Transaction volume rises for the sixth time in a row to more than €25 billion

  • Brisk letting activities affirm investment strategy in the office asset class

  • €17.7 billion invested in Top 5 locations

  • 38 individual transactions and large-scale components in 2015

  • Share of international investors on the rise

  • Net prime yields still in a downtrend


Due in particular to large single transactions in the top locations and nationwide portfolio transactions, office real estate, which accounted for €25.2 billion and 46% of the overall volume, continued to be the asset class with the biggest take-up. A good 24% more, representing €4.9 billion, was invested in German office real estate compared with 2014. This is the conclusion drawn in a current analysis prepared by commercial real estate services company CBRE.

€17.7 billion in the Top 5 locations
The share of office real estate in the Top 5 locations – Berlin, Düsseldorf, Frankfurt, Hamburg and Munich –, which came in at 67%, was even higher than the national average. In total, €17.7 billion were invested in office properties in these locations, up 29% compared with 2014. Regarding the overall investment volume in the asset class, 70% was invested in the five largest office centres. Particularly Berlin, Frankfurt and Munich, which reported investments of significantly more than €4 billion each, contributed to this strong result. In addition, the average lot size in the Top 5 was almost double that of the other German markets as in Frankfurt, Berlin and Munich in particular a number of major deals were closed.

38 individual transactions and large-scale portfolio assets in 2015
In total, 38 single transactions and large-scale portfolio assets each of €100 million and higher were reported – eleven more than in the year-earlier period. Foreign investors participated in eight of the ten largest office property transactions in 2015, three of which with a transaction volume of half a billion and more respectively.

Fabian Klein, Head of Investment Germany
Investment centres were particularly attractive to foreign investors. Transparency here is generally higher thanks to internationally comparable market data and there is more availability, especially concerning large-scale assets. In addition, these locations benefit from better accessibility. Investors were therefore able to satisfy their agenda in terms of fulfilling their investment targets while having simpler asset management compared with a portfolio spread across Germany.
Fabian Klein, Head of Investment Germany

26% of the volume in the form of portfolio disposals
Similar to the previous year, single transactions dominated the market in the office segment. As in 2014, only 26% of the volume was traded nationwide in the context of portfolio disposals, considerably less compared with the overall commercial investment market. This trend nonetheless results primarily from the large single transactions in the top locations where another the portfolio share was even lower at 19%. Outside the Top 5 markets, 42% of investments were conducted through portfolio purchases.

Share of international investors on the rise
Asset and fund managers were particularly active, accounting for a good €7 billion, representing 28% of the investment volume. Second place was taken by open-ended real estate and special funds at €4.5 billion and a share of 18% despite a year-on-year decrease of their investment volume of €600 million. Listed property companies and REITs followed close behind with €4.4 billion, equivalent to 17%. International investors significantly stepped up their investments in the German office investment market compared with 2014, bringing their share in the overall volume to 46% (2014: 39%). They invested almost €4 billion in the Top 5 markets, which is almost four fifths more than in the previous year, and accounted for half of the volume registered in this segment.

Dr. Jan Linsin, Head of Research
International capital largely came from investors in the UK and North America. Along with the healthy German economy, with positive growth rates in the number of office employees, and an extremely healthy letting market in the past year, these investors use the relatively advantageous exchange rate from the recent weakening of the euro.
Dr. Jan Linsin, Head of Research

Prime yields still in a downtrend
Steady and strong demand for German commercial real estate, accompanied by a shortfall on the supply side, is causing prime yields to fall further. As a result, net initial yields for office real estate in the investment centres continued to decline in Hamburg and Munich and have dropped to a new historical low of currently 3.65% in Munich's city centre. Prime yields stabilized in Berlin, Düsseldorf and Frankfurt at the end of the year (for the time being) at a low level. Given the extremely limited supply of core product in central locations, investors have widened their investment horizons to focus on secondary locations in the top office centres. As a result, partly significant yield declines for well-positioned properties have been registered in this segment as well.

More than three million square meters of take-up
German commercial real estate continues to attract the attention of investors on a global scale. Demand for office properties in particular will remain high, especially since the letting markets are also tracking the positive development and are not disengaged from the investment market. More than three million square meters of office space take-up in total were registered in the Top 5 office centres, representing growth of just under 23% in a year-on-year comparison. The letting performance in 2015 therefore represents the third best result since the two boom years of 2000 and 2007, with aggregate take-up in 2015 only 30,000 square metres short of the level reported for the last cyclical peak.

The healthy economic environment in this country, an extremely robust labour market, with a further increase in the number of people gainfully employed and office employees, combined with the underlying upbeat sentiment of Germany's economy, are reflected in the significant increase in take-up in the five most important office markets. The letting markets are well able to track the strong uptrend in the investment markets, allaying fears of a decoupling of occupier and capital market. Vacancies continue to decline, causing rental prices to rise across the board. "New office space in top locations is particularly rare, and set to remain so in the coming years. We therefore expect a moderate increase in rental prices against the backdrop of limited supply", commented Linsin.

2016: office property investment volume of up to €25 billion anticipated
The commercial property investment market in Germany is benefiting from its status as a safe haven. The year elapsed showed that the letting markets were able to keep pace with the investment markets in terms of the dynamic trend. Rents are rising on the back of growing demand, measured by the significant increase in take-up in the office centres accompanied by relatively moderate new completion figures, and are attracting more investors to Germany. "We therefore anticipate another decline in initial yields across the entire risk spectrum of property investment", concluded Klein.

Investment volumes (office properties), net initial yield & Yield 10-year Bund



Source: CBRE Research 2016

Prime yield (net initial yield) for office properties by submarket clusters


Source: CBRE Research 2016


Fabian Klein
Head of Investment Germany
+49 69 17 00 77 55

Dr. Jan Linsin
Head of Research Germany
+49 69 17 00 77 663


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