Year-end flurry boosts German property volumes

Thanks to a year-end flurry of deals, total 2012 investment volumes in Germany came out far higher than predicted, says BNP Paribas Real Estate.

Total real estate investment volumes in Germany amounted to €25.6 bn in 2012, up 9% on the year-earlier period, according to figures from the adviser.

The investment tally is the highest since the boom years of 2006 and 2007 and was fuelled by a year-end flurry of billion-euro portfolio and single-asset deals. Notable transactions include the sale in late December of state-owned residential company TLG Immobilien to Lone Star for €1.1 bn and the disposal of the Karstadt department store portfolio (including the KaDeWe store in Berlin) to Signa for a similar amount. Major single-asset office deals include the sale of the Frankfurter Welle for close to €400 mln, the Kranzler Eck in Berlin (for around €375 mln) and the Residenz Post in Munich for over €300 mln.

‘Although we had forecast a good result well beyond the €20 bn mark, the year-end spurt was far higher than expected, especially against the background of the economic slowdown and still unresolved problems in the eurozone,’ managing director Piotr Bienkowski of BNP Paribas Real Estate in Germany said.

Foreign investors boosted their share of the transaction total to 39.5%, underscoring the strong appeal of German real estate in economically turbulent times, head of investment Sven Stricker said.

Single-asset deals accounted for around 77% or €19.7 bn of the total, corresponding to the year-earlier figure. Portfolio deals increased their share to 23% or €5.9 bn of the total. Offices were the most sought-after asset, taking 42% of total investment, followed by retail (30.5%) and logistics (7%).

The Big Six cities (Berlin, Dusseldorf, Frankfurt, Hamburg, Cologne and Muinich) recorded a total transaction volume of €14.3 bn, beating the 2011 figure by 17%.

Thanks to continued strong demand, prime office yields have tightened further and are now lowest in Munich (4.6%), followed by Hamburg (4.7%), Frankfurt (4.75%), Berlin (4.8%) and Dusseldorf (4.9%). Cologne is the only city to record yields above the 5% mark.

Prime yields for high street retail assets have also dropped and now average around 4.20% in the Big Six cities. Prime yields for shopping centres, the most popular retail class, currently hover around 4.75%.

Later this week PropertyEU publishes its first Deal Watch newsletter with a provisional round-up of the largest European property transactions of 2012.