GERMAN ECONOMY CONTINUES TO GROW

• Germany is seen as a safe haven for global capital. Demand for real estate on the increase gives reason to expect further high transaction volume in 2017.
• Employment numbers in the service sector continue to increase, resulting in record office letting take-up volumes in 2016. Above all, in the top cities modern office space is in short supply and is driving a further rise in rental prices.
• For many years, the retail investment market has been characterised by unwavering strong demand and a decreasing availability of product. As a result, investor focus is shifting increasingly to alternative investment opportunities.
• Thanks to the continued robust fundamentals, the initial signs for 2017 are positive for both the logistics letting and investment markets.
• There is an upswing in Germany’s hotel sector thanks to the solid economic growth and rise in the numbers of guest overnight stays.
• Institutional investors are increasingly focussing on healthcare, which is a highly cyclical but fast-growing investment niche, but requires detailed market knowledge because of the statutory legislation involved.
• The German residential market is becoming increasingly popular among national and international investors. The action scope of investors is expanding on second tier cities, project developments and the student housing Segment.

• Büroimmobilien weiterhin beliebteste Assetklasse im gewerblichen Segment

• Positive Entwicklungen an den Vermietungsmärkten erhöhen Attraktivität von Büroimmobilien

• Markanter Anstieg des Transaktionsvolumens insbesondere in Regionalzentren und B-Standorten

• Internationale Investoren wieder stärker am Markt vertreten

• Renditekompression setzt sich fort – auch in sekundären Lagen der Topstandorte

• Transaktionsvolumen von bis zu 25 Mrd. € im Gesamtjahr erwartet

• Investment volume of €3.2bn in the first quarter of 2017 – significantly higher year on year despite ongoing property shortage
• Share of property development rises to 30% – mid-range selling prices at new record high
• Yield compression expected in the ongoing year – no trend reversal in sight for rents and purchase prices

• Office space take-up of 110,100 sq m in the first quarter of 2017 

• Within the first quarter about 92,100 sq m of no longer marketable office spaces were removed from the market

• Vacancy rate dropped to 10.5%

• Transaction volume increased by 20%

• International investors in particular are on the lookout for large-scale investment opportunities in Germany
• Currency profits as additional incentive to buy for international real estate investors
• The debt environment for property investments is expected to remain quite favorable in Germany despite the recent slight upward shift of the yield curve
• Due to positive exchange rate effects against the British Pound and the US Dollar denominated investors Euro-denominated real estate investment markets seem relatively attractive
• Similar effect should arise out of the Canadian Dollar and Australian Dollar denominated investors
• Additional positive effects thanks to lower financing costs

• German retail market globally sought-after as expansion location

• German retail letting market 2016 narrowly misses previous top results

• German concepts particular active on domestic market

• Record level of new market entrances of international retail and food & beverage concepts

• Third highest transaction volume since 2006

• Year-end rally generates transaction volume of €52.5bn

• Office remains the strongest asset class – alternative asset classes post significant growth

• Numerous large-scale portfolio transactions and landmark deals

• Top 5 locations see a slight downturn in transaction volume

• International investors committing more intensively again in the final quarter of 2016

• Prime yields remain under pressure in all asset classes

• Outlook for 2017: Investment momentum remains at a high level – transaction volume of between €45 and €50bn possible

Factory Outlet Centre (FOC) or Outlet Centre (OC) are developing into an indispensable part of the European and Germany retail scene. Taking into consideration the permanently rising number of assets, FOCs have not only turned into an inherent sales channels for the distribution strategy of brand manufactures and retailers, but also into an increasingly sought-after asset class among property investors. Tenants as well as investors of outlet stores are expecting high revenues and yields. Rising investment volumes and the more diversified group of investors are indicating that the former special retail property is establishing itself as independent asset class on the commercial real estate market.

By: Jan Linsin, Ph.D., Head of Research Germany

Germany's population is ageing; its number of care-dependent people will rise substantially in the coming years. There is a great need for expansion and renovation in Germany's care accommodations, if demand is to be met. With this demographic shift—as well as declining yields on traditional assets and health properties’ increased resistance to the business cycle—investor interest in this asset class has increased significantly, and the market is expected to continue to grow.

• Strong investment activities ongoing in the German logistics investment market – investment volume rises for the fourth time in a row
• Investment turnover posts €1.5bn in the last three months of 2015 alone – strongest quarterly result since records began
• Demand for distribution buildings dominate the logistics investment market
• Above-average demand by international players for German logistics properties – share climbs to 62%

• Germanys commercial real estate investment market heading for a banner year
• Letting turnover on Germany's Top 5 office markets keeps surging
• The investment boom on the market for German retail properties continues unabated. Retail letting market remains dynamic as well
• After a restrained start to the year, the logistics investment market is catching up step by step
• The residential segment continues to be one of the favoured investment targets on the German real estate market
• Hotel investment in Germany continues to reach new records with a transaction volume grown by 40% up on year-to-September 2014 levels

• The ICT sector's share of commercial GVA was 4.7% in each of the three years from 2011 to 2013

• Companies from the TMT sector are an essential occupier group for office real estate accounting for one fifth of the aggregate take-up of the last five years in Germany

• In Berlin TMT firm accounted for almost one quarter of the total cumulated take-up between 2010 and 2014

• TMT is an essential driver of rental growth in Berlin's office market - particularly in the non-CBD submarkets