Savills World Research
Germany
Market in Minutes
Germany investment
markets
Q3 2014
The facts at a glance
Residential and commercial property investors look to regional markets
■The transaction volume in the
commercial property market for the
first three quarters totalled €25.4bn,
representing an increase of 31%
compared to the same period last year.
■Investments in the residential
portfolio market totalled approx.
€9.07bn, equating to an increase of
4% year on year. In contrast with
the commercial sector, residential
investment has lost momentum over
the course of the year.
■In both the residential and
commercial sectors, activity is
increasingly shifting to cities and
regions outside of the top locations.
With the exception of Berlin, A cities
have played almost no part in the
residential portfolio market during
the year to date. In the commercial
property market, the transaction
volume outside of the A cities has risen
by 51% year on year; significantly
more than in the A cities themselves,
where investment has risen by just
13%.
■While the extreme core focus of
recent years is no longer evident, price
sensitivity in the non-core segment
remains high. Consequently, initial
yields on non-core properties, as well
as those in the prime segment, have
tightened only moderately.
■While the fourth quarter in the
commercial sector is likely to see
extremely high levels of investment, the
transaction volume in the residential
portfolio market is expected to
remain at the level of the two previous
quarters (approx. €2bn).
savills.de/research
01
Market in Minutes | Germany Investment Markets
Q3 2014
Commercial investment market Germany
Q1-Q3 2014
TabLE 1
Key investment market figures
Transaction volume
(€m)
Dominating
sector
Share of domestic
investors
Office prime
net initial yield
High street prime
net initial yield
Q3
2014
y-o-y
change
Sector
Share
Q3
2014
Q3
2013
Q3
2014
y-o-y
change
Q3
2014
y-o-y
change
Berlin
2,498
+12%
Office
51%
29%
-52%
4.5%
-20bps.
4.2%
-30bps.
Düsseldorf
1,384
+18%
Office
63%
62%
-19%
4.5%
-30bps.
4.0%
-20bps.
Frankfurt
1,905
-19%
Office
65%
59%
-19%
4.4%
+/-0bps.
3.7%
+/-0bps.
Hamburg
2,021
+32%
Office
57%
47%
-9%
4.4%
-10bps.
4.3%
-10bps.
Cologne
559
+54%
Office
60%
55%
11%
4.8%
-10bps.
4.4%
+/-0bps.
Munich
2,800
+24%
Office
62%
53%
39%
4.2%
+/-0bps.
3.5%
+/-0bps.
Germany*
25,386
+31%
Office
42%
46%
-21%
4.5%
-12bps.
4.0%
-10bps.
Source: Savills / * prime yields = Ø top six
GRAPH 1
GRAPH 2
Transaction volume
Transaction volume by sector
Rolling transaction volume of past 12 months
14
35
12
30
10
25
2009
Q4
2010
Q2
2010
Q4
Source: Savills / * forecast
2011
Q2
2011
Q4
2012
Q2
2012
Q4
2013
Q2
2013
Q4
7.83
7.18
10.37
5.93
11.88
6.38
6.94
5.25
10.97
4.07
5.33
0
6.69
5
6.30
2
5.25
10
5.59
4
6.53
15
3.63
6
2.82
20
4.97
8
3.73
€bn
40
Development
land
3%
Other
8%
Hotel /
Gastronomy
9%
Office
42%
€bn
Transaction volume
16
Industrial /
Logistics
11%
-
Retail
27%
2014 2014*
Q2
Source: Savills
German commercial investment market in minutes
Significant increase in investment across all market sectors
•
The transaction volume for the first three quarters totalled €25.4bn, representing an increase of 31% compared to
the same period last year.
•
Investment levels rose significantly both in the top six locations (+13% to approx. €11.2bn) and outside of these
major cities (+51% to €14.2bn). All sectors, with the exception of development sites, registered an increase in
investment activity, with hotels (+104%) and logistics/industrial property (+88%) enjoying the largest rises.
