German investment transactions defied Covid-19 to reach over €80 bn by volume in 2020.
According to the first figures posted by two of the country’s most active brokers, real estate trading was down on the record numbers of 2019, but only slightly.
BNP Paribas Real Estate calculates a transaction volume of €59.7 bn for commercial, and €21 bn for residential assets (30 units upwards). Only the year 2019 has ever surpassed €80bn in total the firm said.
Colliers International's figure for total commercial real estate traded last year is €59.2 bn which it puts at the third-best result in the last 10 years.
It is now clear that 2020 was characterised by very strong quarters at either end of the year, with high volumes traded in Q1 and Q4, and lower volumes in Q2 and Q3, Q2 being when the pandemic took hold.
Colliers says Q1 saw €17.7 bn traded while both firms logged volume in the the final quarter at or just over €18 bn. BNPRE said the strong showing in Q4 is a sign that investors consider Covid’s effects as temporary.
However, Q1 2021 has begun with most European countries in some form of lockdown again.
‘Most of the high-volume transactions postponed in 2020, particularly in Q2, were finalised over the course of the second half of the year,’ commented Marcus Zorn, the new CEO of BNP Paribas Real Estate Germany who has replaced the departed Piotr Bienkowski.
“In addition to a strong start to the year, lively investment activity at year-end was definitely the driving force behind 2020’s total (commercial) transaction volume of just over €59.7bn, almost 25% over the 10-year average.’
Among many long-running deals making it over the finish line in Q4 were Samsung and Hines’s €630 mln sale of Silver Tower in Frankfurt, bought by Austrian investor Imfarr and Swiss SN owned by the Ketter family. BNPRE and Colliers were the advisers.
Christian Kadel, head of capital markets at Colliers International, confirmed: “After a brief orientation phase, confidence in the German real estate market quickly returned...The number of large transactions over €250 mln alone rose from five in the second quarter to ten in the third and 13 in the fourth quarter.
‘Four deals were registered between October and December that exceeded the half-billion-euro mark. In the previous quarter we only saw one transaction of this size.’
Top trends
Some of the 2020 highlights were:
Office properties remained the top asset class with 41% (€24.7 bn) of commercial market share according to BNPRE
Logistics posted the second best-ever turnover, at almost €8 bn; prime net yields declined to 3.35%
Portfolio deals were on a par with previous years, at €22.1 bn (BNPRE)
Hamburg was the only one of the top 7 cities to increase transaction volume; Berlin was the absolute biggest market (€9 bn of trades)
Despite challenging economic conditions, prime office yields were stable or fell. The lowest are in Berlin and Munich at 2.55% (BNPRE)
Hotels recorded a 7-year low with just under €2.2 bn transacted
2020’s biggest deal by far was Aroundtown’s takeover of the TLG portfolio for €4 bn in Q1
Domestic investors took a higher share at around 60% with foreign investors - mainly European - taking approximately 40%, according to both agents. German buyers were particularly active in the small to medium segment up to €100 mln, said Kadel.
‘Although foreign investors accounted for 62% of portfolio transaction volume, they only generated around 25% with single assets. These results highlight the fact that many foreign investors had limited opportunities to fully review and finalise higher-volume deals because of contact and international travel restrictions during lockdown phases, BNPRE said.
