GERMANY - Turnover of German office space increased by 19% in top locations in the first half of 2011, and other core real estate investments also profited from increased interest, Colliers International in Germany has said.

In its latest set of market outlooks for Germany, the real estate company recorded a major increase in interest in German office and retail (including hotel) property in German top locations.

Andreas Trumpp, head of research at Colliers International in Germany, said: "The robust economic development and full order books are influencing expansion and relocation plans that had been put aside over the last two years."

He added Colliers expected a "continued above-average demand" in the face of a mainly shrinking market of new buildings.

"Overall, we therefore see vacancy rates fall further and expect a slowly stabilising growth in rental prices," Trumpp said.

In the first half of 2011, turnover of German office space in top locations in cities like Berlin, Frankfurt/Main, Munich and Stuttgart increased by 19% year-on-year, which, according to Colliers, is the second highest half-year result since 2005.

The highest increase was recorded in Munich, where it hit 50%, followed by Berlin with a 26% increase.

The average vacancy rate over all these cities dropped by 10 basis points to 9.7%, mainly pushed upward by the highest rate in Frankfurt/Main at 17%.

Rents for top office locations in Berlin increased by 10 percentage points to €22/m2, while the average office rent only increase 3 percentage points to €12.3/m2.

Tenants were mainly public administrators, associations and social institutions, followed by businesses from the information and telecommunication sector, Colliers said.

Munich saw most transactions in the first half of 2011 in the office sector (35% of all transactions), with 4.5% initial yield in the office sector.

However, with two major purchases, the retail sector (at 3.75% initial yield for top products) reported the largest total transaction sum of €270m.

Düsseldorf was the only top city in Germany to see falling rents and rising vacancy rates in the office sector.

For hotels, Colliers calculated an 82% increase in transaction volumes, but this segment still only made up 5% of the total retail volume of the €11bn total in retail transactions in the first six months.

The real estate company pointed out that, while in the first quarter, mainly international investors showed interest in German hotels, the interest among domestic investors increased in the second quarter, and they increased their share from one-fifth of the transactions to one-third.

Because of two large deals, private investors had the largest share in transactions, followed by open real estate funds and Spezialfonds. 
 

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