Domestic buyers dominate top German investments in Q3

Cross-border real estate investors remain keen on the German market but domestic buyers dominated activity in the third quarter, according to research by PropertyEU.

German investors were the buyers in all top 10 investment transactions by volume from 1 July to end-September, PropertyEU data shows. The top 10 deals have an aggregate volume of EUR 1.6 bn, which is 30% of the overall German volume of EUR 5.1 bn in the three-month period.

Investment company Hamburg Trust carried out the largest deal by buying the Milaneo shopping centre in Stuttgart from developer ECE for EUR 400 mln.

Listed real estate company Patrizia Immobilien was involved in the second largest deal. It acquired a portfolio of 1,000 apartments and 30 commercial units for EUR 250 mln.

According to the latest research from Savills, Q3 2012 was the best performing quarter of the year so far with a total transaction volume of EUR 5.3 bn, bringing the overall total investment volume in Germany for the first nine months of 2012 to EUR 14.4 bn. While this represents a year-on-year decrease of 13.1% the international real estate advisor expects a strong final quarter, forecasting a total investment volume of EUR 20 bn by year-end.

Marcus Lemli, CEO of Savills Germany and head of European investment, commented: '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.'

While domestic buyers dominated activity, the firm reports that the share of continental European investors in the German market has also increased, accounting for EUR 2.26 billion of the country’s overall investment activity so far in 2012. This represents an 8% increase year-on-year, Savills said.

CBRE and JLL both noted in reports that the German volume for Q3 was relatively close to historic averages although a shortage of prime assets limited the total compared to 2011.

'The lack of good quality stock on the market in the office and retail sectors in Germany has constrained commercial real estate volumes. However, there has been strong interest over the first three quarters of 2012 in the German residential sector which saw around EUR 8 bn transacted compared to circa EUR 6 bn in full-year 2011,' said Robert Stassen, head of European Capital Markets Research.