Stuttgart’s investment market remains cautious in the second quarter although the overall mood has improved

In the second quarter of 2021 some EUR 301 million were invested in Stuttgart’s real estate investment market, around 65% more than in the same quarter of the previous year. Due to the pandemic the figure for 2020, EUR 182 million, was, however, extremely low. Taken together with the first quarter of this year, the transaction volume of approximately EUR 560 million for the first half of 2021 is, however, still around EUR 93 million lower than in the same period of the previous year. These figures are based on data collected by E & G Real Estate for the Stuttgart investment market. 

“The first quarter of 2021 was weak and could not be offset by the satisfactory second quarter. The latter was dominated by the ‘Turm am Mailänder Platz’ tower deal, a hotel transaction between STRABAG Real Estate and Union Investment with a volume of approximately EUR 137 million. This was the biggest deal of the year to date, accounting for around 46 % of total volume. There was also a major deal in the residential sector - within the scope of a forward deal Wirtgen Invest acquired 90 high-end apartments worth just under EUR 100 million from EPPLE GmbH. “As a result office transactions did not play any significant role in the second quarter,” reports Björn Holzwarth, Managing Partner at E & G Real Estate. 

A total of 17 transactions were carried out in the first six months of the year, of which around one third were in the single digit million range. Only four deals exceeded the EUR 50 million mark. It was not possible to identify any clear focus on the part of investors, with the Office (29 %), Hotel (24 %) and Residential (20 %) asset classes all achieving similar results. Office usage, which still had a share of 63 % in the previous year, has thus lost its dominant position for the time being. With a share of just 8 % plots which are suitable for development were also less important than in the first half of 2020 (21 %). 

As regards purchaser groups, private investors were, for the first time, the most important group, accounting for 27 % of purchases, followed by open-ended mutual funds at 24 %. Insurance companies, which in 2020 generated over half the transaction volume, did not sign a single purchase contract in 2021. 

On the vendor side project developers were able to further consolidate their dominance. After generating some 52 % of volume in the first half of 2020, they accounted for a massive 68 % of total transactions in the first six months of 2021. Far behind in second and third place were private owners (17 %) and banks (10 %).   

“The COVID-19 pandemic appears to have lost some of the fear factor it generated in many parts of Europe and we are now observing an increasing amount of activity on the investment market. Many sales which had been postponed for strategic reasons are now coming onto the market and we are very confident that this will result in stronger take-up in the remaining two quarters,” says Holzwarth. “Even if not all asset classes recover at the same pace, we expect a transaction volume of around EUR 1.5 billion for 2021.”