German resi portfolio volumes to hit €11b in 2014: Savills

Residential portfolio transactions in Germany are expected to hit €11 bn in 2014 on the back of a strong first nine months of the year which saw volumes rise 4%, according to the latest research from property adviser Savills.

The volume of transactions reached around €9 bn between January and September. However, despite the 4% increase in volumes, Savills said activity has been constrained by a lack of availability of large portfolios (over 1,000 units).

The number of transacted residential portfolios dropped by 8% from 154 to 141, of which 26 comprised 1,000 units or more. In Q3, there were only five transactions within the category of 1,000 units or more, of which none were over €500 mln.

The two largest transactions in Q3 were the sale of almost 15,000 residential units by Berlinovo to Westgrund and the purchase of the Franconia package by Deutsche Annington.

Karsten Nemecek, managing director of corporate finance & valuation at Savills Germany, said: ‘These figures illustrate that the residential portfolio market has passed its cyclical high and activity has gradually slowed down – albeit on a remarkable level compared to the long-term average.’

Nemecek attributed the weakening transaction activity to a lack of supply and increase in prices. ‘This means that less investment opportunities are available in the German residential market to buyers seeking higher yields, instead we are increasingly seeing investors taking advantage of the current market by putting assets up for sale.’

Private equity funds were the most active vendors, selling around €1.8 bn to date this year, according to Savills. By contrast, private equity acquisitions totalled no more than around €120 mln. REITs were more active as buyers, purchasing almost €5 bn in residential portfolios in Germany as were more traditionally risk averse investors such as housing associations, special funds and family offices.