TOP 7 INVESTMENT MARKETS 3Q2023: Low volume of trading activity

The sluggish pace of investment in commercial real estate in Germany’s top 7 cities seen in the first half of 2023 continued into the 3rd quarter. By the end of the quarter the volume of transactions was some €5.7m, and thus 72 % lower than the €20.5bn posted in the prior year. However, those figures owed a great deal to Brookfield Properties, which took over the large alstria portfolio, boosting the totals in all top 7 cities bar Munich, as well as to other outlier trades in individual cities. In the 3rd quarter of 2023, commercial real estate changed hands for a total of around €1.4bn. Against the 2nd quarter (€2.2bn), this is a drop of around 34 %. These findings come from research conducted by German Property Partners (GPP). This commercial property network consists of Grossmann & Berger, Anteon Immobilien, GREIF & CONTZEN Immobilien, blackolive and E & G Real Estate.

In the third quarter many investors still hesitated, uncertain of how interest rates and inflation would change. Their caution was reinforced when several property developers filed for insolvency,” remarks GPP spokesperson Andreas Rehberg. “Investment activity is and remains at a low level. When agreements are completed, they are mostly priced in the small to mid-sized range. The price discovery phase is still ongoing, and many investors are biding their time. Some individual players, above all investors with deep pockets, are still active.”


GPP’s findings indicate that the transaction volume fell far behind the prior year’s results in all top 7 cities. Trades plummeted furthest in Frankfurt (-86 % to €526m). GPP noted similar falls in Hamburg (-81 % to €730m) and Düsseldorf (-78 % to €530m). Stuttgart registered the smallest year on year decline, dropping by 51 % to €410m. Cologne’s fall of 65 % to €300m placed it in the mid-range. Berlin posted the highest total figure. Some €2.25bn were invested in real estate in the German capital of Berlin. 

Office properties remain by far the most-traded assets. They comprised about half of the transaction volume (51 %). However, this result is significantly lower than the prior year’s proportion of 75 %. Instead, retail properties were far more popular than in the prior year, accounting for 18 % of the market volume (2022, 3 %). Mixed-use real estate accounted for 11 % of the transaction volume. International investors comprised around 22 % of the market. They were thus appreciably less in evidence than in the same period of 2022 (52 %). Around 26 % of the transaction volume related to portfolio sales.


GPP research shows that prime net yields continued to grow in all top 7 cities and on all classes of asset. In these cities the average prime yield on office properties climbed by 1.04 percentage points to 4.16 %. On industrial and logistics real estate, growth of 0.80 percentage points to 4.37 % was noted. Due to the small number of transactions, however, these yield estimates are not representative.


In view of the prevailing circumstances, GPP does not expect any reversal of current trends this year nor a year-end rally. “There are indeed properties on the market, but buyers and sellers are still grappling with the challenge of finding the right price. Therefore, most investors are likely to remain just as cautious next year as they are now,” remarks Rehberg.“However, we are optimistic that the economy will improve over the course of 2024. As soon as interest rates and borrowing terms are settled enough to permit budget plans, investors, in particular institutional investors, will probably increase their activities and generate a market upswing.”

Katharina Koester

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Katharina Koester

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