34 |
Investor Guide to Europe 2014
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 490bn
(EUR 1 300bn)
EUR 3,380bn
(EUR 8,150bn)
liquidity ratio*
(10y average)
6.0%
(6.0%)
4.0%
(4.5%)
2013 volumes
(10y average)
EUR 30bn
(EUR 25bn)
EUR 139bn
(EUR 135bn)
Investment activity by asset type, 2013
Source : DTZ Research
Investment activity by source of capital, 2013
Source : DTZ Research
Market pricing – Frankfurt/Munich (Q4 2013)
office
(Frankfurt)
Retail
(Munich)
Industrial
(Munich)
Current Yield 5.00% 4.15% 6.90%
Min/Max
(10y)
4.55-5.70% 3.70-5.05% 6.65-8.05%
Yield
definition
Gross initial yield (Gross Rental
Income/net Market value)
Source : DTZ Research
GERManY
* 2012 figures
