Investment market Berlin 4Q2023: Signa sales underpin transaction volume

Few agreements and no end-of-year rally: At the end of the 4th quarter the mood on the market for investment in commercial properties in Berlin remained cautious. The volume of transactions was some €2.7bn or about 65 % below the prior year’s result, which was impacted by outlier trades (€7.8bn). The result in the German capital, Berlin, also fell well short of the ten-year average of €7bn. However, compared with the other 6 cities in Germany’s top 7, Berlin retained the top slot in terms of volume traded. “The big-ticket sales Signa concluded in the first half year form an important part of the year’s transaction volume, which is nevertheless at a low level,” remarks Stefan Olsson, manager of the Berlin Investment Sector of Grossmann & Berger. “Having now sold its remaining holding in ‘Beam” to Kühne Holding, Signa was also party to the largest transaction in the fourth quarter.” In his forecast for 2024 Frank-D. Albers, managing director of Grossmann & Berger, a member of German Property Partners (GPP), says, “I am assuming that initially caution on the real estate trading market will prevail at the start of the year. However, there are many signs to indicate that interest rates will stabilize over the course of the year. If that should happen, investors are likely to become less hesitant, and breathe fresh life into the market.”

Investment market Berlin in detail: 

• Office properties remain by far the most-traded class of asset. Their share of the total volume of transactions was some 51 %. Retail properties ranked 2nd with some 33 % of the market. This was largely attributable to Signa’s sale of the “KaDeWe” and “Galeria Kaufhof”.
• As a result of the big-ticket sales of Signa holdings, the price category €100m or more comprised more than half of the total transaction volume (56 %). The segment priced between €26m and €50m followed with 15 %.
• Accounting for some 37 % of the transaction volume, open-ended property mutual funds comprised the most active group of buyers – followed by corporates and owner-occupiers with shares of 19 % and developers with 12 %. As vendors, developers were the dominant group with about 43 % of the total volume. Here too, the sales of large Signa shareholdings played a crucial role. Listed property investment AGs/REITS were behind 19 % of the total volume sold. 
• Close to half (49 %) of the transaction volume involved real estate in the Mitte sub-market – here too several sales by Signa made a significant impact.
• International investors were far more cautious about buying real estate than in the year before. They were behind about 33 % of the transaction total (Q1-4 2022: 60 %). As vendors of property, however, international players were more in evidence than a year ago. They made up some 67 % of the volume traded, in 2022 the figure was 47 %.
• Prime yields have risen further on all classes of asset. Rates moved towards similar figures of between 4.20 % on offices and 4.40 % on industrial and logistics properties. Prime yields on office properties posted the biggest increase, rising by 1.20 percentage points.