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| Low interest rates boost German investment volume as buyers widen their search Savills finds that low interest rates combined with buyer preference for secure but profitable acquisitions are boosting the German investment market, which records a significant year-on-year rise in turnover at the end of Q313. According to the firm's figures the total transaction volume for German commercial property during the first three quarters of 2013 reached approximately €19.1bn (+31% yoy) and €8.8bn (+14% yoy) for residential portfolios. The international real estate advisor highlights that due to ongoing excess demand for core assets and further contraction of prime yields - which currently stand at 4.6% on average across Germany's top six office markets (Frankfurt, Berlin, Hamburg, Cologne, Düsseldorf and Munich) - investors are cautiously widening their investment spectrum. Buyers, Savills notes, are shifting towards secondary locations or secondary properties in the major markets which present attractive risk return ratios in the current cycle. Andreas Wende, COO and Head of Investment at Savills Germany, says: "Investors in Germany are increasingly prepared to buy secondary, management-intensive properties and raise their value through effective asset management. With a lack of available prime stock and further prime yield contraction in German markets this is a reasonable investor strategy." "Furthermore, with stable fundamentals within the challenging economic environment of the Eurozone, the German real estate market is attracting new international buyers. For example investors from the Middle East and Asia are beginning to take a closer look at investment opportunities." Savills research shows that Middle Eastern investors represent the largest group of foreign net buyers in 2013 to date, investing approx €0.6bn in Q1 to Q3. Domestic demand continues to be strong with special funds and family offices representing the most active players throughout the first three quarters, investing approximately €4.2bn and €1.8bn in this period, respectively. This, the firm predicts, is likely to result in a total transaction volume of approximately €30bn in 2013. In terms of the German office leasing market, wider economic uncertainty has impacted on most German office markets, weakening take-up levels. With the exception of Düsseldorf and Cologne the major German office markets recorded a decrease in take-up year on year. Total take-up of office space in Berlin, Cologne, Düsseldorf, Frankfurt, Hamburg and Munich amounted to approximately 2.1m sq m representing a 5% decrease compared with 2012. Savills research shows that despite the shortage of space in the prime end, speculative development remains limited due to a lack of suitable sites or funding. Going forward, with a number of major letting transactions scheduled for completion before year end, take-up is expected to improve throughout the final quarter. The firm expects the total annual transaction volume will reach between 2.8m sq m to 2.9m sq m, representing a y-o-y decrease of 5%. write your comments about the article :: © 2013 Construction News :: home page |