Despite large-scale investment interest in German property, domestic buyers dominate the German market, according to new information released by real estate advisor Savills. Over 89,000 residential units have changed hands in the first two quarters of 2013.
Karsten Nemecek, Managing Director of Corporate Finance – Valuation at Savills, remarked: ‘compared to 2012 the residential portfolio market gained further ground: Firstly, significantly more deals were closed and secondly a considerably higher number of buyers appeared in the market than had been the case the previous year.’
However, while the number of transactions is up, the number of large transactions is down: in the first two quarters of 2012, Savills recorded four transactions of over 20, 000 units each. In the first two quarters of 2013, only one transaction that size was recorded. The number of transactions of over 1,000 residential units each nearly doubled, rising from nine in the first half of 2012 to 16 in the first half of 2013.
The number of property developments involved in transactions also increased significantly, with 13 developments sold to an end investor in the first half of 2013. Investment in this sector totalled over €450m. Over half of these development-based transactions are taking place in Berlin, Dusseldorf and Munich, following the trend for both investment and retail activity to be hotter in Germany’s major metropolitan areas.
In the past year, German buyers have dominated the German market, despite strong interest from overseas investors, particularly Asian ones. Domestic buyers’ share of transaction volume was about 75% in 2012 and rose slightly in 2013 to about 80%, while the majority of the remaining 19% was attributable to investors from other European countries. Part of the reason for this is thought to be higher prices; Mathias Pinks, responsible for research at Savills Germany, stated that ‘rising prices inherently come along with dropping numbers of potential buyers,’ pointing to the 20% year-in-year rise in per-unit price, which is now at an average €63,000.
The report from Savills stated that transaction activity is likely to remain buoyant throughout the second half of 2013. Demand remains strong and several portfolios of over €100m are either in the market or expected to be within the near future. Investment volume is likely to come in slightly lower than the 2012 figure, due to the reduced number of very large deals; nevertheless the market is thriving, with smaller-sized deals taking place at a greater rate than before. In any case the difference is likely to be significant but relatively minor: 2012’s total investment volume was €10.45bn while 2013’s is forecast to be about €10bn.
‘For the foreseeable future reasonable alternatives to real estate investments do not seem to be available to risk-averse investors and German residential property will remain a good choice despite higher prices,’ remarked Mr. Nemecek, pointing to the ‘safe haven’ status of property investment as a possible reason for increased transaction numbers. He suggested further than demand will continue strong beyond 2013, and that investors with intentions to sell their portfolios should take advantage of the current market environment, which combines strong demand with high prices.
Original Article – http://www.property-abroad.com/germany/news-story/residential-property-in-germany-experiences-greater-volumes-19317748/