Savills investment market monthly offices

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Investment Market monthly - October 2018

Frankfurt on track to regain prime position; smaller deals in the residential market

Commercial investment market

  • October may not have produced any landmark deals, with no transactions making the top 20 from the last six months (Table 3). However, investment for the year as a whole remains on a record trajectory (Graph 1).
  • Furthermore, the number of sales in progress suggests that the momentum in terms of deals will be sustained beyond the end of the year. As a result, the continuation of the plateau phase that commenced in 2015 (clearly illustrated in Graph 3) remains our baseline scenario. That is to say, momentum will remain strong but will not increase.
  • Notably, eight of the twenty largest transactions from the last six months have involved properties in Frankfurt. With further large deals in the pipeline, the transaction volume is likely to set a new annual record, allowing the metropolis to regain its status as Germany’s number one.

 

Residential investment market

  • While recent transactions in the commercial investment market have been larger on average (Graph 3), deals in the residential investment market have been increasingly small since the acquisition of Buwog by Vonovia at the start of the year (Graph 10). Almost half of all residential units transacted over the last twelve months have been attributable to deals for less than 1,000 units (Graph 11).
  • The typical purchasers in this size category are special funds, which are also the largest overall net purchasers over the last twelve months (Graph 15) with net investment of €2.1bn. Listed property companies have been the second largest net investors with approximately €1.8bn. Developments in the market going forward will largely depend on whether and to what extent these investors continue to find investment opportunities. Special funds at least will benefit from the development pipeline, which remains very healthy in relative terms.