Cushman & Wakefield, one of the world's largest real estate consultancies, has analysed developments on the investment markets in Berlin, Düsseldorf, Hamburg, Frankfurt and Munich in the third quarter and summarised the parameters of transaction volumes and yields below.
BERLIN
Uncertainty and restraint characterise the first nine months of the year on the Berlin property investment market
Clemens von Arnim, Head of Capital Markets Berlin at Cushman & Wakefield, comments: ‘The Berlin investment market is currently strongly characterised by sales from the environment of the insolvent SIGNA, such as those of KaDeWe, Passauer Strasse 1 and Femina-Palast. Family offices and opportunistic value-add investors are particularly active. The latter have very high yield requirements that are currently not meeting the desired supply of distressed sales, which is not to be expected due to the generally positive view of Berlin.’
Transaction volume: 3rd quarter with 530 million euros
- Despite the major KaDeWe transaction in the 2nd quarter, the transaction volume of €2.44bn up to the end of September is only around half the 10-year average for the first nine months of each year.
- With the exception of the ‘Glance’ and ‘Passauer Strasse 1’ property developments, there were no sales in the office sector in the 3rd quarter.
- Logistics and industrial properties accounted for 155 million euros and hotel properties for 100 million euros.
44 per cent of the transaction volume was attributable to the Opportunistic risk class, 10 per cent to Value-Add. There were no core transactions at all.
Yields: Stable yields also expected until the end of the year
- The phase of rising prime yields over the past two years has come to an end for all types of utilisation. The second reduction in the key interest rate and the constant to slightly falling long-term bond yields support this development.
- At the end of the 3rd quarter, the prime yield for office properties was 4.80 per cent, for city centre commercial properties 4.35 per cent and for logistics properties 4.5 per cent.
DUESSELDORF
Already more transaction volume than in 2023 as a whole, office properties again with highest turnover
Simon Jeschioro, Head of Capital Markets & Investment Advisory Germany at Cushman & Wakefield, comments: ‘Although office properties were traded more frequently again, sales were primarily limited to value-add and opportunistic properties. Risk-averse institutional investors continue to hold back, partly due to a lack of product availability. The further decline in interest rates should provide more planning security for buyers in the medium term.’
Transaction volume: investment market with significant increase in turnover
- The commercial investment market in Düsseldorf and the extended logistics market area achieved a transaction volume of €775 million in the first three quarters of 2024. This is almost 33 per cent more than a year earlier. At around EUR 140 million, the 3rd quarter is the weakest of the year so far in terms of turnover.
- Despite the still subdued market dynamics, the overall result of EUR 665 million from the previous year has already been exceeded. This was due in particular to two major transactions, each worth more than EUR 100 million, including B&L's acquisition of a 35% stake in the Centrum Group's mixed-use property ‘KII’ in Schadowstrasse.
- The volume of office transactions increased again and totaled €250 million in the first three quarters of 2024, up 32% on the same period of the previous year. Its share of the total transaction volume for the year to date stood at 32 per cent at the end of the 3rd quarter, the highest figure since the 4th quarter of 2022.
- Retail and logistics industrial properties accounted for 17 and 14 per cent respectively.
Yields: Stable prime yields expected until the end of the year
- Following a slight increase in prime office yields in the 2nd quarter (+10 basis points), price stability and a bottoming out of yields are emerging for all types of use.
- The prime yield for core office properties currently stands at 5.10 per cent (+35 basis points com-pared to the previous year); for logistics properties at 4.50 per cent (+20 basis points) and for commercial properties at 4.45 per cent (+25 basis points).
FRANKFURT
Total transaction volume of the previous year on the Frankfurt commercial property market already exceeded after the 3rd quarter
Michael Fleck, Head of Capital Markets Frankfurt and Central Region at Cushman & Wakefield, comments: ‘The turnover result of commercial property transactions in the first three quarters of 2024 is the second lowest in over ten years. Nevertheless, the transaction volume for 2023 as a whole has al-ready been exceeded. This and a much more positive mood in the market are the reason for the confidence in a slow but steady recovery of the Frankfurt investment market.’
