Market at a glance
A transaction volume (TAV) of €24.9bn in H1 2019 points to continued investment momentum on the German commercial real estate market. High-volume single-asset deals, like Frankfurt office assets Die Welle and T8, and the sale of a 60% share in Siemens-Campus Neuperlach are responsible for the second best H1 result ever recorded in the Big 7. Berlin and Düsseldorf both posted an all-time high.
Roughly 54% of TAV focused on the Big 7 markets, although numerous large-scale deals of over €100m were recorded outside those markets as well. Siemens Campus Erlangen (Q1) accounted for the largest deal signed this year to date. Portfolio deals played a rather insignificant role in H1 despite Austrian listed property company Signa’s acquisition of a 50% share in 57 warehouses for over €1bn. Other major deals, including portfolio deals, are currently in preparation, which will likely affect annual results.
Taking into account the current deal pipeline, we expect TAV to come in close to the previous year’s record result of €60bn. Activity among foreign investors remains high. Office assets continue to generate the highest volume by far. Pressure to invest caused gross prime yields for office assets to drop even further in Munich, Stuttgart and Frankfurt. Logistics assets saw a drop in gross prime yields to 4.35%.
Retail is starting to see a trend reversal with investors beginning to price in falling rents. Prime yields for assets featuring a retail/office mix in prime locations in Stuttgart rose from 3.10% to 3.30% in Q2.