Cushman & Wakefield, one of the world's largest property consultancies, has recorded a transaction volume of €16.43 billion for the commercial investment market in Germany from January to September 2024. Compared to the same period last year, this represents an increase in turnover of around 11 per cent.
Simon Jeschioro, Head of Capital Markets & Investment Advisory Germany at Cushman & Wakefield, explains: ‘Although market momentum is still sluggish, the stabilisation of prices and yields in the core segment appears to be gradually stabilising. This is a development that international investors are now also increasingly observing and are once again viewing Germany as a highly attractive investment location in their investment strategies. As the financing environment continues to stabilise and bond yields fall, international players in particular will be looking to enter the market.
Helge Zahrnt, Head of Research & Insight Germany at Cushman & Wakefield, adds: ‘It was foreseeable that the two interest rate cuts by the European Central Bank would not lead to a significant increase in transaction activity in the short term. However, if inflation remains stable over the long term, further interest rate cuts will provide more stability and planning certainty with regard to pricing and purchase decisions on the property market in the medium term’.
Transaction volume: the trough appears to have been passed
- In a year-on-year comparison, the commercial investment market has now recorded growth in turnover for three quarters in a row. The decline in transaction turnover from the previous year appears to have been overcome. The significant increase in individual transactions in the three-digit million-euro range is striking.
- The transaction volume of €5.28 billion in Q3 2024 is also in line with the first two quarters (Q1 2024: €5.61 billion; Q2: €5.55 billion).
- However, the 5-year average for the respective three quarters is EUR 34.49 billion and was still significantly undercut (-52%).
- International investors, including institutional investors, are once again showing increased interest in the German market. Overall, the share of international investors (40 per cent and a volume of €6.49 billion) reached its highest level since the fourth quarter of 2022. More than half of the large-volume transactions (over €100 million) were carried out by foreign buyers.
- Significant increase in transaction volume within the top 7 markets: At a total of €8.64 billion, around 51% more was invested between the beginning of the year and the end of September than in the same period last year. The share of the total German transaction volume is 53 per cent, compared to 39 per cent in the previous year.
Yields: Sideways movement in prime yields
- The stabilisation of prices and yields continued over the course of the year. With the exception of an increase in yields for first-class office properties in the 2nd quarter, prime yields for commercial properties in prime locations and logistics properties have been stable since the beginning of the year.
- At the end of Q3 2024, the average prime office yield for core properties in the top 7 markets was 4.91 per cent. Compared to the 3rd quarter of 2023, the average prime yield increased by 42 basis points; there was no change compared to the 2nd quarter of 2024.
- The lowest prime office yields are currently being achieved in Munich and Berlin at 4.60 per cent and 4.80 per cent respectively. Düsseldorf and Cologne have the highest yields at 5.10 per cent each.
- As in the previous quarter, the average prime yield for city centre commercial properties in the top 7 markets was 4.46% at the end of the third quarter of 2024. In the 3rd quarter of the previous year, the average prime yield was 4.19 per cent.
- The average prime yield for core logistics properties was also unchanged at 4.50 per cent in Q3 2024. Compared to the previous year, this is an increase of 20 basis points.
Types of use: office properties increase turnover for the first time in a long time
- Logistics and industrial properties continued to account for the highest transaction volume in the first three quarters with a total of €4.02 billion (24 per cent share of turnover). The previous year's result was thus exceeded by around 12 per cent. The 80 per cent acquisition of seven German logistics properties from the Burstone Group by the US company Blackstone in the third quarter is the largest portfolio sale at just over EUR 330 million.
- For the first time since the second quarter of 2022 and the interest rate turnaround initiated by the European Central Bank at that time, the transaction volume for office properties increased again year-on-year. A total of €3.65 billion was transacted in the first nine months of the year, around 11 per cent more than a year earlier. This means that office properties accounted for 22 per cent of the total transaction volume. At 270 million euros, the sale of the ‘Rossio’ in Cologne in the third quarter is one of the largest office transactions of the year.
- With a share of turnover of just under 22 per cent and a transaction volume of €3.58 billion, retail properties are almost on a par with office properties. At €1.0 billion, the sale of Berlin's KaDeWe by the insolvent Signa Holding to the Thai Central Group in the 1st quarter continued to provide the main boost to turnover.
- The transaction volume of hotel properties totalled around €940 million in the first three quarters and significantly exceeded the previous year's result (Q1-3 2023: €440 million). Worth mentioning here is the portfolio acquisition by BC Partners, which acquired a total of 30 Ibis hotels from Accor for just over EUR 100 million.
