Investment market Hamburg 4Q2023: Investment market remains weak at year’s end

The year closed as it began, with low levels of investment activity on the market for commercial property in Hamburg. The persistent lack of certainty about how the economy will develop continued to make investors cautious and acted as a brake on trade. The volume of transactions reached some €1.2bn. There was in fact a slight increase in transactions at the end of the year and a large part of the total volume, €740m, stemmed from 4th-quarter trades. Nevertheless, the total for 2023 fell some 73 % below the prior year’s figure, which was in part impacted by outlier trades, but it was also well below the ten-year average of €4.0m. 

“Overall, we look back on a muted year which, as expected, brought many challenges and was marked by a low number of transactions. Individual large purchases, above all those made by the City of Hamburg, gave a certain boost to the overall low volume of trading,” remarks Frank-D. Albers, managing director of Grossmann & Berger, member of German Property Partners (GPP). In his forecast, Albers says, “I take a guardedly optimistic view of 2024. The market shake-out is likely to continue to affect the holders of real estate portfolios and developers; however, during the course of the 1st half year we could see interest rates bottom out. There are many signs that investment activity could increase, albeit only slightly, during the course of the year, even though the volume of transactions will fall below the long-term average.”

Investment market Hamburg in detail:  

• Accounting for some 35 % of the transaction volume, the public sector remained by far the most active group of buyers. Above all, this results from the fact that the City of Hamburg made the two biggest purchases, buying what used to be the Unilever-Haus in HafenCity for Hamburg Port Authority and the Treasury building at Gänsemarkt. Private investors were behind 17 % of the transaction volume. By sheer number of transactions, they were still the biggest group. 
• Among vendors, open property mutual funds contributed the biggest share, 21 %, to the total volume traded. They were followed by private investors with 18 % and specialist funds with 15 %.
• As in the past, office properties were the most-traded class of asset, comprising some 67 % of the total. Industrial and logistics real estate made up 10 % of the volume traded, partly due to Kaldox Group’s purchase of six logistics properties in Billbrook district.
• The City remained the most popular sub-market with about 31 % of the transaction volume.   A big-ticket purchase by the City of Hamburg propelled HafenCity into 2nd place with 19 % of the total.
• International investors were more cautious about buying real estate than in the year before. As they accounted for only 12 % of the market, little international capital flowed into Hamburg. International investors featured far more prominently as sellers. They were behind 48 % of the volume posted (Q1-4 2022: 27 %).
• Prime yields on all classes of asset increased and began to converge at rates between 4.10 and 4.40 %.