Cyclical peak reached in the commercial market? Weakest monthly volume since 2014.
Commercial investment market
With a transaction volume of just €2.2bn, October was the weakest month in terms of transaction volume since May 2014 (Table 1), while the cumulative investment total for the current year fell behind 2015 levels for the first time (Graph 1). Significantly higher transaction volumes are expected in November and December.
However, with the supply side preventing further growth, we are assuming that the transaction volume has reached its cyclical peak. An ever-increasing proportion of the German commercial investment market is now in the hands of long-term institutional investors with a correspondingly low willingness to sell. Conversely, investors on the demand side have largely reached the limits of what they are willing to pay, resulting in something of a stalemate.
Residential investment market
In contrast with commercial investment, the residential investment market registered a modestly above-average transaction volume in October (Table 4). While supply in the residential sector is also scarce, investors appear significantly more willing to make compromises in terms of macro-location and micro-location than they are on commercial investments. Cities such as Duisburg, Essen and Halle (Saale) are among the top 10 locations in terms of residential units transacted this year (see Table 5 + Graph 16).
It is all the more remarkable that average prices paid in Germany rose yet further (Graph 12), particularly since only a small number of (highvalue) development projects changed hands in October. The housing market policy of a new German government, whatever form this may take, also appears to be of little importance to investors.
Source : Savills