The year 2022 for German brokers was not so much a year of two halves, as a year of two-thirds, one-third - with the last third giving a foretaste of what much of 2023 may well be about.
While most brokers are putting a good spin on things, confidently predicting a recovery in summer 2023, there's no doubt that the interest rate turnaround last year put the kibosh on broker forecasts for the full year last year, with more than 40% of the total investment volume of €50.6bn (Savills) coming in Q1.
Depending on definition, most of the big brokers' estimates for last year's annual volume range from €54.1bn (BNPPRE), €53bn (Colliers), and Cushman & Wakefield at €51.7bn - coming in at up to 17% below the previous year's figure. That's only about 2% below the 10-year average, but it highlights the heavy weighting in the first quarter and the subsequent collapse.
Colliers CEO Matthias Leube says that a high level of sales negotiations are still ongoing - postponed, perhaps, but not cancelled. Given a lack of clear pricing visibility, potential investors now need a lot of advice on likely future ESG compliance needs, technological change and the new world of work, including working from home.
All asset classes are affected, with all posting lower figures. Office was the best performer at €19.9bn (Savills figures), or €22bn {BNPPRE figures} followed by industrial and logistics (€9.3bn) and retail (€8.3bn). The largest decline was recorded - not surprisingly - by development properties (down 43%) . In healthcare property, turnover was €3.3bn for a share of 6%, with its lower volume being characterised by a chronic shortage of supply.
With 2023 heralding further interest rate rises and tighter financing conditions, investors will be keeping their powder dry until they see stabilisation of interest rates and financing costs. This could see 2023's transaction volume falling as low as €40bn, to judge by some of the gloomy forecasts from the big broker groups. Exit prices, too, are likely to be quite a bit lower than at the beginning of 2022.
