Marcus Lemli, Savills CEO Germany and Head of Investment Europe, commented: “A large number of development sales as well as a couple of large-volume portfolio transactions ensured an exceptionally strong start of the investment market into the year.”
The Savills report highlights the largest single-asset transaction, the sale of the “Kö-Bogen” development in Düsseldorf for around € 400m, and significant other portfolio deals including the purchase of an IVG open-ended special fund for approx € 500 m and Dundee’s purchase of a portfolio of eleven office properties for circa € 420 m from SEB. Indeed, office buildings dominated Q1 figures with over € 2.4bn invested in the sector, 36% of the total transaction volume, and representing a 62% increase year-on-year.
In other sectors, Savills report states that retail investments once again slightly decreased market share (- 9%) and totalled circa € 1.9 bn. However, hotel investments saw the strongest growth of over 150%, boosted by the sale of a portfolio of 20 hotels worth €300m by Goldman Sachs to Israeli Fattal Group contributing to an overall transaction volume for the sector of almost €800m. Industrial and warehouse properties saw total investments of € 450m in the past quarter (+ 36%) whereas development sites accounted for € 360m (22%).
Cross border investment, Savills notes, is on the rise again in Germany with the share of foreign buyers amounting to 40% (€2.7bn) in Q1 2013 up from 34% in Q1 2012 but not as much as 2012’s total volume of 46%.
Foreign investor demand for commercial real estate in Germany, the firm states, remains strong with European (excluding UK) and North American investors purchasing €1.0bn and €0.9bn respectively (the latter focusing on non-core property).
REITs accounted for over half (57%) of the corresponding transaction volume of North American investors. In terms of both foreign and domestic investors, special property funds represented the by far most active group of buyers, accounting for €1.9bn.
The trend of a stronger focus on the top six locations observed last year continued in Q1 2013. Savills records that in all six markets the investment volume increased year-on-year with € 3.7 bn invested, representing 46% more than in the same period of last year across Berlin, Cologne, Düsseldorf, Frankfurt, Hamburg and Munich.
As foreign investor activity and associated demand for properties in the top locations is expected to remain strong, Savills forecasts that the total transaction volume of €12.9bn achieved by these six markets in 2012 is likely to be surpassed in 2013.
Matthias Pink, at Savills responsible for research in Germany, added: “Investors are increasingly willing to buy properties prior to completion in order to achieve higher initial yields. The strong dynamics on the investment market seen in Q1 will continue throughout the year.”
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