GERMANY - Domestic investors dominate the German real estate market - contrary to the European trend - but transactions have decreased year on year, according to the German bureau of CBRE.

In the first nine months of 2012, around €14.5bn has been invested in German commercial real estate, 14% less than in the same period last year.

However, CBRE noted that the main slump happened in the second quarter while transactions were up again in the third quarter, with around 11% more in transactions compared with Q3 2011.

Further, the decrease was much less pronounced in the five major cities, where only 6% less has been invested - these now account for almost half of all transactions.

CBRE said investors were still looking for core assets and risk-averse investments, which would eventually lead to them to B cities to "place the amply available liquidity on the real estate markets".

In total, 71% of the transactions were made by domestic investors, while the share of foreign investors shrunk from 35% to 29%.

Looking at a more European picture, CBRE noted that the share of foreign investors was increasing, with one-fifth of all investments in the first half of 2012 coming from North America, Asia and the Middle East.

The real estate company noted that this number had been driven primarily by increased investment activity by sovereign wealth funds and pension funds.

According to CBRE, foreign investors are mainly looking at office property in the Northern part of Europe, including London, Paris, Stockholm and, to a lesser extent, German cities.

Patrizia identified this European divide as well in its latest report on the residential property market.

The real estate company said countries such as Germany, Sweden or Switzerland were viewed as safe havens by investors.

Meanwhile, Spain, Italy and Portugal are fighting corrections in their markets.

Other countries that had seen market corrections such as Belgium or the UK were already back on their way to price stability, Patrizia said.

In other news, German real estate company Real IS has collected €350m from institutional investors for its Spezialfonds year to date.

Of that amount, around €100m is earmarked for a Spezialfonds solely invested in Southern Germany, while the rest has been earmarked for funds diversified across Europe.

Jochen Schenk, member of the board at Real IS, said: "What we are seeing at the moment is that institutional investors commit themselves in a very wide, cross-European spread or else in highly specialised regional products, such as our regional fund for Southern Germany."

He added that the latter region had "impressed" the company as stable and attractive real estate locations because of its "high propensity to innovation and purchasing power, and their positive economic parameters".