Germany has so far been holding up as the most stable market in Europe, according to Daniel Piazolo, managing director of IPD Germany. Speaking on a panel at the Mipim trade fair in Cannes last week, Piazolo said he would be surprised if Germany saw the big drop in capital values seen recently in Ireland and the UK. ‘We never had a big party, so we won't have a big hangover.’
Germany has so far been holding up as the most stable market in Europe, according to Daniel Piazolo, managing director of IPD Germany. Speaking on a panel at the Mipim trade fair in Cannes last week, Piazolo said he would be surprised if Germany saw the big drop in capital values seen recently in Ireland and the UK. ‘We never had a big party, so we won't have a big hangover.’
IPD Germany is due to publish its All Property capital values for 2008 on April 2. Earlier this year, IPD reported that All Property capital values in Ireland slid 37.2% in 2008, while total returns on investment in Irish commercial property fell 34.2%. Meanwhile All Property UK commercial property capital values fell by a record 14.4% over the fourth quarter last year, generating an annual decline of 26.4%. Total returns fell by 13.0% over the final quarter and by 22.1% over the full year.
While some markets such as Frankfurt are being hit hard by the downturn due to the strong representation of banks and financial services companies, overall rents in Germany have so far remained stable, said Etienne Prongue, director of international investment at Atisreal. Pointing to the UK, which has recently seen some aggressive repricing after earlier witnessing significant yield compression, he noted that Germany remains a defensive market. ‘For 15 years since reunification, Frankfurt and Munich have seen virtually no rental movement at all. Germany is boring and was boring. It will never be a sexy market.’
