Take Brexit in the UK, add Trump in the US, a shaky situation in Italy and clouds on the horizon in other EU countries and what do you get? Germany finding its long-established safe haven status hugely burnished.
No wonder foreign investors, from Asia to America to the Middle East, have been piling into German real estate, experts said at the PropertyEU Outlook 2017: Europe and Germany briefing, which was held this week at King & Spalding’s Frankfurt offices.
'These are exciting times for Germany, a lot of money is coming in and there are a lot of transactions,' said Markus Beran, head of origination international investors at Berlin Hyp.
'There is a lot of capital in the market that needs to be invested and, looking at Europe, it is clear that Germany is not the worst place to invest,' said Sven Wortberg, partner, capital transactions and real estate practice at King & Spalding Germany. 'It may be early to say it has profited, but we can certainly say that Germany has not suffered from Brexit.'
At at time when uncertainty and instability are prompting a drive towards safe assets, German real estate is a safe haven within the bigger safe haven that is Germany.
'The market is blooming, there are massive amounts of capital looking for investment,' said Thomas Beyerle, managing director of Catella Property Valuation. 'There is some enthusiasm in Germany that our transaction volumes have overtaken the UK for the first time since 2012 this year, due to the cooling down of the London market after Brexit.'
Transactions volumes in the UK in the first three quarters of the year have been down 46%, the steepest fall in Europe. Most countries have reported declines this year, with only a few notable exceptions such as Spain, Sweden and the Netherlands.
In Germany transaction volumes have fallen by 33% between January and September 2016, due to lack of product and intensifying competition. According to Beyerle, 'this is a healthy sign because it means that investors are paying attention to price and will not overpay. The market is in a very stable situation with no danger of a bubble.'
Another positive, said Daniel Younis, managing director of ING REF Germany, is that 'there are many Asian and Middle Eastern investors coming in but they are all acting with good local asset managers to get the local expertise, which is a new and welcome development.'
Catella predicts the final commercial real estate transaction volume in Germany this year to be around €48 bn, down from €55.2 bn in 2015, but still above the long-term average. A positive sign is that after a slow start activity has picked up and the year is likely to end on a high. In Q1 volumes came to €7.9 bn, in Q2 €10.2 bn and €14.4 bn in Q3, and Catella's prediction is of a further increase to €15.5 bn in the last three months of the year.
