The skyscraper, which has not yet been completed, is the most expensive building in Germany even before completion.
(Photo: dpa)
Frankfurt There is a cheer among the big brokers: 2021 was an excellent year for them despite the corona crisis, as they summed up on Wednesday. And real estate service providers such as CBRE, JLL, BNPPRE and Colliers are also optimistic for 2022. There is a lot to suggest that the investment markets can “take their momentum into the new year”, says Marcus Zorn, CEO of BNP Paribas Real Estate Germany (BNPPRE).
There is a catch, however: the great interest shown by investors is pushing purchase prices up and yields down. “That will only change again when the product pipeline has followed suit,” says JLL expert Jan Eckert. But even if “capital pressure, competition and thus prices for top products will continue to rise, there are no signs of bubbles forming,” he emphasizes. There is too little supply, particularly for office and logistics properties.
In 2021, institutional investors – primarily fund managers – would have invested a good 64.1 billion euros in German commercial real estate, as BNPPRE calculated. That is almost 23 percent above the ten-year average. If one takes into account the investments in residential real estate – which for this statistic are only assessed for 30 units or more – the total volume amounts to a good 115 billion euros.
Residential real estate is particularly popular – despite political debates
According to JLL’s calculations, the lion’s share of the money went to German residential properties, nursing homes and student housing complexes, at 52.2 billion euros. That is around 47 percent of the total transaction volume. “The asset class is growing enormously – despite the political debates about rent caps and expropriations. A lot of dynamism can be seen in the sub-products in particular, and this will continue this year, ”it says.
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In second place in the ranking of the top asset classes are office properties with a share of almost 25 percent (around 28 billion euros) and an increase of twelve percent compared to 2020. According to JLL, the worst seems to have bottomed out. In total, 2021 delivered the third-best result in the past ten years.
The worries that a large part of the demand for office property will collapse in the wake of the home office trend have apparently disappeared: “We see a clear relaxation in the debate about the future of the office.” Nonetheless, the industry is facing new challenges. Because the question of how “green” a building is should, in the opinion of experts, continue to come to the fore.
JLL is convinced that “it will no longer be about a green surcharge, but rather a price reduction for non-sustainable real estate”. Investors are therefore likely to try to sell properties that do not conform to the taxonomy. Financing for such “brown assets” will also become more difficult.
Seven metropolises are particularly in demand
The professional investors put more than half of their money for investments in commercial real estate in the seven metropolises of Germany last year. Above all, Berlin, as they calculated at Colliers. In the capital, one of the biggest deals of the year was concluded in the spring with the Fürst office property.
Munich landed in second place. Not least thanks to six major transactions with the sale of the Highlight Towers, Uptown Munich, Elementum and Pandion Soul office buildings. Frankfurt came in third place and achieved its ten-year average with 5.8 billion euros – but was able to report the largest transaction of the year in all of Germany with the sale of the Four T1.
Even if you look at where professional investors were active in the housing market, Berlin stood out: More than every second euro that they invested in residential property went to Berlin.
More: Housing, office, logistics: where the real estate market is booming – and where it is in crisis