investing circa €900m, these investors appear to believe this high demand for class A product will continue for the time being.

- Thursday 08 August 2013

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