German resi portfolio volumes hit 5-year high in 2012

German residential portfolio transaction volumes hit €10.45 bn in 2012, the highest level since 2007, according to Savills.

The 2012 volume marked a 46% year-on-year increase.

Savills said that 2012 was characterised by large transactions of above 10,000 units - a trend that was last at the forefront of the market in 2008.

Five portfolios in this size bracket changed ownership in 2012 including properties belonging to LBBW, BayernLB (DKB Immobilien) and the federally-owned TLG. Consequently, the number of transacted units in this period increased by 65% to almost 200,000 although the actual number of transactions decreased to 159, from 207 in 2011.

Matthias Pink, head of research at Savills Germany: 'Large-scale deals contributed significantly to the high transaction volume recorded in 2012, however all size categories saw a year-on-year increase except the smallest, of less than 800 units. As a result of this the average deal size more than doubled compared with 2011.'

According to Savills data, German investors were behind 75% of residential portfolio transactions in 2012 but the firm expects the comparatively low share of foreign investors to increase in 2013 due to rising levels of interest from private equity funds.

Savills research shows that listed real estate companies were by far the most active group of investors into German residential packages in 2012, investing over €4 bn. Insurance and pension funds followed with almost €1.5 bn of direct investments and another €700 mln invested through special funds. Private equity funds complete the top three investor groups of 2012, having spent over €1.2 bn on residential packages in this period.

While there are fewer portfolio sales with more than 10,000 units pending in 2013 compared with 2012 (for example GBW with approximately 33,000 units), Savills expects to see a marked increase in the number of transactions involving assets perceived as higher risk due to potential refinancing difficulties for a number of loans which are due to mature this year. This combined with rising demand and the potential launch of several IPOs this year, leads the firm to predict another above-average investment volume in the sector for 2013.