German Residential Property Sales Grow In Q1 2014

By Editorial 29 April, 2014

Approximately EUR4.9bn (USD6.78bn) was invested into residential property portfolios in Germany in the first quarter of 2014, up on the EUR3.77bn recorded in Q1 2013, according to London-based real estate services provider Savills.

Karsten Nemecek of Savills Germany said: "The largest transactions anticipated for 2014 have completed in the first quarter pushing up turnover, and consequently we are expecting lower investment volumes in the remaining three quarters. Another few packages in the three-digit million range will change ownership over the coming months and are likely to push annual turnover above the EUR10bn mark, representing another strong year for the market segment."

"However, as the number of billion-euro transactions is likely to remain low we do not expect this year's volume to reach the very strong level in 2013, when almost EUR14bn was transacted. Overall, the parameters for the residential asset class continue to be very favorable with demand for German residential packages continuing to exceed supply this year."

Listed property companies represented the largest group of buyers in Q1 2014, generating an investment volume of about EUR2.9bn. Next was housing associations (with a volume of about EUR900m), next followed by special funds and other fund/asset managers (about EUR100m each). Domestic buyers accounted for three quarters of the total transaction volume, which the firm notes is in line with their share in 2013. On the sell-side US investors dominated, accounting for a 41 percent share of the sales volume, with private equity investors being the major players.

Overall, irrespective of origin, private equity funds represented the largest group of sellers, and generated a sales volume of approximately EUR1.1bn, with listed property companies/Real Estate Investment Trusts (REITs) following closely behind at about EUR1bn. Savills suggests that this data is evidence of two ongoing trends, that domestic buyers are increasing their ownership of German residential portfolios and that an increasing volume of residential stock is listed and tradable on the stock exchange. The firm believes that these trends will continue throughout the year.

A further trend identified by Savills over the past few months is the increasing presence of regional cities in the current residential investment boom, outside Germany's top six metropolitan areas of Berlin, Hamburg, Cologne, Düsseldorf, Frankfurt, and Munich. For example, for the first time in a number of years, in Q1 2014, Berlin was not among the five top locations in terms of transaction volume. Instead Kiel (about 15,100 transacted units), Bremen (approximately 10,200 units) and Mönchengladbach (circa 6,100 units) recorded the largest volumes.

Matthias Pink of Savills Germany commented: "Due to strong investor competition and the resulting rising prices in Germany's top markets, the smaller cities are becoming increasingly attractive to buyers. In addition, the government's initiative to cap rental increases is likely to be restricted primarily to the larger conurbations, offering an additional incentive to invest in smaller cities and medium-sized towns. We expect to see these locations represent a greater market share going forward."

Tags: Investment | Private Equity | Real-estate Investment | Accounting | Real-estate | Germany | Services | Expats |


News Archive