•
While the extreme core focus of recent years is no longer evident and value-add property is in particularly high
demand, price sensitivity in the non-core segment remains high. Disadvantages in terms of location are producing
the largest price discounts while lease terms have long since ceased to carry the same weight that they did in the
years immediately following the financial crisis.
savills.de/research
02
Market in Minutes | Germany Investment Markets
Q3 2014
Commercial investment market Germany
Q1-Q3 2014
GRAPH 3
GRAPH 4
Transaction volume by location
Transaction volume by type of investor
Purchases
Munich
12%
Sales
Net investments
Private-equity fund
Insurance company / Pension fund
Open-ended special fund
Berlin
10%
Listed property company
Corporate
Sovereign wealth fund
Other
Closed-ended fund
Housing association
Hamburg
8%
Other
55%
Other Asset Manager
Public administration
Open-ended public fund
Private investor / Family office
Frankfurt
8%
Bank
Developer
Düsseldorf
Cologne 5%
-5,250
-3,500
-1,750
2%
Source: Savills
Source: Savills
GRAPH 5
GRAPH 6
Transaction volume by origin of buyer
Prime yields
€m
1,750
Office
3,500
5,250
Prime High Street
7
Other
22%
6
5
4
%
Germany
46%
Canada
2%
3
France
7%
2
1
UK
10%
0
USA
13%
2005
Source: Savills
2006
2007
2008
2009
2010
2011
2012
2013 2014 Q3
Source: Savills
TabLE 2
The largest transactions in Q1-Q3 2014 at a glance*
Property / Portfolio
Type of use
Location(s)
Volume
Buyer
Vendor
Leo 1 portfolio
Office
Hesse
approx. €1,000m
Patrizia
Commerz Real
Accor portfolio
Hotel
Germany +
Netherlands
approx. €720m
Accor
Moor Park
Centro (50% share)
Retail
Oberhausen
approx. €540m
Unibail-Rodamco
Stadium Group
Christie portfolio
Retail
East Germany
approx. €400m
Morgan Stanley, Redos
Prudential et al.
Portigon ensemble
Office
Düsseldorf
approx. €350m
Blackstone
Portigon
Source: Savills / * only published transactions are shown
savills.de/research
03
Market in Minutes | Germany Investment Markets
Q3 2014
Commercial investment market Berlin
Q1-Q3 2014
GRAPH 7
GRAPH 8
Transaction volume
Transaction volume by sector
Transaction volume
Average of past five years
Other
13%
3,000
Development
land
2%
2,500
Hotel /
Gastronomy
8%
€m
2,000
1,500
Office
51%
1,000
2009
Q4
2010
Q2
2010
Q4
2011
Q2
2011
Q4
2012
Q2
2012
Q4
2013
Q2
2013
Q4
Retail
26%
1,219
656
623
1,253
812
768
645
2,618
605
528
613
1,171
617
498
692
509
394
680
738
0
358
500
2014
Q2
Source: Savills / * forecast
Source: Savills
GRAPH 9
GRAPH 10
Transaction volume by origin of buyer
Transaction volume by type of investor
Purchases
Sales
Net investments
Private investor / Family office
Other
28%
Germany
29%
Open-ended special fund
Private-equity fund
Corporate
Other
Open-ended public fund
Listed property company
Sovereign wealth fund
Housing association
Public administration
Developer
Closed-ended fund
UK
6%
Bank
Insurance company / Pension fund
France
6%
Asia / Pacific
8%
Other Asset Manager
USA
23%
Source: Savills
-400 -300 -200 -100
€m
100
200
300
400
Source: Savills
Berlin market in minutes
Locations outside the suburban rail ring are increasingly in demand
•
Almost €2.5bn was invested in commercial property in Berlin in the first nine months of the current year; an increase
of 12% compared with the corresponding period last year.
•
There is now demand across all risk categories, with the majority of investors maintaining a strong focus on core
properties as well as properties in good B locations. A number of transactions were completed in such B locations
in the third quarter, including the acquisition by TLG of a property let to Verdi and Deutsche Bahn at the Ostbahnhof
station.
