Investment market Hamburg 3Q2023: Market proving slow to recover

Investors in commercial properties located in Hamburg are still reluctant to commit to trades. By the end of the 3rd quarter the volume of transactions totalled some €730m, and was thus about 81 % below the result for the same period the year before. However, these figures had been inflated by outlier trades. Nevertheless, year on year about a third fewer transactions were completed and big-ticket trades remained the exception. Frank-D. Albers, managing director of Grossmann & Berger, member of German Property Partners (GPP), comments that, “The overall conditions for investment in commercial real estate have barely altered in the third quarter. We shall have to wait before we see a market recovery; as was suspected, players are still in the process of price discovery.” Albers predicts that, “In addition to the volatility of interest rates, market players are primarily concerned with the question of when the investment business will return to normal. In a cyclical market we expect that next year we shall at least see some progress towards a recovery. Here, however, Germany’s overall economic development will play a crucial role.”

Investment market Hamburg in detail:  

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

• As in the previous quarter, the public sector was the most active group of buyers. Their share of the total transaction volume was around 38 %. This is attributable to the City of Hamburg’s purchase of the large treasury building and of Office 3001. Private investors bought some 17 % of the total traded. Properties purchased included an office and commercial block on Neuer Wall. Fund and asset managers ranked in third place with around 14 % of the transaction volume. In terms of groups of sellers, private investors also played an appreciable role. Here they accounted for some 29 % of the volume traded.
• Almost half of the volume traded (48 %) was real estate located in the City sub-market. Even discounting the purchases made by the City of Hamburg, in which case private investors become the most active group of buyers, the largest share of sales was noted in the City. 
• Prime yields continued to rise on all asset classes. However, interest rate growth is still a few steps ahead of yields. Due to the low number of transactions, the yield estimates are of limited information value.