The overall transaction volume last month totalled almost €14.0 billion, Savills data shows. In total, around €43.4 billion of commercial property has changed hands over the year to date, representing a decrease of 2% compared with the corresponding period last year.
The transaction volume in the residential investment market has totalled €12 billion, which is also broadly in line with last year (-3% compared with Q1-Q3 18). While a reversal in interest rate policy now appears unlikely to be a factor for several years, a potential economic downturn may become an increasingly important issue for investors.
While the German economy remains in an industrial recession, this is scarcely perceptible in the real estate markets and not at all discernible in the major cities at present. Should this recession continue for a prolonged period, however, the downturn will spread to other sectors of the economy.
Companies are then likely to become somewhat more hesitant when it comes to leasing office space. Whether this materialises depends not least on whether the US and China settle their trade conflict. As far as demand in the real estate investment markets is concerned, however, the impact of the deferral of interest rate hikes can be expected to outweigh that of the economic downturn, with transaction volumes remaining at a very high level beyond the current year.
The commercial transaction volume is likely to increase to €65 billion by the end of the year, according to Savills, which would be another investment record. In the residential investment market, the fundamentals remain largely unchanged.
In fact, in view of the continued growth in the number of households and the further decrease in building permits, the supply shortage in many regions could even increase. Apartment owners can, therefore, expect income and capital values to remain stable in many locations.
Hence, investor demand is likely to remain strong. Nevertheless, there remains a growing uncertainty among investors with regard to the regulatory measures that have already been passed and those that remain on the table, particularly in respect of Berlin. The current discussion surrounding the rental cap makes it difficult for permissible rental levels to be estimated at present, which may well deter many investors from acquiring further apartments in the German capital for the time being.
Events in the German real estate investment market during the year to date have been dominated by a number of major transactions. There have been five portfolio transactions with a volume above €1 billion this year, compared with only three in 2018.
Furthermore, there have been four individual transactions with a volume of at least €500 million so far. Both of these are new records for the first three quarters of a year and a reflection of the sustained extremely high pressure on investors to invest capital.