German property investment still on target to hit EUR 20b: Colliers

Colliers International is sticking to its prognosis that German real estate investment volumes could reach EUR 20 bn for full-year 2012. Transaction volume on the commercial investment market in Germany stood at some EUR 14.5 bn at the end of the third quarter of 2012.

That works out to a decline of approximately 13% from last year, which was marked by high volumes, despite brisk activity this summer, Colliers said in its latest update on the market.

The property adviser noted the supply of good newly constructed properties, especially office properties, is dwindling due to low completion figures, even though investors are focusing in particular on these products.

One consequence of this is that prime yields are holding steady at a low level. In Munich (4.5%) and Hamburg (4.7%), the two most expensive locations, prime yields were stable, as they also were in Berlin (5%) and Stuttgart (5%). In Düsseldorf (5.2%) and Frankfurt (5.15%), prime yields fell slightly, by 5 base points in each case.

Aside from a few exceptions, investors continue to be reluctant about value-added and opportunistic investments. 'Nonetheless, we expect that the transaction volume of about EUR 20 bn that we had forecast at the start of the year will be achieved based on the sales processes currently in progress,' Andreas Trumpp, Head of Research at Colliers International, Germany said.