• Healthcare properties are on their way out of being a niche asset class, but price transparency is still fairly limited and subject to quite different perceptions

• In the light of a persistent ultra-low interest rate environment and the relatively cyclical independence of healthcare related real estate assets, we observe an ongoing accelerated repricing especially of care homes

• Therefore, we estimate that prime yields for care homes to decline by another 25 base points to 4.25% in Q1 2020

• Given the asset class inherent fundamentals and increased liquidity, yields for healthcare real estate will move closer to the values of other well-capitalized, more core-ish real estate asset classes (e.g. hotels, which are currently priced at 3.75%)

• The transaction volume fell by 15% year-on-year to €18bn; office properties nevertheless hold their position as the real estate asset class with the greatest transaction volume on the German market
• 78% of investments in office properties were in the top 7 cities of Berlin, Düsseldorf, Frankfurt am Main, Hamburg, Cologne, Munich and Stuttgart - Berlin accounted for a good fifth of the nationwide transaction volume
• The share of international investors increased by more than 4%-points year-on-year to 42%
• The average prime yield in the top 7 markets for office properties fell by 0.15%-points year-on-year to 2.85%
• Outlook: Transaction volume of up to €25bn is possible for 2020 as a whole

• Healthcare investment market delivers strong third quarter
• The Corona pandemic has heightened the interest of investors in properties with secure streams of rental and lease payments, as offered by healthcare properties
• The investment market for healthcare properties in Germany generated an investment volume of almost €2bn in the first three quarters of 2020 
• Care homes maintained their dominant position in the asset class with a share of 69%
• Given the continued supply shortage and strong demand, the prime yield for care homes decreased to 4.25% year-on-year

• In the second quarter, take-up itself was as much as six percent above the running average of all second quarters over the last decade
• In effect, the Corona pandemic has had very little impact on the market. There was neither a huge demand for space nor has the crisis caused demand to slump. Inasmuch, the current situation is distinctly different from the last crisis in 2008 and 2009 when demand dropped off notably
• In the medium term, we expect the demand for warehouse facilities to rise. This development will be driven by an even stronger future realignment of the global supply chain, various re-/near-shoring strategies, the introduction of buffer storage and the rise of e-commerce
• There were no changes in terms of rents. The rental level is stable as demand has not slumped, there are no massive vacancies, and space is still in short supply
• Given the way things are developing in the wake of the Corona pandemic, and the signs of economic recovery, we are assuming a sound full-year result. Significantly more than six million sq m is likely to be achieved on the industrial and logistics real estate market this year as well

• Office take-up drops 8% to 520,500 sq m compared with 2018
• Vacancy in a downtrend; vacancy rate at 2.4% at year end
• Weighted average rent for premium space rises 11 % to €31.50 /sq m/month
• Transaction volume of €4.3bn on the commercial investment market below year-earlier figure
• Net initial yield in the office segment slips 25 basis points to 2.75%

In 2019, the German hotel real estate market remains very dynamic with a continued demand surplus. The hotel transaction volume in the German hotel investment market stood at €1.64bn in H1 2019, down 14% from the prior-year period. The lack of product on the market is restricting the investment volume and results in a further decline in yields in prime locations. Consequently, investors increasingly buy in B and C locations.

The report provides an overview of:

• European and German hotel real estate market
• Key performance indicators of the German top cities
• Investment volume and prime yields
• Recent transactions
• Future supply and outlook