savills-market-in-minutes-residential investment market Q2 2018

Publication

Market in Minutes - Germany residential investment market Q2 2018

Development acquisitions are driving prices and transaction volume

  • With a transaction volume of €2.6bn, the third quarter yielded the lowest level of investment of any quarter in the current year. Investment during the first nine months of 2018 totalled almost €11.3bn, representing an increase of 8% compared with the corresponding period last year (Table 1, Graph 1). The increase in the transaction volume is (still), to a large extent, attributable to price rather than volume. The average price per apartment in the A-cities has even exceeded the €200,000 mark for the first time (Graph 4). This recordhigh price is largely attributable to the fact that development acquisitions have accounted for more than a third of the overall transaction volume in the A-cities during the year to date.
  • A separate analysis of purchases of developments and existing property reveals that prices in both segments have only increased marginally, i.e. by less than 5% compared with last year.
  • The C-cities and D-cities have witnessed the highest recent levels of transaction activity. This is also attributable to the acquisition of Buwog by Vonovia, the largest transaction of the year to date, and should not therefore be over-interpreted. Nevertheless, this activity does reflect demand preferences.
  • We expect further investment of approximately €5bn by the end of the year, taking the overall transaction volume for 2018 to around €16bn, which would be broadly in line with the five-year average.