Investment market Berlin 3Q2023: No big-volume transactions reported

The downturn in Berlin’s investment market for commercial real estate that was noted in the first half year has become more pronounced. At the end of the 3rd quarter the volume of transactions totalled some €2.3bn. This result is appreciably lower than the ten-year average of €4.8bn and some 64 % below the prior year’s figure for the same period (€6.3bn). However, the 2022 results were inflated by Brookfield Properties’ takeover of the huge alstria portfolio. 

“A large part of the volume traded is comprised of shareholdings sold by Signa in the first half year,” says Stefan Olsson, who became manager of the Berlin Investment Sector of Grossmann & Berger on 1st September. Transactions totalling a mere €350m were posted in the 3rd quarter. This represents a steep decline from the 2nd quarter (€1.2bn). To put the result into perspective, Frank-D. Albers, managing director of Grossmann & Berger, member of German Property Partners (GPP), says, “In Germany’s capital city no big-ticket transactions were concluded in the past three months, but, compared with the other top 7 cities, Berlin has still returned the highest volume reported thus far in 2023.” Albers adds that, “We do not expect to see investment activity change for the better during the rest of the year. Price discovery is still proving to be a challenge. Until this phase is over, investors are likely to remain cautious. We are optimistic that the Berlin market will soon have bottomed out and that business will gain momentum in the course of 2024.”

Investment market Berlin in detail:

Note: The small number of transactions limits the information value of a detailed analysis.

• Because Signa sold several large shareholdings during the 1st half year, for example in “Galeria Kaufhof”, “MYND” and “BEAM”, the ‘€100m or more’ price category comprised nearly two thirds (63 %) of the transaction volume.
• Office properties accounted for about half of the transaction volume (52 %). Year on year, this is a significant drop (from 71 %). Retail real estate was the second most traded type of property, accounting for 33 % of the total. This asset class was thus in far greater demand than a year earlier (2 %).
• 49 % of the total volume traded was located in Mitte sub-market. Here too, the sales of Signa shareholdings played a crucial role.
• Open-ended property mutual funds comprised the most active group of buyers. They accounted for 48 % of the total. Corporates and owner-occupiers took a share of around 19 %. Developers were the major sellers of property. They made up some 38 % of the volume traded.
• Prime yields have risen on all classes of asset. Due to the low number of transactions, the yield estimates are, however, of limited information value.