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Reviewing turnover figures
As is our wont at this time of year, REFIRE has now sat down to review turnover figures for the past twelve months and the first quarter with many of the larger property advisory groups, including Jones Lang LaSalle, Aengevelt Immobilien, CBRE and BNP Paribas Real Estate – and all are expecting full year volume in the German market of at least €25bn, after a first quarter surge which carried over from last year’s surprisingly bullish last-quarter spurt.
The wave of buying at the end of last year continued into 2013, underpinned by large portfolio deals. About €4.6bn or 65% comprised single deals in this year’s first quarter, while portfolio sales more than doubled to €2.5bn, said BNPPRE. The largest included Luxembourg-based project developer Freo’s sale of three office and retail assets in Frankfurt and Berlin for an estimated €500m to German listed group IVG, which co-invested with a German pension fund, and Frankfurt-based SEB Asset Management, in the process of liquidating its main open fund (see elsewhere in this issue), selling 11 assets across Germany for €420m to Canadian REIT Dundee International.
“The overall business environment, such as low interest rates, the lack of safe investment alternatives and Germany’s stable economic situation compared to other European countries, support the good development,” said BNPPRE Germany Chairman Piotr Bienkowski. “Against this backdrop, we expect a 2013 investment turnover of at least €25bn,” a figure CBRE and JLL also forecast in their first quarter reports.
The most popular asset class remains office buildings, accounting for 40% of transaction volume invested, followed by retail at 21%, logistics at 12% and hotels at 9%. International investors stepped up activity to around one-third of the total. CBRE Germany Head of Investment Fabian Klein said talks with international investors showed they are, “desperately looking for investment opportunities in the country.” Turnover in all Germany’s biggest six cities - Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne and Munich - rose by 56% to €4.1bn, said BNPPRE. Berlin attracted most at €806m, followed by Munich (€783m), Frankfurt (€778m) and Hamburg (€765m). The biggest increase (of 172%) was experienced by Düsseldorf, while Cologne investment more than doubled.
Yields remained stable over the first three months. According to BNPPRE figures, prime office yields in Munich are currently at 4.6%, 4.7% in Hamburg, 4.75% in Frankfurt, 4.8% in Berlin, 4.9% in Düsseldorf and 5.2% in Cologne. “We cannot exclude the possibility that the continued strong competition for prime assets may lead to slightly falling yields in some locations,” said Bienkowski. “We tend to assume however that the bottom has been reached.”
Another group providing analysis on the first quarter’s figures is consultancy NAI Apollo, who provide the information that German investors were the most dominant buyers and sellers in the quarter, accounting for €4.4bn and €4.2bn of the €7.1bn transaction volume. Interestingly, US and British investors were among net sellers.