Secondary German locations are outperforming the country's prime cities in terms of office rental increases, a new report has found.
Secondary German locations are outperforming the country's prime cities in terms of office rental increases, a new report has found.
The phenomenon can be traced to the growth in investor interest in these secondary locations, according to the analysis by Corpus Sireo, in conjunction with research organisation empirica.
The 'Germany 21 - Regional office market index' looks at the seven largest cities and 14 other locations. Between end-2013 and end-2014, rents rose by 3% to an average €8.10 per m2 in the secondary markets. In the top seven cities of Germany the increase was a more modest 1.8% to €13.00 per m2.
Franz Krewel, managing director at Corpus Sireo Asset Management Commercial, said: 'New players or investors who are already active in this country continue to appreciate real estate in Germany as a safe bet. Due to the lack of core properties and the high level of prices, it is becoming more and more difficult to achieve adequate yields.
'Core properties at market entrance in top locations are usually sought after and expensive. However, rents are not increasing to the same extent. This leads to declining yields relating to the investment capital. This is the reason why more and more investors are now looking to secondary cities. At the same time, this is not yet a mass market.'
The complete report “Germany 21: Regional office market index” can be downloaded free of charge from www.corpussireo.com/downloads
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