After the ECB lowered its main refinancing rate again to 0% on 10 March, the share prices of the three largest German residential property companies rose by 10.6% by the end of March. The DAX rose by just 3.2%, demonstrating that German residential property has become even more attractive to investors.
Despite this, the transaction volume in the first quarter of 2016 fell by 85% compared with Q1 15 to €1.5bn (excluding the acquisition of Gagfah: +27%).
One reason for this decline is that owners’ inclination to sell is extremely low, particularly since the interest rate cut makes it even more difficult for investors to achieve returns on the reinvestment of sales proceeds. Disposals of large residential portfolios will, therefore, remain the exception this year. Only four portfolios comprising more than 1,000 units changed hands during the first quarter of the year. This is less than half of the average figure over the last three years.
Source : Savills