The market at a glance:
Commercial investment market
- The commercial investment market closed the year with a transaction volume of more than €50bn for an unprecedented third year in succession. Although the number of transactions was around 10% lower than in the two previous years, this was more than compensated for by an increase in the average transaction size.
- Logistics/industrial property was the only sector to significantly exceed the previous year’s transaction volume. All other sectors trended broadly in line with the overall market.
- Any records set in 2018 will only come via modestly lower initial yields. The available supply is unlikely to increase and declining price growth will also impose limits on the transaction volume. However, the €50bn threshold is likely to be exceeded once again this year.
Residential investment market
- In the residential investment market, too, rising prices more than offset the decline in the number of units transacted. The annual transaction volume totalled €13.7bn, representing a modest increase on the previous year’s figure.
- One reason for the strong price increases was the further growth in development acquisitions. These were responsible for 28% of the transaction volume over the course of the year. Planned student apartment and micro-apartment properties played a leading role, accounting for investment of more than €1bn for the first time. Investors are increasingly shifting their attention to this niche sector as well as second and third-tier towns and cities, a trend that is likely to continue this year. While development activity continues to increase, the surplus demand is likely to persist.
Source : Savills Germany