TOP 7 INVESTMENT MARKETS 4Q2023: Market upswing yet to arrive

As expected, the year closed with a rather modest result of trading in commercial property investments located in Germany’s top 7 cities. The volume of transactions totalled €7.8bn, or about 69 % below the prior year’s strong result of €25.5bn, which was, admittedly, impacted by outlier trades. In the 4th quarter of 2023, commercial real estate changed hands for a total of around €2bn. This is slightly higher than the 3rd-quarter result (€1.4bn), but nevertheless the total volume remained very low. These findings are contained in a survey compiled by German Property Partners (GPP), the commercial real estate network formed by Grossmann & Berger, Anteon Immobilien, GREIF & CONTZEN Immobilien, blackolive and E & G Real Estate.

“Throughout the year 2023 there was a low level of investment activity. Overall, only a few contracts were signed and there was no end-of-year rally to revive the market,” comments GPP spokesperson Björn Holzwarth. “The economic situation remains difficult and so, together with uncertainty about what the future holds, the mood on the market remained as cautious in the 4th quarter as in the rest of the year.”


GPP noted that year on year the volume of transactions dropped appreciably in all top 7 cities. The biggest falls were posted in Frankfurt (-84 % to €658m) and Düsseldorf (-78 % to €610m). A similarly large drop was noted by GPP for Hamburg (-73 % to €1.2bn). Among the top 7 cities, Cologne saw the smallest reduction in total transactions, dropping 33 % to €800m. Berlin posted the largest volume of transactions at €2.7bn.

Accounting for about 52 % of the total, office properties were by far the most traded class of asset, but lost quite a bit of ground compared with the prior year’s figure of 73 %. Retail real estate (16 %) and mixed-use properties (10 %) placed second and third. Foreign investors were far more hesitant than in the prior year; they were behind about 21 % of the transaction total (Q1-4 2022: 47 %). Portfolio sales made up around 21 % of the volume traded.


GPP’s research shows that prime net yields continued to rise in all the top 7 cities. The gap between average prime yields on the three classes of asset narrowed; rates moved towards similar figures of between 4.23 % on commercial buildings and 4.43 % on logistics properties. On office properties, GPP noted a yield rise of 1.06 percentage points to 4.34 %.


“Unless the business environment changes, the cautious mood on the market is likely to persist for a while,” says Holzwarth. “However, there is much to suggest that interest rates could bottom out in the 1st half of 2024. Therefore I am optimistic that as the year progresses we shall see first steps towards a market recovery.As soon as interest rates permit better budget planning, the volume of transactions should regain momentum.”

Katharina Koester

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Katharina Koester

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