•
Private investors and family offices remain the most active purchasers in the central locations. However, in
addition to B locations, peripheral locations have also increasingly attracted investors’ attention. The axis towards
Schönefeld / BER Airport has particularly come under the spotlight while other locations outside of the suburban rail
ring are also being searched by investors for investment opportunities.
savills.de/research
04
Market in Minutes | Germany Investment Markets
Q3 2014
Commercial investment market Düsseldorf
Q1-Q3 2014
GRAPH 11
GRAPH 12
Transaction volume
Transaction volume by sector
Transaction volume
Hotel /
Gastronomy
3%
Average of past five years
900
Other
1%
800
700
€m
600
Retail
33%
500
400
300
2010
Q2
2010
Q4
2011
Q2
2011
Q4
2012
Q2
2012
Q4
2013
Q2
2013
Q4
187
690
507
824
172
358
648
282
Office
63%
186
115
479
346
95
195
586
256
94
2009
Q4
242
0
495
100
37
200
2014
Q2
Source: Savills / * forecast
Source: Savills
GRAPH 13
GRAPH 14
Transaction volume by origin of buyer
Transaction volume by type of investor
Other
2%
Purchases
Sales
Net investments
Insurance company / Pension fund
Private-equity fund
Open-ended special fund
Closed-ended fund
USA
30%
Private investor / Family office
Listed property company
Other
Housing association
Sovereign wealth fund
Bank
Open-ended public fund
Other Asset Manager
Public administration
Germany
68%
Developer
Corporate
-400 -300 -200 -100
Source: Savills
€m
100
200
300
400
Source: Savills
Düsseldorf market in minutes
High levels of activity across all risk categories
•
In Düsseldorf, property changed hands in transactions totalling €1.38bn during the first three quarters of the year,
representing an 18% rise in the transaction volume year on year.
•
Moreover, the extraordinarily high transaction volume is very broadly based. While activity is largely focused within
the office and retail sectors (transactions totalling approx. €870m and approx. €450m respectively), this is distributed
across many locations and risk categories.
•
Investments during the year to date have included both traditional core properties (e.g. Metro headquarters and
Kö-Galerie) and value-add assets (e.g. La Vie). However, there is also much activity in the opportunistic segment: A
particular area of focus has been the Seestern office district, where even completely vacant office properties have
been finding buyers with plans for refurbishment or conversion to residential accommodation.
savills.de/research
05
Market in Minutes | Germany Investment Markets
Q3 2014
Commercial investment market Frankfurt
Q1-Q3 2014
GRAPH 15
GRAPH 16
Transaction volume
Transaction volume by sector
Transaction volume
Other
8%
Average of past five years
1,800
Development
land
1%
1,600
1,400
1,200
Hotel /
Gastronomy
25%
€m
1,000
800
600
2009
Q4
2010
Q2
2010
Q4
2011
Q2
2011
Q4
2012
Q2
2012
Q4
2013
Q2
2013
Q4
840
358
Office
66%
707
1,136
560
923
858
1,615
116
704
433
514
928
278
727
441
186
161
0
344
200
357
400
2014
Q2
Source: Savills / * forecast
Source: Savills
GRAPH 17
GRAPH 18
Transaction volume by origin of buyer
Transaction volume by type of investor
Purchases
Other
12%
Sales
Net investments
Insurance company / Pension fund
Sovereign wealth fund
USA
6%
Private-equity fund
Closed-ended fund
Other Asset Manager
Developer
UK
6%
Housing association
Other
Corporate
Public administration
Switzerland
8%
Germany
59%
Open-ended special fund
Listed property company
Open-ended public fund
Bank
Quatar
9%
Source: Savills
Private investor / Family office
-500 -375 -250 -125
€m
125
250
375
500
Source: Savills
Frankfurt market in minutes
Major deals in Q4 could mean positive investment growth
•
More than €1.9bn was invested in commercial property in Frankfurt in the first three quarters of the current year. This
represents a 19% decrease in the transaction volume year on year.
•
The sale of the Messeturm was by far the largest transaction ahead of a number of deals in excess of €100m. With
several additional major transactions due for completion in the fourth quarter, the shortfall in investment could well be
converted into an increase by the end of the year.
