• Transaction total already at 18.2 billion euros by Q3 2015

• Domestic investors continue to dominate residential investment market

• Market action paced by small portfolio acquisitions

• Limited supply prompts investors increasingly to shift their focus to property developments

• Upcoming big-ticket takeovers in Q4 could drive 2015 transaction total up to an all-time high

The residential property segment continues to be one of the most popular investment choices on Germany's real estate market, and residential portfolio trading remains lively as a result. According to analyses conducted by the real estate consultancy firm CBRE, domestic and cross-border investors spent a total of 18.2 billion euros on housing packages and housing estates of 50 residential units or more during the first nine months of the year. Compared to the already rather dynamic first nine months of the previous year, this implies a year-on-year increase by 8.3 billion euros or 84 percent.

Judging by the number of transactions and by the transaction volume, trading during these first three quarters was mainly dominated by listed property companies from Germany, with registered portfolio transactions now up to 194 (up 17 percent year on year) and involving around 279,000 residential units (up 62 percent) with a combined residential floor area of nearly 17.4 million square metres.

While altogether 17 portfolios with a transaction volume of more than 100 million euros each were registered during H1 2015, the market action shifted to smaller portfolios of less than 100 million euros after the mid-year point, as 68 block sales were transacted during Q3. This explains why the Q3 transaction total, adding up to approximately 1.8 billion euros, was noticeably lower than the volumes of the first two quarters. That said, it should be added that the transaction activity during the first semester was paced primarily by large-scale company takeovers when Deutsche Annington acquired GAGFAH plus another 20,000 flats from Süddeutsche Wohnen (SüDeWo), and that the modest quarter-end turnover should rather be seen as a market stabilisation after the extremely dynamic trading during the year's opening months.

Domestic Investors Account for the Bulk of the Market Action – Property Developments Move Increasingly into Focus for Investors
The single biggest transactions during the third quarter included a portfolio in Berlin that a joint venture of KauriCAB Management and Apeiron Capital acquired for 100 million euros, and the acquisition of a projected residential/commercial building in Zollhafen/Mainz by Aberdeen Asset Management on behalf of a special fund. “Given the limited supply of existing properties on the market, we are seeing a growing willingness to invest in property developments, in addition to the increased investments in smaller portfolios,” said Jan Linsin, Head of Research at CBRE Germany. “Property developments accounted for nearly one third of the transaction volume registered in the course of Q3. With nearly eight percent, the focus here is on the residential investment market in Berlin because that market is virtually swept clean of property portfolios,” elaborated Michael Schlatterer, Team Leader Residential Valuation at CBRE Germany. The trends also explains the rise in square-metre prices, which jumped up by 10 percent year-on-year to a current price average of 1,050 euros. Analogously, the average purchase price realised for residential unit is 14 percent higher than it was twelve months ago, the going rate being 65,275 euros now.

Outlook
“Given the favourable macro-economic prospects, and the persistently high demand, and considering moreover that several big-ticket takeovers such as the acquisition of LEG by Deutschen Wohnen are under way, we expect the German residential investment market to maintain its momentum during the fourth quarter,” said Linsin. Accordingly, the year-end transaction total of 2015 could by far exceed the historic banner year of 2005 in terms of housing packages traded.

Residential portfolio transactions in Germany (100 residential units or more)

Source: CBRE Research, 2015

Market for residential portfolios in Germany

Source: CBRE Research, 2015

Contact:
Konstantin Lüttger
CBRE GmbH
Head of Residential Investment Germany
+49 69 17 00 77 29
konstantin.luettger@cbre.com

Michael Schlatterer
CBRE GmbH
Team Leader Residential Valuation
+49 30 726 154 156
michael.schlatterer@cbre.com

Dr. Jan Linsin
CBRE GmbH
Head of Research Germany
+49 69 17 00 77 663
jan.linsin@cbre.com