German investment reaches EUR 19bn in 2010: CBRE

Commercial real estate investment turnover in Germany grew to EUR 19.1 bn in 2010, an 83% increase on the total turnover recorded in 2009, according to the latest data published by CB Richard Ellis (CBRE). The growth in investment stems from rapid economic recovery and sustained investor confidence in the German market.

The fourth quarter (Q4) of 2010 alone registered transaction volumes of EUR 6.8 bn, which was the highest quarterly total since Q1 2008.

A notable feature of the German investment market in 2010 has been a significant increase in the number of large deals, with over 34 EUR 100 mln-plus deals transacted last year, including the sale of the Opernturm in Frankfurt.

Portfolio deals also contributed to the uplift in investment activity, amounting to 26% of total turnover. Another prominent aspect, CBRE said, has been the growth of international investor activity, which accounted for 35% of the market in 2010, compared to 13% in 2009. The majority of investment activity has remained focused on office and retail assets, which accounted for 42% and 40% respectively of total investment volumes in Germany in 2010.

Investment activity remained concentrated in the five major German markets of Berlin, Hamburg, Frankfurt, Munich and Dusseldorf, which together accounted for half of total turnover in Germany. Berlin saw the highest growth of the five markets, with a year-on-year increase of 123%.

As a result of the huge demand for prime assets, prime yields (net initial yields) in the top five markets of Berlin, Hamburg, Frankfurt, Munich and Dusseldorf eased again by 10 basis points compared to the previous quarter.

Fabian Klein, head of Investment, Germany, CBRE, commented: 'We anticipate that there will be sustained high demand for core properties in 2011, and that restricted supply of assets with low risk potential will continue to be a limiting factor for investment activity in Germany. We also expect that prime yields for the core segment will experience a further slight fall.. As a result, investors will once again focus their attention on properties offering more promising investment opportunities.'