TOP 7 OFFICE MARKETS Q1/2019
DYNAMIC START TO THE YEAR
- Volume of take-up at the end of the 1st quarter totalled some 858,000 m², almost equal to the prior year’s figure (+1 %): “With the volume of empty space shrinking and rents rising, the first quarter of 2019 is a continuation of what has been happening in recent years”, comments Guido Nabben, spokesperson for GPP.
- Demand remained high, but lack of suitable office space limited take-up.
- Take-up by coworking space providers remained stable andaccounted for 49,334 m².
- The average vacancy rates in Germany’s top 7 cities dropped again to 3.2 %.
- Due to shortage of available space, office rents increased in most locations. In terms of premium rents, rates were highest in Frankfurt(€43.40/m²/month) and Munich (€35.00/m²/month), while rates rose most steeply in Berlin (+10 % to €34.00/m²/month). The sharpest rises inaverage rents were noted in Cologne (+16 %) and Berlin (+15 %), Frankfurt being the only top 7 city with a slight fall in average rents (-3 %). With an average rent of €23.00/m²/month, Berlin is the front-runner ahead of Frankfurt (€19.90/m²/month) and Munich (€18.50/m²/month).
- For 2019/2020, the estimated volume of completion is at 2.90m m² in 257 developments.
- “We take an optimistic view of how the market for commercial property lets will develop. We can expect to see more buildings completed in 2019 and 2020 than in the recent past, although much of the space has been let off plan”, forecasts Nabben.
TOP 7 INVESTMENT MARKETS Q1/2019
SLUGGISH START TO THE NEW YEAR
- After the first three months of 2019, the volume of investment transactions in commercial properties (excepting buy-to-let residential) in Germany’s top 7 cities fell by 32 % to €4.85bn.
- Of all top 7 cities, only Berlin posted growth. The transaction volume surged by an impressive 149 % to €2.1bn – a new first-quarter record for Germany’s capital city.
- “The rather slow start to this year may be attributed to an excellent trade in investment properties in 2018 and the ensuing shortage of real estate on the market”, summarizes GPP-spokesperson Guido Nabben.
- International investors accounted for 37 % of the volume traded, which was on a par with the previous year; but they spent less than in the same quarter 2018 (-32 % to €1.8bn). Stuttgart (70 %) and Munich (53%) recorded the highest share of international buyers.
- Forward deals accounted for 12 % of the total volume. Offices remained the most sought-after asset class and accounted for 75 % of the transaction volume.
- The share of transactions in the central business districts (CBDs) remained stable in comparison to the first quarter 2018 (20 %).
- Year on year, the top 7 prime yields on office properties stabilized at a low 3.03 %. Hamburg noted the lowest prime yield (2.80 %), Stuttgart the highest (3.30 %).
- “There is still a great deal of cash that urgently needs to be invested. Borrowing terms for purchases of real estate remain favourable in 2019 following the European Central Bank’s recent announcement. Therefore we are confident that the final result will be good this year, although well below that for 2018”, forecasts Nabben.
German Property Partners (GPP) is a nationwide network of property service providers in the commercial segment which are leaders in their local markets. These comprise Grossmann & Berger, Anteon Immobilien, GREIF & CONTZEN Immobilien, blackolive and E & G Real Estate. The network’s greatest strengths are in-depth knowledge of local markets, the long service history of the partner companies’ real estate consultants and the strong personal commitment of the owners and directors. The network is represented by offices in Hamburg, Berlin, Düsseldorf, Cologne | Bonn, Frankfurt, Stuttgart and Munich. It offers services in matters of property investment and commercial lets, in the property management, valuation and research business, plus banking, financial and administrative services. Currently more than 400 property experts act for German Property Partners. Nationwide, the network brokered lets in 2018 involving 556,200 m² of commercial property and managed transactions totaling €2.27bn.
Source : GPP