H1 DEALS: Germany sees investment recover to peak levels

Germany saw €24.3 bn of investment in commercial real estate in the first six months of 2015, the market's best result since the last peak year of 2007, research by BNP Paribas Real Estate reveals.

The H1 volume was almost 41% more than the level recorded for the same period last year.

Underscoring the red-hot investment activity in Continental Europe's largest market, BNP Paribas Real Estate said that the volume for the first six months of this year was also the second-best ever, with the highest equity capital volume of all time.

Single-asset deals generated a new record of €14.8 bn. Portfolios contributed slightly more than €9.5 bn, which was the third-best first-half performance ever registered. The chief focus in this segment was large retail packages, which accounted for around two-thirds of the result.

These deals included the €2.4 bn sale of most of the Kaufhof properties, the €1 bn acquisition of Corio by Klépierre and the €650 mln purchase of 50% of German shopping centre developer Mfi by Canada Pension Plan Investment Board from Unibail-Rodamco.

Large office portfolios were also in demand and made a considerable contribution to total investment. The largest office transaction involved Orion Capital Managers acquiring the Odin portfolio for €625 mln.

In terms of investment locations Berlin, Cologne, Düsseldorf, Frankfurt, Hamburg and Munich accounted for €12.6 bn, or over half the total investment in H1 2015.

'The upswing in the investment markets looks set to continue in the second half of the year as well. Alongside a large number of single assets already being marketed, the transaction volume will remain at a very high level especially in the portfolio segment, where several substantial packages are already on the market or are being prepared for marketing,' said Piotr Bienkowski, CEO of BNP Paribas Real Estate Germany.

He continued: 'There are no signs of any decline in demand on the part of either domestic or foreign investors. Against this background, yield compression is probably not entirely over yet. External eventualities, especially a possible Grexit, seem unlikely to have an adverse influence since such a scenario has already been largely priced-in by the market players. So for the year as a whole, we expect to see a transaction volume of between €45 and €50 bn.'

For more on the German investment market in H1, see H1 DEALS: residential and retail battle for supremacy in German Top-10 and for the latest investment briefing information, see the digital Outlook edition of PropertyEU Magazine published in July.