•
Faced with a shortage of core properties, some investors are adapting their search profile and becoming bolder. This
is particularly demonstrated by a growing amount of due diligence being conducted on peripheral locations, such as
Niederrad or the Osthafen. Niederrad in particular is now a highly vibrant submarket. Four properties have already
changed hands in the former offices-only district during the year to date.
savills.de/research
06
Market in Minutes | Germany Investment Markets
Q3 2014
Commercial investment market Hamburg
Q1-Q3 2014
GRAPH 19
GRAPH 20
Transaction volume
Transaction volume by sector
Transaction volume
Development
land
Hotel /
1%
Gastronomy
3%
Average of past five years
1,400
1,200
Industrial /
Logistics
6%
1,000
€m
Other
8%
800
600
Office
57%
400
2009
Q4
2010
Q2
2010
Q4
2011
Q2
2011
Q4
2012
Q2
2012
Q4
2013
Q2
2013
Q4
746
701
574
473
580
475
631
404
192
434
393
500
617
567
930
173
291
545
0
84
200
1,315
Retail
25%
2014
Q2
Source: Savills / * forecast
Source: Savills
GRAPH 21
GRAPH 22
Transaction volume by origin of buyer
Transaction volume by type of investor
Purchases
Other
15%
Sales
Net investments
Open-ended special fund
Other Asset Manager
Private-equity fund
UK
4%
Closed-ended fund
Insurance company / Pension fund
Housing association
Austria
6%
Other
Germany
47%
Sovereign wealth fund
Bank
Private investor / Family office
Public administration
Listed property company
Sweden
10%
Corporate
Open-ended public fund
Developer
USA
18%
Source: Savills
-400 -300 -200 -100
€m
100
200
300
400
Source: Savills
Hamburg market in minutes
St. Pauli was the most active submarket in the third quarter
•
Investment in the Hamburg commercial property market totalled just over €2.0bn in the first three quarters of the
current year; almost a third more than in the corresponding period last year.
•
The two largest transactions in the third quarter are a good reflection of the overall situation in the Hamburg
investment market. These involved Atlantic Haus and the ‘Tanzende Türme’ in St. Pauli; both high-quality properties
in good B locations. Such B locations close to the city centre are currently accounting for the highest levels of
activity.
•
Besides St. Pauli, HafenCity has also been a particular focus during the year to date while a number of transactions
have been completed in the Langenhorn district close to the airport. Further deals are expected to be completed
in these submarkets in the fourth quarter while a number of transactions are also in progress in the City North
submarket.
savills.de/research
07
Market in Minutes | Germany Investment Markets
Q3 2014
Commercial investment market Cologne
Q1-Q3 2014
GRAPH 23
GRAPH 24
Transaction volume
Transaction volume by sector
Transaction volume
Average of past five years
600
Development
land
6%
500
€m
400
Industrial /
Logistics
4%
Other
6%
Hotel /
Gastronomy
9%
300
200
2009
Q4
2010
Q2
2010
Q4
2011
Q2
2011
Q4
2012
Q4
2013
Q2
2013
Q4
171
104
284
26
488
85
253
174
26
2012
Q2
257
148
131
282
202
111
80
183
257
273
260
0
Office
60%
Retail
15%
100
2014
Q2
Source: Savills / * forecast
Source: Savills
GRAPH 25
GRAPH 26
Transaction volume by origin of buyer
Australia
5%
Transaction volume by type of investor
Switzerland
4%
Purchases
Sales
Net investments
Private investor / Family office
Open-ended public fund
Private-equity fund
Other Asset Manager
Public administration
Other
Housing association
Sovereign wealth fund
North America
32%
Corporate
Open-ended special fund
Closed-ended fund
Germany
59%
Bank
Developer
Listed property company
Insurance company / Pension fund
-100
Source: Savills
-50
€m
50
100
Source: Savills
Cologne market in minutes
Cologne increasingly on investors’ radar
•
Some €560m was invested in Cologne’s commercial property market in the first three quarters of 2014; 54% more
than in the corresponding period last year.
•
Cologne is benefiting from the fact that initial yields are still relatively high despite favourable conditions in the letting
markets, meaning that certain investors who were previously only active in the other top German markets are now
also looking at Cologne. Foreign investors are also increasingly active in the cathedral city.
