Property EU Investment Briefing Germany
 

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Property EU Investment Briefing Germany Presentation Transcript

  • 1. Office and Investment Market Germany Analysis and forecast PropertyEU Investment Briefing Germany London, 19 Sep 2013
  • 2. Germany in European comparison
  • 3. 5 Germany – Key facts and leading commercial real estate markets 2012 Trend 2013 Population (31 December) 80.5 million GDP growth 0.7% Working population 41.6 million Unemployment rate 6.8 % Inflation rate +2.0% Government surplus as a percentage of the GDP 0.2% General government debt as a percentage of GDP 81.9% German top 6 real estate markets - Berlin - Düsseldorf - Frankfurt - Hamburg - Munich - Stuttgart
  • 4. 6 Office stock (in million m²) in selected European markets – German top 6 cities • No dominating office market in Germany • Munich region no. 3 in EMEA • 3 German office markets in the Top 10 … … … …
  • 5. 7 Office take-up (in 1,000 m²) Selected European markets • Germany‘s office tenants exercise restraint during H1 • All in all total take-up result for H1 2013: 1.25 million m²
  • 6. 8 Prime office rents in comparison (in EUR/m²) Selected European markets • Low rent level compared with leading EMEA markets
  • 7. 9 Commercial transaction volume (in million €) Selected European markets • No single top city due to the federal structure
  • 8. 10 CBD prime office yields (in %) Selected European markets • Office properties in German top cities are in keen demand • On the other hand there‘s a lack of especially new buildings in top locations • Result = decreasing yields
  • 9. German office market – an overview
  • 10. 12 Take-up of office space (in 1,000 m²) Top 6 cities in total Lehman • Germany’s office tenants exercise restraint during first half of year Backup take-up
  • 11. 13 Vacancy rate (in %) Top 6 cities in comparison • Positive net absorption – office vacancy rate continues to decline slightly • Conversions from office into residential, hotel, student housings: > 500,000 m² from 2010 to 2012 • Continuing low completion rates due to banks not willing to finance speculative constructions
  • 12. 14 Completions of office properties in Germany (in 1,000s of m²) - Top 6 cities in total • Almost two-thirds of the developments (2.6 mn m²) have already been leased out • (Possible) consequences: • Lack of new office spaces • Lack of investment opportunities which result in increasing purchase prices for prime properties • Declining vacancy rates • Rising rent prices
  • 13. 15 Prime office rents (in EUR/m²) German top 6 cities in comparison • Tendentially rising prime office rents • Top locations still in keen demand e.g. by consulting firms, law firms, financial sector etc. • Nevertheless, top segment is a comparatively small segment (3% of take-up)
  • 14. Commercial investment market Germany 16
  • 15. 17 Commercial transaction volume in comparison (in billion euros) 17,5 € 13,1 € 6,4 € 3,4 € 3,3 € 1,3 € 1,0 € 2,3 € 1,1 € 2013 UK Germany France Sweden Russia The Netherlands Poland Italy Spain 2012 H1 2013 Sources: Colliers International, RCA • Germany’s commercial real estate market is No. 2 in Europe • Domestic as well as cross border investors place a lot of trust in the German market (“safe haven”)
  • 16. 18 Commercial transaction volume (in billion euros) – Germany in total • Transaction volume in H1 39% higher than previous year’s level • More than half of investment volume in the top 6 cities • Domestic investors: 73% (€ 9.57 bn) • Cross border investors: 27% (€ 3.49 bn) Deals
  • 17. 19 Transaction volume in the top 6 cities Market share: international buyers • 3 cities benefited from big investment transactions: • Berlin  Hallen am Borsigturm  Lindencorso  K195 (Prime Portfolio) • Düsseldorf  Kö-Bogen • Frankfurt  T11, One Goetheplaza (Prime Portfolio)  Skyper  Gallileo Deals
  • 18. 20 Commercial transaction volume in millions of Euro by property type in H1 2013 • Two-tier market: • Top 6 cities: office • Outside top 6 cities: retail and industrial Deals
  • 19. 21 Prime yields for office properties Top 6 cities (gross initial yields) • First-rate office properties in prime locations are hard to come by • Result = they have become even more expensive in some cases • Stable market conditions with a lack of new office properties
  • 20. 23 Foreign Capital Flow into Germany (H1 2013) (Market share international buyers: 27%) Other countries: 180,533,939 € (=5.2%) Investment volume H1 2013: 3.492 billion euros AMERICAS in % of total USA 638,847,392 € 18.3% Canada 630,790,157 € 18.1% In total 1,269,637,550 € 36% EMEA in % of total Israel 439,642,000 € 12.6% Great Britain 307,592,075 € 8.8% Austria 194,445,020 € 5.6% Switzerland 177,506,624 € 5.1% Italy 151,900,000 € 4.3% Angola 108,500,000 € 3.1% Luxembourg 105,679,000 € 3.0% France 76,275,500 € 2.2% EMEA others 162,977,850 € 4.7% In total 1,724,518,069 € 49% APAC in % of total South Korea 288,610,000 € 8.3% Australia 18,987,500 € 0.5% APAC others 9,765,000 € 0.3% In total 317,362,500 € 9.1%
  • 21. 24 Buyers and sellers by sectors in million of euros – Germany in total • Real estate funds and private investors with highest investment volume • Special funds (SPV), which were involved in a number of transactions, often acted on behalf of state and pension funds • Continuing attractiveness of German commercial real estate particularly for security-oriented investors Deals
  • 22. 25 Reasons to invest in Germany (“Safe haven”) - One of the world’s leading economies with a continuing positive business climate - Decentralized / diversified real estate market with at least 6 top locations - Diversified product availability – office, retail, industrial, residential - Price stability, low yield volatility - Market liquidity leads to easy market entry and exit - Attractive risk-adjusted returns (yield spread government bonds / prime office yields) - High level of economic and political stability lead to low external risks
  • 23. 35 Outlook - Office market to pick up – but only after a delay: take-up of 2.5-2.6 million m² forecasted – an average year - Peak of the current market cycle for prime rents almost reached - Lateral trend in terms of vacancy rates - Deal pipeline on the commercial investment market is still well stocked for the last months of 2013 - Persistently low interest rates and uninterrupted excess demand for core real estate - A Germany-wide transaction volume of more than 25 billion Euros is realistic Reasons
  • 24. 49 Contact information Ignaz Trombello MRICS Head of Investment Germany Managing Partner Colliers International Düsseldorf DIR +4921186206250 EMAIL ignaz.trombello@colliers.com Andreas Trumpp Head of Research Germany DIR +4989540411040 MOB + 4915155110942 EMAIL andreas.trumpp@colliers.com