The high transaction level achieved on the commercial property investment market held steady in the first half of 2018 as well, with an investment volume of around €25.3 billion. This signifies a marginal decline of two percent in comparison with the previous year, which is, however, no indication of a downtrend. Investment activities in the Top 7 locations increased substantially, with €14.6 billion (up 28 percent) being invested than in the first six months of 2017. This is a conclusion drawn in a current analysis prepared by the global commercial real estate services company CBRE.
“Investor interest in the German commercial real estate continues to run at a high level, as shown by the high transaction volume and yield compression,” says Fabian Klein, Head of Investment at CBRE Germany. “International investors have, however, clinched deals less frequently in the first half year: firstly because there are fewer core properties – a segment that is of general interest to them – in the market, and secondly because more German investors, under pressure to invest, are now increasingly prepared to accept the price competition for the objects that are available,” Klein explains. “We anticipate that investment activities will remain lively and estimate a transaction volume around the €50 billion mark for the full year,” Klein predicts.
The German commercial investment market with its polycentric structure and positive economic fundamentals has lost nothing of its attraction. Economic growth and falling unemployment guarantee sustained demand on the part of commercial real estate users.
Land for future commercial property becoming increasingly important
Given the supply shortfall in the investment market, strong user demand for commercial real estate, coupled with the yield opportunities that property development offers, the significance of land transactions is growing in the commercial real estate investment market. The transaction volume soared by 106 percent to €1.3 billion in a year-on-year comparison as a consequence. Investors and developers can benefit from the rising rents that can be commanded from contemporary space upon completion. Despite higher construction prices, especially land for future use as office space in the investment centers was acquired. Land outside the urban areas is also in demand for commercial real estate, mostly for the development of future logistics properties.
Source: CBRE Research,