•
Large, high value properties are particularly in demand, although investment opportunities in this category remain
scarce. The properties currently available in the market are often of a value-add character. However, demand
for these is also high since the situation in the letting markets is conducive to the implementation of value-add
strategies.
savills.de/research
08
Market in Minutes | Germany Investment Markets
Q3 2014
Commercial investment market Munich
Q1-Q3 2014
GRAPH 27
GRAPH 28
Transaction volume
Transaction volume by sector
Transaction volume
Average of past five years
2,500
2,250
2,000
Industrial /
Logistics
Development 1%
land
2%
Hotel /
Gastronomy
12%
Other
5%
€m
1,750
1,500
1,250
1,000
Retail
19%
750
Office
61%
2009
Q4
2010
Q4
2011
Q2
2011
Q4
2012
Q2
2012
Q4
2013
Q2
2013
Q4
1,320
568
1,112
2,200
860
563
827
1,141
549
710
361
860
653
452
207
183
2010
Q2
294
0
91
152
250
504
500
2014
Q2
Source: Savills / * forecast
Source: Savills
GRAPH 29
GRAPH 30
Transaction volume by origin of buyer
Transaction volume by type of investor
Purchases
Other
19%
Sales
Net investments
Open-ended special fund
Private-equity fund
Insurance company / Pension fund
Corporate
Open-ended public fund
Other
USA
5%
Private investor / Family office
Housing association
Sovereign wealth fund
Germany
53%
Ireland
7%
Public administration
Bank
Other Asset Manager
Listed property company
Developer
Norway
7%
Closed-ended fund
UK
9%
Source: Savills
-600
-400
-200
€m
200
400
600
Source: Savills
Munich market in minutes
Brisk investment activity despite high prices
•
More than €1.3bn was invested in Munich’s commercial property market between July and September making the
third quarter the most successful of the year to date in terms of investment activity. The transaction volume for the
first three quarters of 2014 stands at approx. €3bn, representing an increase of 33% compared to the corresponding
period last year.
•
Despite the very low net initial yields in the prime segment (3.5% on high-street properties, 4.2% on offices), the
investment pressure once again resulted in a number of transactions being completed. However, investors are also
increasingly shifting their attention to locations outside of the CBD.
•
Two properties in the Arnulfpark district changed hands in the third quarter in Munich’s central bus station and the
Kontorhaus, while less central locations, such as Ramersdorf-Perlach, also registered a number of transactions
during the same period.
savills.de/research
09
Market in Minutes | Germany Investment Markets
Q3 2014
Residential portfolio investment market Germany
Q1-Q3 2014
GRAPH 31
GRAPH 32
Transaction volume
Size of portfolios transacted
100 < 800 units
< 5,000 units
10,000+ units
Number of deals
18,000
180
16,000
160
14,000
140
12,000
10,000
100%
4,000
120
70%
3,500
100
60%
3,000
50%
2,500
40%
2,000
30%
1,500
20%
1,000
10%
500
€m
4,500
80%
80
6,000
60
4,000
40
2,000
20
0
2007
2008
2009
2010
2011
2012
2013
2014 Q3
0%
0
2007
2008
2009
2010
2011
2012
2013
Source: Savills / * portfolios with at least 100 units each
Source: Savills
GRAPH 33
GRAPH 34
Transacted units by location
Transacted units by type of city*
Berlin
13%
2014 Q3
A
16%
Kiel
9%
Other
36%
Bremen
6%
Other
66%
B
18%
Mönchengladbach
5%
Dresden
3%
C
22%
D
8%
Source: Savills
5,000
90%
8,000
0
800 < 2,000 units
< 10,000 units
Units per transaction
Number of Units
Transaction volume and number of deals*
Source: Savills / * based on the Bulwiengesa classification
German residential portfolio market in minutes
Regional markets increasingly important - Berlin still in the spotlight
•
The German market for residential portfolios recorded a transaction volume of approx. €2.09bn in the third quarter
of 2014; a moderate increase compared to the previous quarter (approx. €1.85bn). Investment from January to
September 2014 totalled €9.07bn, representing a 4% increase compared to the corresponding period last year.
•
With the exception of Berlin (the most active city with almost 22,000 units transacted), the A cities are now practically
insignificant in terms of the overall market. Particularly in the highly expensive cities, such as Hamburg (approx. 1,000
units, 27th place) and Munich (approx. 460 units, 38th place), few residential portfolios have changed hands this year.
