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Commercial real estate investment in Munich at lowest level since 2012

Verena Bauer • 12/01/2023

According to international real estate consultancy firm Cushman & Wakefield (C&W), Munich’s commercial real estate market generated a transaction volume of around EUR 810 million in Q4 2022. This brings the transaction volume for 2022 as a whole to around EUR 3.72 billion. Compared to the previous year's result, this corresponds to a decline of almost 45 percent. 

Fewer large-volume transactions

The reason for the declining transaction volume in the 4th quarter was primarily the scarcity of major transactions. Whereas in the strong 3rd quarter (transaction volume: EUR 1.45 billion) six transactions of over EUR 100 million each were recorded, only two transactions of this size took place in the 4th quarter, including the sale of the 4-6 Leopoldstrasse office building.

In 2022 as a whole, there were a total of eleven large-volume transactions, which together contributed approximately EUR 2.1 billion to the total. In the previous year, the transaction volume of the 15 largest deals alone was EUR 4.6 billion, not least due to three deals each in excess of EUR 500 million. No deal reached this price threshold in 2022.

Focus on office property

Office properties remain the main driver of Munich's transaction volume, remaining the most popular asset class among investors. In 2022, their transaction volume totalled around EUR 2.34 billion, which corresponds to about 63 percent of the CRE total. The most expensive office transaction in 2022 thus remains the sale of the Olympia Business Center for around EUR 300 million in Q1 2022.

Logistics and industrial properties have established themselves as the second-strongest sector, achieving a market share of around 11 percent. With a total of around EUR 405 million, the transaction volume here almost tripled compared to the previous year. After retail real estate transactions being almost non-existent in 2021, in 2022 they contributed around 7 percent or around EUR 260 million. This corresponds to an increase of around 478 percent compared to the previous year.   

Jan Isaakson, Head of Capital Markets Munich at Cushman & Wakefield, summarizes: "The majority of investors continue to expect low liquidity for the first half of the year, especially for core and core-plus properties. Furthermore, the question arises whether the yield adjustments so far are a mere consequence of the increased cost of debt or whether investors' rising equity yield expectations have already been priced in. If the latter is not the case, additional adjustments to prime yields may be necessary in the first half of the year."

Prime yields to continue to rise 

The prime yield for high-quality core office properties in Munich at the end of Q4 2022 is 3.30 percent, 30 basis points above the level of the previous quarter and 80 basis points above the level a year ago. In Q4 2021, the prime yield was still at a low 2.50 percent. 

Logistics and light industrial properties are currently trading at a prime yield of 4.00 percent. The prime yield for city centre commercial properties was 3.20 percent at the end of the fourth quarter.  


verena bauer
Verena Bauer

Head of Business Development Services, Germany • Frankfurt


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