The commercial real estate market in Düsseldorf is heading towards another strong year for investment, according to Stefan Mellies, director of investment at Savills Düsseldorf.
‘In the first half we have seen commercial investment transactions totalling around €1.2 bn and there are so many large deals on the market that it should not be a problem to exceed the €2.5 bn mark in 2018,’ he told PropertyEU's sister publication EuroProperty in an interview.
Savills alone currently has nine office properties under offer, of which five are now in exclusivity, he added. ‘In total we have had commercial properties worth €650 mln under offer in the first six months. I think this will be a record year,’ Mellies said.
Since 2013, Düsseldorf has generated an average investment volume of €2 bn with a peak of €2.4 bn in 2017. The average size of office assets that come up for sale in Düsseldorf is normally between €25 mln and €120 mln, but this year a number of larger properties in excess of €200 mln are due to be transacted, Mellies noted. ‘Normally we don’t have so many landmark deals of such high volumes within a single year.’
Savlls is also advising on a number of deals with a significantly higher price tag, including a 90,000 m2 office on Wilhelm-Boetzkes-Strasse. Another office property currently under offer and believed to have a price tag in excess of €200 mln involves a sale-and-leaseback transaction for the Metro headquarters in Düsseldorf. The complex comprises six separate buildings with a total lettable area of 75,000 m2 on a 45,000 m2 site. JLL has a mandate for the seller.
The Statdttor, which is being sold by Corestate Capital and which, according to well-informed sources is currently in exclusivity, is also expected to fetch a price in excess of €200 mln. The landmark 84 metre skyscraper in the Unterbilk neighbourhood features a 15-story atrium and has a total gross floor area of some 30,000 m2. CBRE, not Savills, is advising on this deal, as was erroneously reported in an article in Friday's edition of EuroProperty.
While Düsseldorf is one of the smaller Big Seven cities in Germany with 600,000 residents compared to Berlin with 3.5 million, Munich with 1.5 million and Frankfurt with 750,000, it is gaining traction among international investors, Mellies said. ‘We’re seeing more Asian investors coming here, for example. There’s so much money out there that they are starting to look at the alternatives in Germany. The yields here are slightly higher than in Munich or Frankfurt and there are a number of big properties for sale in excess of €100 mln, which is generally the cut-off mark for many foreign investors.’
The Düsseldorf market has two key advantages, Mellies said. On the one hand rental growth has not been as strong as in the other Top 6 cities and the occupier market is very mixed. ‘Finding tenants is a challenge everywhere, but the benefit of Düsseldorf is that there is already quite a mix of different sectors so there's a broader occupier base. It is not a specialised financial hub like Frankfurt and it is still relatively cheap compared to Berlin, for example.’