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German Property Market
German property investment totalled 5.3 billion Euros in Q3 this year according to the latest data from Savills, making it the best performing quarter of the year and taking us to 14.4 billion Euros for the first 9 months of the year. This is down 13.1% compared to last year, but Savills expects that the final quarter will make up for this, predicting a year end total of 20 billion.
Marcus Lemli, CEO of Savills Germany and Head of European investment, said: "We have seen a real increase in activity over the last quarter, which has been dominated by our domestic investors who have accounted for 67% of transactions. In fact, the growth in investor appetite is such that it is only due to a lack of quality supply that the transaction volume was not even higher."
According to the report domestic buyers continued to dominate the German property market, but the number of investors from elsewhere in Europe is growing. According to the report European investors have accounted for 2.26 billion Euros worth of investments this year, which is 8% higher than last year.
Unsurprisingly the major cities dominate the report's location breakdown, with Berlin, Frankfurt, Hamburg, Cologne, Düsseldorf, and Munich accounting for around 46% of the investment. Berlin is top, with 1.8 billion Euros invested this year, but Munich recorded a 27% year on year growth in transactions.
However, investment volumes grew 18% across the rest of Germany, not withstanding a 19% decrease in the other key investment markets not mentioned above. This trend brought the following statements from Matthias Pink, head of research at Savills Germany: "Some investors have looked towards the economically strong regional markets due to there being a lack of prime product in the core cities. However, location remains fundamental in their criteria and is often prioritised over lease term and covenants."
On a sector by sector basis retail is still top-dog with 40% of the total volume being invested into retail properties. Offices picked up 29% of the investments, while the industrial sector had the lowest overall volume but did record a 90% growth on last year.
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