BNP Paribas Real Estate publishes market figures for 2013
“The end-of-year rally we had anticipated came about and pushed the transaction volume up over the 30 billion euro threshold. Investment in the final three months reached around 11.8 billion euros, producing the best quarterly result of the past six years. The fact that all the main asset classes were able to register a marked increase underlines the broad basis of demand and highlights the great – and indeed expanding – interest shown in German property. In view of the incipient rise in the rate of economic growth, we can expect this year to bring an even better business environment”, says Piotr Bienkowski, CEO of BNP Paribas Real Estate Germany.
Last year brought an increase in both single deals and portfolio transactions. Turnover in the form of single deals climbed by almost 17 percent to 23 billion euros, thus accounting for just under 75 percent of the overall result. Investment in portfolio transactions actually expanded by around one third year-on-year to generate a total of 7.82 billion euros. One reason for this was the strong interest shown by foreign investors, who contributed nearly 45 percent to the portfolio turnover total. Another highly notable factor is the extent of the renewed activity in the field of sizeable office portfolio sales which have been scarce in recent years. This market segment attracted all of about 2.6 billion euros, more than five times the prior-year figure. This, too, can be regarded as evidence of the positive view taken by both domestic and international investors of the way in which Germany is developing and of their appreciation of the stability it offers in comparison with other countries. Foreign investment came to 33 percent of aggregate turnover, which is somewhat lower that the year before in relative terms.
Well out in front in the asset-class ranking were office properties, which accounted for around 44 percent of the overall result. In second place, just as in 2012, came retail assets, with just short of 29 percent. Investment in logistics complexes increased substantially, to 2.76 billion euros, equivalent to a share of 9 percent. Fourth place was taken by hotels, which also registered a much larger transaction volume than the year before and achieved a share of 5.5 percent.
“The buoyant scale of investment benefited in particular Germany's Big Six locations (Berlin, Cologne, Düsseldorf, Frankfurt, Hamburg and Munich). Together, they generated 18 billion euros, representing year-on-year growth of more than 26 percent. With the exception of Berlin, which – with turnover of 3.59 billion euros – suffered a slight decline of 7 percent compared with its record performance in 2012, all the cities registered marked increases. This shows that the top German locations continue to attract the favour of most investors”, emphasises Sven Stricker, Managing Director and Head of Investment at BNP Paribas Real Estate GmbH. The clear-cut leader was Munich with a total of 4.74 billion euros (+31 %). It was followed by Frankfurt with 3.89 billion euros (+21 %) and Berlin. With investment totalling 2.68 billion euros, Hamburg also exhibited a year-on-year increase, with growth of 24 percent. The most dynamic rise was that achieved by the Düsseldorf investment market where turnover – at 2.08 billion euros – was 150 percent higher than in 2012. Also gratifying to note is the fact that Cologne once again managed to pass the one-billion mark by generating the excellent total turnover of 1.03 billion (+82 %).
In view of the strong demand, office yields have eased further in almost all locations. Munich remains the most expensive city, with a net initial yield of 4.40 percent. It is followed by Hamburg and Frankfurt, each with 4.65 percent. Yields also continued to decline in Berlin (4.70 %) and Düsseldorf (4.75 %), while Cologne, too, has now dropped below the 5 percent level, posting a prime yield of 4.85 percent.
“With its strong transaction volume, Germany has impressively underlined its significance as a major investment location and especially as one which stands out in any international comparison as stable and secure. Against the backdrop of a brightening economy, interest on the part of investors is set to continue unabated this year. One important reason is that there are still many investors with robust equity resources. So from today's viewpoint, all the signs suggest that 2014 should be another very good investment year, with turnover again well above average”, says Piotr Bienkowski, summing up the present outlook.