German residential in lead after Q1 investment falls

The German real estate investment market attracted Investments totalling €14.8 billion in the first quarter of 2021 which was 48% down on the corresponding period of 2020 according to a report by CBRE Germany.

However, in early 2020 the market was dominated by takeovers in the order of a billion euros, including Ado Properties’ acquisition of a majority stake of Adler Real Estate and Aroundtown’s bid for TLG Immobilien. Take these deals out of the picture and volumes are only 20% down, said CBRE.

Furthermore, the first quarter 2021 figure is then 5% five percent higher than the level posted in the same period in 2019. And compared to the 10-year average of first quarter figures, the result is only 1% down, the firm said.

First quarters compared (excluding corporate M&A activity).

“Investment activity was very subdued in the first six weeks of the opening quarter due to tight restrictions on international travel and on-site inspections as a result of the extended lockdown and following on from the very dynamic final quarter,” CBRE Germany head of investment Fabian Klein said. “Since mid-February, however, the market has picked up significant momentum again,” he added.

Institutional residential property investment deal volumes took over the lead from office in the first quarter of 2021. While office accounted for €3.2 billion, the multifamily market attracted €5.7 billion.

Offices remain a leading asset class

“Office property will remain a leading asset class on Germany’s real estate investment market. Seeing as employees in most companies aspire to social interaction, and companies are seeking to benefit as soon as they can from the advantages of stationary and collaborative work, it has become apparent that a broad-based return to the office is merely a question of how successful the vaccination program is,” commented head of research Jan Linsin.

Logistics and industrial properties, along with retail properties, attracted an investment volume of €1.9 billion; almost €700 million was allocated to land for development; and hotel properties accounted for almost €500 million, all down on last year.

However, the “other” category, mainly comprising data centres and healthcare real estate, registered a 37% increase in the investment volume to just under €1 billion.

Open-ended real estate and special funds were the largest net buyer group accounting for €2.2 billion compared to €3.1 billion in the corresponding period of 2020. Asset and fund managers were the next most important group with net acquisitions of more than €1 billion, slightly ahead of the previous year.