40 / 132
Germany
In terms of annual investment volumes
Germany is the largest commercial real estate
market in Continental Europe, and the third
largest European market by invested stock.
Germany has a well established investor base of its
own with many institutional investors, of which the
majority are private property vehicles, notably the
various German closed ended funds and German
open ended funds. Listed real estate companies and
REITs, which came into effect in 2007, still play a
relatively minor role.
Germany attracts investors from across the Globe
because of its size and stable economic performance.
Unlike the UK and France, where investment
is dominated by their respective capital cities,
investment activity in Germany tends to be more
broad-based and focussed towards the three main
cities of Berlin, Frankfurt and Munich, alongside
Dusseldorf and Hamburg.
Investing in the German real estate market often
takes place in the way of share deals, which avoids
having to pay real estate transfer tax, or by way
of a joint-venture with a domestic market player.
Establishing new funds is subject to regulatory
requirements.
Debt funding is provided by both domestic and
overseas banks that are active in the German market.
There are a number of mortgage banks that are
specialised in real estate. Activity from institutional
lenders (predominantly insurers) and private and
institutional funds started only a few years ago, is
expected to increase over the coming years.
Market sizing
Germany
Europe
Invested stock
(Total stock)
EUR 516bn
(EUR 1,330bn)
EUR 3,335bn
(EUR 8,201bn)
Liquidity ratio
(10y average)
7.20%
(6.5%)
5.6%
(4.6%)
2014 volumes
(10y average)
EUR 37bn
(EUR 29bn)
EUR 187bn
(EUR 142bn)
Market pricing – Frankfurt/Munich (Q4 2014)
Office
(Frankfurt)
Retail
(Munich)
Industrial
(Munich)
Current Yield
4.60% 4.15%
6.80%
Min/Max (10y)
4.55-5.70% 3.70-5.05% 6.65-7.80%
Yield definition
Gross initial yield
(Gross Rental Income/Net Market Value)
Source: DTZ Research
Investment activity by source of capital, 2014
Investment activity by asset type, 2014
Source: DTZ Research
Source: DTZ Research
Domestic
Non-European
European
Office
Mixed Use
Retail
Industrial
Other
13%
17%
70%55
19%
26%
43%
8%
10%
4%
25%
40 Investors Guide to Europe 2015