CBRE’s comment on the German residential portfolio market 2011


- Transaction volume of more than €6.1bn in residential portfolios in 2011
- Berlin underpins its position as most important and fungible local transaction market for residential properties in Europe
- Increase in average purchase prices in Berlin due to large volume transactions and project developments in the high-end segment
- Continuously high investment activities in 2012 due to planned large volume portfolio divestments

According to the commercial real estate services firm CBRE, the flight to tangible assets due to the still insecure outcome of the sovereign debt crisis in Europe is leading to a run on German housing stock in metropolitan regions. National and international institutional investors in particular confide in Germany as a location with its very stable residential real estate market.

An analysis by CBRE showed that the transaction volume in residential portfolios and complexes of more than 50 residential units increased year-on-year by 44% to €6.12bn in 2011. Here, the indirect sales revenue owing to the initial public offering of the Berlin property company GSW AG with a share of approx. 29,500 residential units was not included. The number of traded residential units also increased significantly. Around 92,000 sold units within 194 registered transactions resulted in an increase of 27% year-on-year. Hence, the market for large residential portfolios with 1,000 or more units has clearly regained momentum. In 2010, only 12 transactions took place, whereas 19 large transactions were registered in 2011. Among these was, for example, the takeover of the majority stake of Colonia Real Estate by TAG Immobilien with a share of 9,500 residential units as well as parts of the former Level One portfolio – advised by CBRE – and the sale of a partial portfolio of Gagfah to Berliner GSW AG.

On the purchaser side, listed property companies dominated the investment market with an overall volume of 32%. In connection with closed-end investment vehicles, private investors were also very active, accounting for more than 13%. In addition, investments were also made by open-ended (special) real estate funds (13%) as well as the public sector (10%).

Konstantin Lüttger, Head of Residential Investment for CBRE Germany: “In times of the sovereign debt crisis in the eurozone and volatile international capital markets, German residential properties are regarded as secure investments. This has led to positive developments in all integral segments of the housing industry. National project developers enjoy a very positive demand for individual sales as well as capital investments, not least because of the rents that are increasing particularly in the economically strong large cities and prosperous medium-sized cities as well as university cities with a decreasing supply of housing stock. The development clearly shows the strong national and international trust in the German residential real estate market.”

In terms of numbers of transactions, more than 62% of residential investments in 2011 were made in the category up to €20m. This underpins the trend – and in parts also the escape – of private investors and family offices towards tangible assets mainly for reasons of securing capital.

National purchasers accounted for €4.35bn (more than 71%) of the overall volume and were thus clearly the largest group of investors regarding nationality. They were followed by investors from the USA with 5.7% as well as Sweden (4.2%) and Austria (3.4%). International investors were most active in the opportunistic price segment and usually already dispose of existing asset management platforms. Alternatively, they collaborate with experienced German asset and property managers in order to enter the German market.

On the vendors’ side, listed property companies were also very active accounting for 24% of the transaction volume. They were followed by developers with 12%. The privatization of public housing stock on the other side only generated 4% of the overall volume in 2011.

The unbroken large demand for residential properties in Berlin is particularly notable. The federal capital traded around €2.3bn and more than 32,300 residential units, 37% of the registered investment volume in Germany and 37% of all residential units. The average scored purchasing price per sq m thus increased to €1,033 per sq m resulting from the large volume transactions in Berlin as well as the project developments in the high-end segment.

Michael Schlatterer, Team Leader Residential Valuation for CBRE in Berlin: “The German federal capital is profiting from its increasingly positive socio-demographic development, a significant shortage of rental units due to the virtual absence of building activities as well as the fact that it is widely known for its cultural offers. Together with the relatively low rent level, this has resulted in a significant increase in rents over the past few years. In some neighbourhoods in particular in the district of Mitte and in Kreuuzberg-Friedrichshain, the rents have already reached the double digits. A similar development can be seen in the prices for owner-occupied flats. The yields for apartment buildings, however, are still on a comparably moderate level compared to other metropolises. We estimate that in 2011 a further €6 to 6.5bn will be generated by sales of single apartment blocks (single asset deals) and owner-occupied flats in addition to the institutional investment sector. Berlin is thus underpinning its position as most important and most fungible local transaction market for residential real estate in Europe.”

Jan Linsin, Head of Research for CBRE Germany, adds:
“For 2012, we generally expect a similarly robust and positive residential market as in the previous year. Against the background of a continuously favourable financing environment particularly for small to medium-sized residential assets and the lack of low-risk alternative assets, it is to be expected that the market will tend to be characterized by an excess demand, should the developments in the international finance markets not change fundamentally. The market might gain more international attention through the possible sales of the housing stock of Landesbank Baden-Württemberg, BayernLB, TLG or the sale of the shares in the Nassauische Heimstätte of the federal state of Hessen as well as further large volume portfolio sales that are currently being discussed. From our point of view, this would also have fundamental positive effects on the entire German residential real estate market and would result in a transaction volume comparable to the level of the previous year.

Further information on CBRE:
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2010 revenue). The Company has approximately 31,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Since 1073, CBRE is also represented with a head office in Frankfurt/Main. Further offices are located in Berlin, Dusseldorf, Cologne, Hamburg and Munich. Please visit our website at

Konstantin Lüttger
Head of Residential Investment Germany
T: +49 (0) 69 17 00 77 29

Michael Schlatterer MRICS
Team Leader Residential Valuation
T: +49 (0)30 726154156

Dr. Jan Linsin
Head of Research Germany
T +49 (0) 69 17 00 77 663