German investment reaches €9.9b in Q1

German commercial real estate investment hit €9.9 bn in the first quarter of 2014, representing a 40% increase in turnover year-on-year and the second strongest first quarter ever recorded after Q1 2006, according to a new research report published by Savills.

The strong level of transactions is in line with the significant market activity seen in the final quarter of 2013, traditionally the busiest period, when the market reported an investment volume of over €11.4 bn.

'The ongoing favourable financial and economic parameters are increasingly joined by a rising risk-embracing attitude of investors so that the investment market in Germany is now definitely no longer limited to core,' said Andreas Wende, COO and head of investment at Savills Germany. 'This broader market activity is reflected in another year-on-year increase of the transaction volume.'

Every sector saw higher transaction volumes against the same period in 2013 with the most significant increase recorded in the warehouse and industrial segment (+154% year-on-year), followed by the office sector (+64% year-on-year). Nearly all sectors were boosted by portfolio deals, which accounted for over €4.3 bn of turnover according to Savills, representing 44% of the total turnover.

These portfolio transactions were a key contributor to a significant rise in turnover recorded outside Germany’s top six markets of Berlin, Hamburg, Frankfurt, Düsseldorf, Cologne and Munich. Outside these markets the Q1 2014 transaction volume doubled to €6.4 bn, from €3.2 bnin Q1 2013, of which almost €3 bn was attributable to portfolio transactions.

By contrast turnover in Berlin, Düsseldorf and Frankfurt recorded a decrease of between 8% and 29% against Q1 2013 whilst Hamburg, Cologne and Munich recorded a year-on-year increase in investment turnover of between 12% and 17%.

According to the research the majority of the property portfolios were purchased by international investors in this period, increasing their market share to 55% (€5.4 bn), up from 38% in Q1 2013. Of these buyers private equity funds represented the most active group investing almost €1.5 bn into commercial real estate in Germany in the first three months of the year.