Commercial real estate investment in Germany in the first half of 2020 climbed by 15%, despite the global pandemic, according to new research from Savills.
Investment volumes for H1 totalled approximately €29.2 bn, while prime yields, which have been at historically low levels for offices between 2.7% (Berlin) and 3% (Cologne), remained stable for most property sectors.
Marcus Lemli, CEO Germany and head of investment Europe for Savills, says: 'So far, the German real estate investment market has been robust.
'Of course, it is important to consider that the time lag of the market figures compared with current market activity means that they do not reflect the full extent of the crisis.
'However, for a few weeks now, we have observed an increasing number of sale processes being initiated or resumed. Subject to a second wave of infection, we are therefore optimistic about the medium-term prospects.'
While the number of transactions declined by around a fifth in the first half of the year compared with the corresponding period last year, there were several large transactions in Germany driving the relatively high transaction volumes.
Portfolio deals included x+bricks €500 mln acquisition of a German grocery portfolio numbering 120 stores.
Meanwhile Patrizia's sale of Hamburg's Ericus-Contor building to Union Investment for a reported €185 mln in May marked the city's largest single-asset deal this year.
Domestic investors increased their market share as foreign investment fell from 50% in Q1 to just 36% in Q2, partially explained by travel restrictions. Over the coming months, Savills said it expected many foreign investors to return to the market, albeit with a below-average level of investment this year.
Matthias Pink, head of research for Savills Germany, says: 'In view of the recent low number of transactions, it is difficult to make any credible statements on price trends, particularly in the non-core segment.
'There are several indications that initial yields will soften, although this cannot yet be quantified. With the exception of hotels and shopping centres, however, prime yields held at historically low levels in the second quarter.
'Further developments will depend on the extent to which the recession impacts the lettings market.'
