Frankfurt,
15
January
2019
|
12:13
Europe/Amsterdam

Record Result on the German Commercial Real Estate Investment Market; Residential Investment Market Sees Significant Growth

  • Transaction volume of €77.3 billion on the German real estate investment market
  • Top 7 investment markets’ share in transaction volume rises to 55 percent
  • Commercial real estate investment market sets new record at around €60.1 billion
  • Office investment delivers record result of €31.9 billion as the dominant asset class in commercial real estate
  • Residential investment volume grows by 10 percent to €17.2 billion year on year

Around €77.3 billion was invested on the German real estate investment market over the course of 2018. The commercial real estate investment market accounted for €60.1 billion of this amount, thus even surpassing the former record result of €57.6 billion from 2017 (up six percent). Another €17.2 billion was attributable to the residential investment market that also saw substantial growth compared with the previous year (up 10 percent). This is the conclusion drawn in a current analysis prepared by the global commercial real estate services company CBRE.

Fabian Klein, Head of Investment Germany
The year 2018 set another record on the investment market for German commercial property. In particular, lively investor interest in commercial real estate in investment centers such as Frankfurt am Main, Berlin and Munich drove momentum. Office properties are especially attracting investor attention, not least due to great demand on the letting markets. At €17.2 billion, the residential investment market also delivered another strong result, thus exceeding the previous year’s figure. The German real estate market generally remains one of the most important target markets for domestic and international investors due to the promising macroeconomic fundamental data and interest rates running at a persistently low level.
Fabian Klein, Head of Investment Germany

Office properties remain the strongest asset class with new record transaction volume

Especially major single transactions in the top locations and portfolio transactions across the nation ensured that office real estate, which accounted for €31.9 billion, or 41 percent of the overall volume, remains the asset class with the highest investment volume. In comparison with 2017, the sum total of capital invested in office real estate therefore climbed by 15 percent, thus outperforming all the other asset classes. The share of office real estate in the Top 7 was even higher at 60 percent overall. Residential property (upward of 50 residential units) across Germany followed on with a transaction volume of €17.2 billion and a share of 22 percent, and retail properties came in at €10.5 billion, which is just under 14 percent.

Investors focusing on real estate centers

The Top 7 locations of Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne, Munich and Stuttgart saw the investment volume increase significantly by a good €6.3 billion in total, up 17 percent in a year-on-year comparison. Of the total German investment volume, 55 percent was therefore attributable to the country’s largest investment centres.

Domestic market players continue to channel a great deal of funds into the domestic market. At €46.5 billion, German investors contributed 60 percent to the overall volume in the country’s real estate investment market and have therefore once more raised their share compared with the previous year (53 percent). Along with European investors, investors from North America in particular (almost nine percent) were especially active.

 

Outlook for 2019: transaction activity stable at a high level

Fabian Klein, Head of Investment Germany
Given the German economy’s stable fundamental data, demand remains persistently strong and the German real estate investment market continues to top the list of real estate investors. Consequently, transaction activity will continue to run at a high level in 2019 as well despite speculation about a possible interest rate reversal, with the sole constraint being the lack of property suitable for investment.
Fabian Klein, Head of Investment Germany

Investment transaction volumes in Germany (commercial real estate; quarterly figures)

Source: CBRE Research, Q4 2018.

Top 7 investment markets (commercial real estate)

Source: CBRE Research, Q4 2018.

Yield spread office real estate vs 10Y government bonds

Source: Bundesbank, CBRE Research, Q4 2018.

Source: CBRE Research, Q4 2018.

 

Contacts:

Fabian Klein
CBRE GmbH
Head of Investment Germany
+49 (0)69 17 00 77 55
fabian.klein@cbre.com

Jan Schwarze
CBRE GmbH
Team Leader Research
+49 (0)69 17 00 77 150
jan.schwarze@cbre.com

 

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