In 2015, foreign buyers were responsible for over 50% of all
commercial property investments and made history by injecting
€78.4billion into the market, beating the record set in
Foreign buyers dominate most segments
Last year, foreign investors spent €28.1billion on
commercial property in Europe's leading economy, representing
51% of the total investment amount in the market according to JLL,
aglobal real estate services company. This marks a five-year high
for inbound investments, which hadn't occupied more than
30–40% of the market share in recent years.
Foreign funds continued to satiate their appetite for office
property (39% of all foreign investments) and retail space (42%).
These popular segments are particularly attractive thanks to
growing wages, astrong German economy and low vacancy rates.
The pull of retail property was even stronger in terms of
overall investments into the segment: 61% of all retail property
investments came from abroad according to Savills, another
international property giant.
International buyers were just as active as locals on the German
office market, with both parties putting up 50% of the total
investment volume. However, acloser look shows that Europeans made
up 28% of this sum, U.S. buyers 15% and 4% from Asia-Pacific.
Foreign capital also dominated industrial property with 63% of
investments, even though the segment only attracted only 9%
(€4billion) of the total commercial property volume.
In 2015, Berlin became Germany's most popular location for
foreign investments into commercial property, making up 58% of the
total volume. Germany's capital is now ahead of the
country's other "Big Seven" cities, which are the
most popular markets nationwide. The other members of this
"Big Seven" club are Hamburg, Dusseldorf, Munich,
Stuttgart, Frankfurt and Cologne.
Record foreign investment volume
The industry concurs that 2015 was indeed a record-breaking year
in terms of investment volumes, however global real estate giants
have diverging estimates regarding the total injected capital.
According to CBRE, €78.4billion was invested into German
commercial property last year, a48% increase on 2014. But figures
by JLL, acompetitor, report that it only accumulated
€55.1billion, anincrease of 40% year-on-year.
These record investments reflect international trust in the
German economy. In 2015, the country's GDP grew by 1.7%
compared to 2014 and consumer spending increased by 1.9%. The
latter is akey factor in why retail property is so popular with
The volume of investment into Germany's buy-to-let
residential property also increased last year, hitting
€23.3billion. However, this segment is dominated by locals
with foreign investments making up just 15% of the total
What to expect in 2016
Two elements distinguished Germany's commercial property
market in 2015. While the country's "Big Seven"
cities were leaders, investors started going for lower-budget
property outside the overheated central districts. Secondly,
buy-to-let residential investors were looking for higher yield
property from property such as new-builds, studios and student
accommodation. This trend is most likely going to continue in
Experts also expect the commercial investment volume to exceed
€50billion once again this year, but buyers will no doubt
struggle to find real estate in their favourite segments. Vacancy
rates should continue to fall but rental rates in core markets
should grow. At the same time, as online retail gains in
popularity, demand in the industrial and logistics segment,
particularly for well-located warehouses, is expected to grow.
The future of Germany's commercial property market is indeed
bright for owners, however local and foreign investors will have to
contend with the scant supply in areas with the highest demand.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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