According to Savills, commercial transaction volumes were EUR 59 billion in Germany in 2020, just 6% below the five-year average.
Because many investors are unlikely to meet their procurement goals last year and may be willing to receive even more money this year for stable revenues, the foreign real estate adviser anticipates that volumes will exceed EUR 50 billion once again by 2021. Apartment
Marcus Lemli, CEO Germany and Head of Investment Europe at Savills, said: "In light of many feelings of investment strain and increasing risks in the occupiers' markets, we expect that individual investors' strategies will become more diversified beyond the lowest common denominator of logistics, residential and AAA offices.
"For instance, many investors are likely to perceive a decrease in B-locations' equity value as a countercyclical opportunity for purchases, while others would consider the same properties to have excessive long-term risk and be operating at the seller's side. This year's active vendors and consumers are likely to guarantee a high volume of transactions."
A great deal of demand is focused on the assets that deliver stable cash flows throughout and after the crisis. Which involves logistics facilities and offices for public sector tenants or other employees with strict covenants and niche resources, such as data centres. Over the past year, yields in the aforementioned sectors have continued to harden. At the end of 2020, the primary production for logistics assets amounted to 3.5%, 20 basis points below the comparable figure in 2019.
In the last year, the prime yield for supermarkets also grew by 20, at 4.9 percent by the end of December. Prime returns for offices in the top six cities in Germany averaged 2.8 percent (-3 basis points compared with Q4 19). Returns for shopping centers and retail sites, respectively, was reduced by 70 basis points and 35 basis points.
"The shift in sector assessment has shown itself in the continued polarization of yield movements," said Savills Germany Associate Research Matti Schenk adding, "We predict that initial yields for core office buildings, logistics and food retail assets will harden further this year. In comparison, yields for non-core offices and highways are likely to be milder."
Last year, partially due to travel restrictions, the proportion of German investors increased. Inland purchasers accounted for approximately 57% of the investment value, the largest share since 2013. Approximately 71% of the international capital came from Europe, followed by approximately 21% from North America and the remainder from the Middle East and Asia. "Investors from outside Europe remain very interested in German commercial property, adds Marcus Lemli. They currently concentrate on investments by fund managers, investment managers and local partners."
The most successful buyer category again was open-ended special funds, accounting for more than 31 percent of the transaction volume. Followed by fund managers and asset managers, who accounted for over 20% of investment. Property companies/REITs were third with approximately 9 percent of the volume of transactions.
Insurance and pension funds have spent considerably more than in 2019 (+EUR1,1 billion/49%). "The fact that insurance firms are far more involved than they were in the past represents a common occurrence in the current phase of the industry. If debt capital is scarcer, investors rich in equities gain," says Lemli.