•
The scarce supply of large residential portfolios remains a primary limiting factor for the transaction volume. Overall,
there were just five transactions in excess of €100m in the third quarter.
savills.de/research
10
Market in Minutes | Germany Investment Markets
Q3 2014
Residential portfolio investment market Germany
Q1-Q3 2014
GRAPH 35
GRAPH 36
Transaction volume by origin of buyer
Luxembourg
3%
Transaction volume by origin of seller
Other
7%
Other
20%
Austria
12%
Germany
43%
Italy
8%
Germany
78%
USA
29%
Source: Savills
Source: Savills
GRAPH 37
GRAPH 38
Transaction volume by type of investor
Development of prices*
Purchases
Sales
Net investments
Average price per unit
70,000
Listed property company
Housing association
60,000
Open-ended special fund
Open-ended public fund
50,000
Other
Closed-ended fund
€/sq m
Corporate
Insurance company / Pension fund
Sovereign wealth fund
Bank
Public administration
40,000
30,000
20,000
Private investor / Family office
Developer
Other asset manager
10,000
Private-equity fund
-6,000
-4,000
-2,000
€m
2,000
4,000
6,000
0
2007
Source: Savills
2008
2009
2010
2011
2012
2013
2014 Q3
Source: Savills / * for portfolios with at least 100 units each
TabLE 3
The largest residential portfolio transactions in Q1-Q3 2014 at a glance*
Portfolio
Number of units
Volume*
Buyer
Vendor
Vitus
ca. 30,000
€1,400m
Deutsche Annington
Vitus
Dewag
ca. 11,500
€970m
Deutsche Annington
Equity Residential, AvalonBay
Communities
DGAG
ca. 18,000
€892m
Buwog / Immofinanz
Prelios, Deutsche Asset & Wealth
Management
-
ca. 13,300
Undisclosed
Westgrund
berlinovo
-
ca. 8,200
Undisclosed
Adler Real Estate
Corestate
Source: Savills / * only published transactions are shown
savills.de/research
11
Market in Minutes | Germany Investment Markets
Q3 2014
Savills Germany
Savills is present in Germany with
around 160 employees with six
offices in the most important estate
sites Berlin, Dusseldorf, Frankfurt,
Hamburg, Cologne and Munich.
Today Savills provides expertise
and market transparency to its
clients in the following areas of
activity:
HH
B
D
Our services
C
»» Purchase and sale of single assets and portfolios
»» Corporate Finance - Valuation
»» Leasing of office and retail buildings
»» Leasing and sale of industrial and warehouse properties
»» Corporate Real Estate Services
F
M
www.savills.de
Savills Germany
Please contact us for further information
Marcus Lemli
Investment Europe
+49 (0) 69 273 000 11
[email protected]
Andreas Wende
Investment Germany
+49 (0) 40 309 977 110
[email protected]
Steffen Pulvermacher
Investment Berlin
+49 (0) 30 726 165 187
[email protected]
Stefan Mellies
Investment Düsseldorf
+49 (0) 211 22 962 221
[email protected]
Jürgen Schmid
Investment Frankfurt
+49 (0) 69 273 000 18
[email protected]
Sascha Hanekopf
Investment Hamburg
+49 (0) 40 309 977 141
[email protected]
Dr. Frank Urfer
Investment Munich
+49 (0) 89 427 292 211
[email protected]
Karsten Nemecek
Corp. Finance - Valuation
+49 (0) 30 726 165 138
[email protected]
Matthias Pink
Research
+49 (0) 30 726 165 134
[email protected]
Fabian Sperber
Research
+49 (0) 30 726 165 139
[email protected]
Savills is a leading global real estate service provider listed on the London Stock Exchange. The company, established in 1855, has a rich heritage with unrivalled growth. It is a
company that leads rather than follows and now has over 600 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East with more than
27,000 employees worldwide. Savills is present in Germany with around 160 employees with six offices in the most important estate sites Berlin, Dusseldorf, Frankfurt, Hamburg, Cologne
and Munich.
This bulletin is for general informative purposes only. Whilst every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss
arising from its use. The bulletin is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research.
© Savills October 2014
Connecting people & property
savills.de/research
12