Germany on track to hit new investment record in 2019 - Savills

Real estate transaction volumes in Germany could reach €65 bn this year, thanks to a strong third quarter and a number of major transactions in the pipeline, says Savills.

In its latest report on the market, the adviser has upwardly revised its projected annual volume, which stood at €55 bn previously, to take account of the increased trading activity.

According to Savills, almost €43.4 bn of German commercial property changed hands during the first nine months of the year. Approximately €18.5 bn was invested in Q3 2019 alone, making it one of the strongest quarters of all time.

The third quarter was dominated by a number of major transactions, including the two largest deals of the year to date: the sale of the Millennium Portfolio by Generali to Commerz Real for more than €2.5 bn and the acquisition of an interest in Aroundtown by TLG for around €1.6 bn.

Marcus Lemli, CEO Germany and head of European investment for Savills, commented: 'In view of this surprisingly high investment volume and with a number of major transactions expected to close in the fourth quarter, we have raised our projected annual transaction volume from the previous €55 bn to €65 bn. This would represent another new investment record.'

Offices accounted for 46% of the overall transaction volume in the first nine months, followed by retail (23%) and industrial/logistics assets (11%). With the exception of shopping centres, initial yields hardened by a further 10 to 20 basis points during the third quarter for all other sectors.

Matthias Pink, head of research at Savills Germany, said: 'While the German economy remains in an industrial recession, this is having hardly any effect in the real estate markets and none at all in the major cities.'

Lemli added: 'We have yet to notice investors adapting their rental growth expectations with reference to economic developments. Hence, we currently expect initial yields to harden further during the remainder of the year. However, forecasting uncertainty remains high at present.'

 

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