Transaction volume: office properties account for half of the transaction volume
- Turnover of around €1.34 billion was recorded for the Frankfurt commercial investment market in the first three quarters of 2024. This exceeds the previous year's result by 135%. The 10-year and 5-year averages were both missed by around 60 per cent. The sales result for the third quarter totaled EUR 565 million and remained stable compared to the second quarter (EUR 560 million).
- Office properties have accounted for 51 per cent of transactions in the year to date with around 680 million euros. Eight transactions with a total volume of around 285 million euros were registered in the 3rd quarter alone. The acquisition of the ‘Canyon’ project development in the banking district by Tite Street Capital made a major contribution to this.
Yield: stabilisation of prime yields quarter-on-quarter
- From September 2023 to September 2024, the prime office yield for core properties in Frankfurt rose by 55 basis points to currently 4.90 per cent.
- The prime yield for city centre commercial properties increased by 35 basis points year-on-year to 4.55%.The prime yield for logistics properties is currently 4.50 per cent, 20 basis points higher than a year ago.
- Cushman & Wakefield expects stable prime yields across all asset classes until the end of the year.
HAMBURG
Cushman & Wakefield: Revival of the Hamburg property investment market is still a long time coming
Simon Jeschioro, Head of Capital Markets Germany at Cushman & Wakefield, comments: ‘The Hamburg property investment market continues to be cautious, particularly in the area of large transactions. Despite a slight increase compared to the previous year, the volume is still far from the long-term average. We expect a noticeable market recovery in mid-2025.’
Transaction volume: major deals remain in short supply
- A transaction volume of €740 million was achieved on the Hamburg commercial investment market in the first nine months of 2024. Although this exceeded the previous year's weak result of €715 million by 3 per cent, the result is still 71 per cent below the five-year average for the first three quarters of around €2.5 billion.
- Investment activity focused on the small to medium purchase price category due to the continued reluctance of institutional investors. 78 per cent of the transaction volume was attributable to properties below €50 million - with a clear focus on core-plus properties. The only exception was the sale of the Nikolai-Quartier project in the city centre submarket from Procom to Bilton for around €100 million.
- The logistics industry was the asset class with the highest turnover in the first three quarters (210 million euros, 28 per cent) - just ahead of office properties (200 million euros, 27 per cent).
Yields: Prime yields remain stable
- Prime yields for first-class office and logistics properties as well as commercial buildings in prime locations remained stable in the third quarter of 2024 compared to the previous quarter, with a slight increase compared to the previous year (office: 4.90 per cent, +50 basis points; commercial buildings and logistics: 4.50 per cent, +20 basis points).
- Cushman & Wakefield expects prime yields to have peaked - the sideways movement is expected to continue until the end of the year.
MUNICH
Cushman & Wakefield: Transaction volume on the Munich property investment market has doubled
Jan Isaakson, Head of Capital Markets Munich at Cushman & Wakefield, comments: ‘Market players are becoming increasingly confident that falling interest rates will bring property back into the focus of institutional investors. This is already reflected in an upturn in transaction activity, which has doubled compared to the previous year. However, it is not yet possible to predict when this confidence will translate into rising prices.’
Transaction volume: strong increase due to several major deals
- A transaction volume of €2.04 billion was achieved on the Munich commercial investment market in the first three quarters of 2024. This corresponds to a doubling (+98 per cent) compared to the same period of the previous year. The 3rd quarter alone accounted for €595 million.
- At 445 million euros (22 per cent), office properties were just ahead of retail properties (20 per cent). Due to a number of high-priced transactions involving mixed-use properties, half of the transaction volume is attributable to the ‘Other’ category.
- In the first nine months of the year, three deals worth over €100 million were registered. The largest transaction continues to be the sale of the ‘Fünf Höfe’ for around 700 million euros in the first quarter.
- Foreign market participants invested around 580 million euros, 63 per cent more than a year earlier (28 per cent share). Core transactions accounted for a good two thirds of the total transaction volume. The three major transactions above the 100 million euro mark are the main reason for this.
Yields: Stability of prime yields prevails
- The level of prime yields in Munich is the lowest among the top 7 German markets. Prime yields for office, logistics and commercial property have been stable since the end of last year. The outlook for the future is also stable.
- The prime yield for office properties is 4.60 per cent (+40 basis points compared to the previous year); logistics properties are currently achieving 4.50 per cent (+20 basis points) and commercial properties 4.10 per cent (+30 basis points).
