Around 13 billion euros invested in German offices real estate in the first nine month of 2014
41 percent of invested capital from foreign investors // Proportion of portfolio sales doubles to 27 percent // Significance of B-locations increases further
Around EUR 13 billion has been invested in German office real estate in the last nine months. That equates to an increase of EUR 4.5 billion or 52 percent compared to the same period last year. These are the figures stated in the latest CBRE investment report. “With a share of 51 percent of the total volume invested in German commercial real estate, office properties is still the most sought-after asset class,” declared Fabian Klein, Head of Investment at CBRE Germany. “In the third quarter of 2014 alone, office real estate saw EUR 5.5 billion of investment, which is the strongest quarter of the year so far.” Several large single asset transactions contributed to this result, including the sale of Upper West in Berlin, the Munich properties Isartor City, Theresie, Lenbach Gärten and the main headquarters of Allianz Insurance in Unterföhring as well as a part of the Metro Campus in Dusseldorf.
“The German commercial real estate market as a whole, and especially the office segment, is extremely attractive to international investors in particular thanks to the sound fundamental data and more positive economic expectations for the coming year compared to other countries,” said Jan Linsin, Head of Research at CBRE Germany. Additionally, yield levels are significantly more attractive in an international comparison. “Asian investors in particular are looking for investment options in Europe and specifically in Germanyas the polycentric structure offers more options and prices are considerably lower than in London or Paris, for example,” explained Klein. Overall, foreign buyers invested around EUR 5.3 billion, equating to 41 percent of the total volume and a 77-percent increase against the same period last year. Buyers from the United States and investors from Great Britain were especially active in this respect.
Share of portfolio transactions doubles
In comparison to the same period last year, appreciably more real estate was traded in the form of package sales. Their proportion of the overall volume increased to 27 percent, predominantly due to nationwide portfolio transactions of EUR 3.5 billion. In the first three quarters of 2013, this figure was just EUR 1.1 billion or 13 percent. In addition to the packages traded in the first six months, such as the Leo portfolio, the sale of the TAG package and the CBRE-supervised purchase of the Portigon complex in Dusseldorf, buyers were also found for four other packages in the third quarter, each trading for more than EUR 100 million. Three of these were acquired by Asian investors, including the sale to the I-REIT Global Group of three Telekom properties in Bonn, Darmstadt and Münster by the Israel-based Ravad Group and a 50 percent participation of the Public Officials Benefit Association (POBA), a South Korean pension fund, in seven office properties valued at EUR 221 million acquired by the Canadian Dream Global REIT in recent years. POBA has consequently concluded its first investment on the German real estate market. “We are currently talking to a number of Asian investors who want to become involved in the German market and are looking for investment opportunities, not only in the major cities, but also in regional centres and B-locations,” revealed Klein, who went on to say that “Due to the high equity ratio of these investors, portfolios are also increasingly becoming the focal point of investment activities besides individual large volume transactions and trophy properties in the premium investment centres in order to build up an appropriate German exposure within global real estate allocations.”
Open-ended real estate funds and special funds represented the most active investor group with EUR 3.5 billion of investment, or 27 percent, effectively doubling their commitment on the German office investment market compared to the same period last year. In second place were asset and fund managers with EUR 3.35 billion or 26 percent, followed by insurance companies and pension funds in third with EUR 2.1 billion or 16 percent, a slightly higher investment volume than last year.
Lack of product in top 5 locations
The relative share of the top 5 investment centres in overall volume dropped from 78 to 65 percent in comparison to last year. “Owing to the substantially limited level of supply in the core segment in premium locations, investors are increasingly eyeing top properties in B-locations,” explained Fabian Klein, who continued, “Buyers are also acquiring sound properties in secondary locations within the investment centres to a greater extent.” Accordingly, as a result of the rise in demand in this segment, further yield compression is conceivable for good properties in secondary locations in the top investment centres.
Net initial yields remain stable
In the top 5 locations, net initial yields for prime office properties in the best areas continue to remain stable. That constitutes 4.65 percent in Berlin, 4.70 percent in Dusseldorf and Frankfurt, 4.55 percent in Hamburg and 4.45 percent in Munich. “However, here too a further drop of prime yields for premium properties is on the cards for later in the year,” predicted Klein.
Please find attached the complete press release including all images and statistics
Head of Investment Germany
+49 69 17 00 77 55
Dr. Jan Linsin
Head of Research Germany
+49 69 17 00 77 663
CBRE Group, Inc. (NYSE:CBG) is a Fortune 500 and S&P 500 company headquartered in Los Angeles, California, and based on turnover in 2013 the world’s largest service provider for the commercial real estate sector. With around 44,000 employees in over 350 offices worldwide (excluding associated companies and affiliates), CBRE provides real estate services to owners, investors and users of commercial real estate. Core CBRE services include capital markets, leasing, valuation, corporate services, research, retail, investment management, property and project management as well as building consultancy. CBRE Germany has been headquartered in Frankfurt/Main since 1973 and also operates branches in Berlin, Dusseldorf, Cologne, Hamburg, Munich, Nuremberg and Stuttgart.www.cbre.de