Studies confirm Germany as ‘most attractive market’

Two recent studies seem to confirm the increasing role Germany is playing when it comes to institutional investors allocating resources to European real estate, and highlight agreement among investors that the German market is now much more accessible than was the case - to any bar really experienced hands - a mere seven or eight years ago. To us at REFIRE, of course, this comes as no surprise since we follow this market so closely, but these studies now practically make it official…(!)

Firstly, property adviser CBRE said results from its most recent 'Real Estate Investor Intentions Survey' found that Germany had surpassed the UK as the most attractive market for property investments.

More than one-third (35%) of those surveyed cited Germany as the most attractive market to invest in in 2013, up by 8 percentage points, compared with 27% in the previous year. The UK was named as the most attractive market by 24%, down from 32%. Whereas London is, for the second consecutive year, by far the most attractive city for investors, CBRE said that, in the case of Germany, no single city dominated the survey.

“Among the Top 10 investment locations, there are as many as four German cities. At 16%, Munich comes second in the ranking, followed by Berlin,” CBRE noted, adding that Hamburg and Frankfurt also were in the Top 10.

Central and Eastern European (CEE) markets were chosen by 14% of investors compared with 19% last year. The majority of investors choosing the CEE region considered Poland to be the most attractive market for purchases, with limited interest in markets elsewhere in the region.

In an unrelated study, Colliers International also found that Germany was "on its way" to becoming the most important real estate market in Europe. Its total transaction volume of €25.4bn for 2012 was 10% higher than in 2011, boosted by major deals in the last quarter, the company's German business said in a statement. In the commercial property segment, however, Germany still ranked behind the UK when it came to transaction volumes, it added.

For 2013, head of investment Ignaz Trombello predicted that transactions would be limited due to a lack of supply. He said he expected transaction volumes to be "well above €20bn", with a stable demand and stable or slightly receding top yields. Not surprisingly given recent trends, he predicted "continued high level of commitment" by foreign investors within the German market.