German housing ‘unscathed’ but Berlin concerns persist

Germany’s residential property market is almost unaffected by the COVID-19 pandemic according to consultant Savills. The firm said that deals worth a total of €15.8bn took place on properties comprising at least 50 apartments during the first three quarters of 2020.

This was a year-on-year increase of 29% and also 29% above the five-year average, the firm said.

The firm added that, subject to further significant restrictions due to COVID-19, the full year’s transaction volume will exceed last year’s €17.2bn and could be the second highest investment volume of all time.

“The fact that the German apartment market has come through the pandemic almost unscathed so far underlines the status of residential property as a safe haven, particularly in Germany,” said Savills Germany’s managing director, corporate finance – valuation, Karsten Nemecek.

“Since demand for low-risk but stable investment opportunities is higher than ever, there is likely to be even more capital seeking product in the market going forward,” he added.

39% more units changing hands

The number of units transacted totalled almost 125,000 in the year to date, 39% higher than the corresponding period last year. However, this is largely due to a strong first quarter, particularly the acquisition of Adler Real Estate by Ado Properties.

Berlin was once again the strongest market for investment with a €2.6 billion transaction volume. Savills said this was, not least, because of Swedish investor Heimstaden Bostad’s purchase of around 3,900 apartments. Nevertheless, there are concerns about the city’s rent control policy.

“The rental cap in the Berlin market continues to cause uncertainty. Some investors are, therefore, steering clear of the city for the time being,” Nemecek said. “However, reduced competition among bidders gives opportunistic investors the chance to increase their market share.”