Cross-border investors were involved in for half of all transactions total volume in Germany in 2015, according to new figures compiled by JLL.
Cross-border investors were involved in for half of all transactions total volume in Germany in 2015, according to new figures compiled by JLL.
North American private equity funds were the largest group, accounting for 28% of deals so far this year, followed by French capital, which was involved in 17%. French investors invested €2.4 bn in German real estate in the first half of 2015, surpassing the volume for the whole of 2014 of €1.7 bn.
The figures indicate a rapid internationalising trend in mainland Europe’s largest real estate market, which has historically been dominated by domestic players. In 2014 foreign buyers were involved in 20% of property transactions, but accounted for 80% of bids on assets worth more than €100 mln.
Research by Colliers yielded similar figures, showing that 50% of liquidity in the market came from foreign sources, up from 44% in 2014.
Middle Eastern investors are showing more interest in Germany, according to JLL, while and Korean pension and insurance funds contributed €896 million in 2014 and €417 million in H1 2015. However, investment from other Asian capital sources, including the Chinese investors, remains largely speculative.
Matt Richards, Head of JLL’s International Capital Group, EMEA, said: 'As Europe’s largest economy, properties come at a premium, but in terms of capital values, Germany has yet to catch up with London or Paris and this is appealing to many investors looking to expand in Europe.'
Alastair Meadows, Head of JLL’s International Capital Group, Asia Pacific, added: 'Korean investors are the most active in the region, but where other Asian capital sources are concerned we’re seeing more bidding than buying at the moment. Germany has become the second European destination of choice after London for Asian investors who are drawn in by attractive cash-on-cash returns driven by historically low financing costs.'
Colliers predicts deal volume in Germany will hit €50 bn this year, up more than 20% on the €40 bn of deals transacted in 2014, according to Ignaz Trombello, head of investment Germany at Colliers.
'We have already seen around €37 bn in deals so far this year, which is already almost as much as during the whole of 2014,' said Ignaz Trombello, head of investment Germany. He said offices would account for around 50% of the total, followed by retail and logistics.
`US investors are still very interested in the German market, accounting for around 50% of international money,' Trombello said. 'UK and French investors also remain very active in the market.'