Catella forecasts EUR 10b investment volume in Germany for 2009

The transaction volume in the German investment market plummeted year-on-year during the first semester 2009, according to Catella Deutschland. But the property adviser believes the prospects for the year as a whole are brightening.

'Overall, we saw deals in a volume approximating EUR 3.5 bn, down from EUR 14 bn during the first semester of 2008,' said Klaus Franken, managing partner of Catella Deutschland.

Both of the past quarters manifested a stable and no longer regressive trend. Portfolio deals have been the exception in 2009: out of the investment total of EUR 3.5 bn, just 15% were generated by block sales. Still, Catella envisions great market opportunities for the year as a whole. 'The second semester will be defined by stability, even if transaction volumes remain low-level. While we will be unlikely to see a run, a transaction volume of 10 billion Euros is entirely in the cards,' Franken added.

Aside from residential real estate, which has been largely spared by the crisis, demand is particularly high for inner-city office and business buildings of a volume between EUR 5 and EUR 50 mln. 'In the core product segment, Catella is currently negotiating purchase prices above multiples of 20. It would be absurd to speak of a broad-based deterioration of prices,' said Franken.

'Since the demand for these products in top locations has sustained its high level, returns around five percent will remain relatively stable, too. Cap rates of less than five percent for top products are accepted not just in Munich,' Franken said.

This market assessment is corroborated by Catella's own transactions. 'We already realised transactions of EUR 50 mln twice this year, of EUR 25 mln once, plus several smaller sales,' he said.

'While many of our competitors are well ahead of us in terms of manpower, we do see ourselves among the top 5 professional brokerage advisors, what with the transaction volume we realised in the first semester." Concrete buying and selling mandates, he added, are perfect for effectively sounding the market for opportunities. There are virtually no official sales procedures anymore, the maxim for 2009 being to do business off-market.

'Realising sales in an inconspicuous but dedicated manner - that is the way to foster a modest growth for the transaction volume before the end of this year,' Franken concluded.