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Germany : Investment Market monthly - November 2017

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Germany : Investment Market monthly - November 2017

Commercial transaction volume of €60bn - perhaps not?

Commercial investment market

With a transaction volume of almost €5.7bn, November was an above-average month in terms of investment activity. However, the rolling 12-month transaction volume fell by 3% compared with the previous month. As a result, it is now unlikely that the €60bn mark will be reached by the end of the year. For this to happen, properties would have to change hands for almost €12bn in December.

In November alone, there were five individual and portfolio transactions
for more than €200m, accounting for more than half of the month’s total volume. Conversely, however, this also indicates a lack of deals in the mid-price segment. Hence, while the number of transactions remains high, the average deal size has recently decreased.


Residential investment market

November also witnessed a high level of transaction activity for the third month in succession. Investment in the residential sector this year has already exceeded the total for 2016. Besides Berlin, we are also seeing dynamic growth in “second-tier” cities. Dresden, for instance, has registered a higher transaction volume during the year to date than Cologne and Munich combined. Meanwhile, Magdeburg has accounted for more investment volume than Stuttgart.

Such “second-tier” cities are also likely to benefit from the fact that investors are often unable to find any suitable product in “top-tier” cities. And, even if they do find opportunities, the prices are very high. Instead, some investors are also considering secondary locations or making compromises in terms of the quality of properties. Consequently, portfolios in “second-tier” cities are increasingly finding purchasers.

Source : Savills

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