Investment market Berlin 3Q2020: Investors choose core real estate
By the end of the 3rd quarter commercial properties with a total value of €4.75bn had been traded in Berlin, a year on year decline of 42 %. However, this massive change owes much to the exceptionally high trading volume in 2019. Nevertheless, “Investors are more hesitant and are especially wary of assets that have been badly affected by the pandemic such as hotels and certain properties in the retail sector. A large number of risk-averse investors are seeking offices that have been let long-term to highly credit-worthy tenants, and these properties are selling at high prices,” notes Holger Michaelis, managing director of Grossmann & Berger, a member of German Property Partners (GPP). He is optimistic about the further course of the year, saying “Between July and September spending was around 230 million euros higher than in the second quarter, so the market is moving in the right direction. Since investors are under pressure to acquire investments and several large transactions are close to completion we expect the year to end well.”
Investment market details Berlin:
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In the first nine months of 2020 there were “only” twelve trades with price tags of more than €100m. A year before, 22 transactions had involved such sums.
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Offices, the most sought-after asset class, accounted for 57 % of total trading (Q3 2019: 68 %).
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Prime yields on offices (2.7 %), commercial buildings (2.8 %) and logistics properties (3.8 %) softened slightly year on year.
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Thanks to a good 1st quarter and with several large trades nearing completion, Grossmann & Berger expects the year to close with a transaction volume of some €7bn. This would be well above the ten-year average of €5.5bn, despite the effects of coronavirus on the market.
Investment market | Berlin | 2020 |
Q 1-3 |
Transaction volume [€ millions] |
4,750 |
against prior yr [%] |
-42 |
Share of trading in CBD [%] |
9 |
Proportion of international investors [%] |
65 |
Prime net yield, office [%] |
2.7 |
against prior yr [percentage points] |
-0.2 |
Prime net yield, commercial buildings [%] |
2.8 |
against prior yr [percentage points] |
-0.1 |
Prime net yield, logistics properties [%] |
3.8 |
against prior yr [percentage points] |
-0.4 |
Strongest asset class |
Offices |
Strongest asset class [%] |
57 |
Selected top transactions | investments in Berlin | 1st to 3rd quarters 2020
Project/property Street no. |
Sub-market |
Asset class |
Buyer/investor |
Vendor |
Purchase price* [approx. €m] |
“Chaussee23”, Chausseestrasse 23 |
Mitte |
Offices |
Credit Suisse |
Barings Real Estate Advisers |
220 |
Quartier Schützenstrasse, |
Mitte 1a |
Offices |
Henderson Park |
Caleus Capital Partners for GIC |
194 |
“The Grid”, |
Kreuzberg |
Offices |
DWS |
Pandion |
129 |
“Enter“” |
Periphery North |
Offices |
DEKA Immobilien |
Townscape One |
120 |
|
|
|
|
|
|
Zalando Headquarters, Edith-Kiss-Strasse 1 |
Friedrichshain |
Offices |
HIH Real Estate |
HIH Projektentwicklung |
confidential |
Hallen am Borsigturm, |
Reinickendorf |
Mixed use |
ECE Preferred Equity Fund |
ECE European Prime Shopping Center Fund |
confidential |
“Linden-Center”, |
Periphery East |
Retail |
ECE Preferred Equity Fund |
ECE European Prime Shopping Center Fund |
confidential |
*The purchase prices stated are based on publicly available data, where none is available an estimate is made; new transactions or those occurring in the quarter dealt with in this report are highlighted. |
The complete market survey will soon be available here.