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Germany : office investment market - Q2 2016

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Germany : office investment market - Q2 2016

While office property was one of the few segments in the investment market to register increased transaction volume in the first quarter of the year, there was a significant decrease in investment in the second quarter. Office property changed hands for a total of approximately €7.4bn in the first half of the year, representing a decrease of 19% year on year.

There are two fundamental reasons why investors are showing increased interest in properties in (good) B-locations. Firstly, the letting markets in these submarkets are showing positive development from an owner’s perspective and, secondly, the supply is still greater than in the highly coveted central locations.

With yields already at historic lows and little further potential for capital growth from yield compression, rental growth is becoming an increasingly important component of total return. As a result, competition for properties with rental growth potential is likely to increase further.

Source : Savills

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