Residential investment in Germany reached €4.9 bn in the first quarter of 2014, up on €3.77 bn recorded in Q1 2013, according to new research published by agent Savills.
Residential investment in Germany reached €4.9 bn in the first quarter of 2014, up on €3.77 bn recorded in Q1 2013, according to new research published by agent Savills.
The strong turnover is predominantly the result of three major transactions; Deutsche Annington's purchase of 30,000 units from Vitus Group for €1.4 bn, the Dewag portfolio sale for just below €1 bn and the purchase of the DGAG portfolio by Buwog (Immofinanz Group) for another €900 mln.
These three deals alone generated two thirds of the quarterly turnover.
'The largest transactions anticipated for 2014 have completed in the first quarter, pushing up turnover and consequently we are expecting lower investment volumes in the remaining three quarters,' commented Karsten Nemecek, managing director corporate finance – valuation at Savills Germany. 'Another few packages in the three-digit million range will change ownership over the coming months and are likely to push annual turnover above the €10 bn mark, representing another strong year for the market segment. '
However, the number of billion-euro transactions is likely to remain low and Savills does not expect this year’s volume to reach the very strong level of 2013, when almost €14 bn changed hands.
Due to the two major acquisitions of Deutsche Annington, listed property companies represented the largest group of buyers in Q1 2014, generating an investment volume of circa €2.9 bn, according to the research. Domestic buyers accounted for three quarters of the total transaction volume, while on the sell-side US investors dominated, accounting for a 41% share of the sales volume.
Overall, irrespective of origin, private equity funds represented the largest group of sellers and generated a sales volume of €1.1 bn, with listed property companies and REITs following closely behind at around €1 bn. This suggests that domestic buyers are increasing their ownership of German residential portfolios and that an increasing volume of residential stock is listed and tradable on the stock exchange.
Recent investment activity also points to a growing presence of regional cities, with Kiel (appproximately 15,100 transacted units), Bremen (approximately 10,200 units) and Mönchengladbach (circa 6,100 units) recording the largest volumes. On the other hand, for the first time in a number of years, Berlin was not among the five top locations in terms of transaction volume in Q1 2014.