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Investment market for commercial real estate slumps by 72 percent


In Q1 2023, the German investment market for commercial real estate achieved a transaction volume of 5.1 billion euros, according to research by international real estate consultancy firm Cushman & Wakefield (C&W). This is 72 percent less than in the equivalent period last year, making it the weakest first quarter since 2010. 

Retail properties generate higher transaction volume than office properties 

At 31 percent or 1.6 billion euros, the largest contributor to CRE transaction volume was retail real estate properties. C&W puts the decline in comparison to the first quarter of 2022 at 30 percent. This relatively positive result was in part due to the sale of 49.9 percent of Berlin's KaDeWe department store to the Central Group from Thailand, as well as the increase in Deutsche Euroshop's holding in five German shopping centres. 

Office real estate transaction volume plummeted by almost 90 percent compared to the equivalent period last year, to 1.05 billion euros. Only 2009 and 2011 began more weakly in the previous 15 years. The majority of office properties sold in the first quarter were in the 50 million euros or less price bracket. Value-add and core-plus properties dominated. Core transactions and transactions of over 100 million euros remained the exception. For core properties in particular, the downward price adjustment necessitated by the turnaround in interest rates has not yet been completed, which is causing a widespread standstill in transactions in this sector. Buyers are focusing their attention primarily on value-add and core-plus properties in very good and central locations, not least with regard to compliance with ESG criteria. 

Logistics and hotel also significantly lower 

The sales of logistics and industrial properties generated a transaction volume of 795 million euros which is 79 percent below last year's equivalent figure. Two transactions of 100 million euros each contributed to the result, including the sale of the "Areal Böhler" industrial and commercial park in Meerbusch to Jamestown. 

Hotel transaction volume declined by 49 percent compared to the opening quarter of 2022, to 180 million euros (4 percent of total CRE transaction volume). In the "Other" sector, which at 1.5 billion euros (minus 34 percent) is almost on a par with retail, development properties made the major contribution, some 805 million euros. 

Few portfolio deals and restrained international capital 

With fall of more than 90 percent to 630 million euros, portfolio transaction volume recorded both its lowest quarterly value and lowest share (12 percent) of total transaction volume since the last quarter of 2011. The majority of portfolio transactions were below 50 million euros. The largest and only portfolio in the three-digit-million-euro range was Deutsche Euroshop's increase in its holding in five shopping centres in Germany. International capital was active in the first quarter of 2023, contributing 34 percent, but this is well below the more than 50 percent share of the past five years. 

Yields continue to rise

The rise in yields triggered by the interest rate turnaround in Q2 2022 continued unabated in Q1 2023. In the first three months, the prime yields in the top-7 markets rose on average by 32 basis points to 3.83 percent for office properties, by 30 basis points to 3.90 percent for city centre high-street mixed-use properties and by 15 basis points to 4.15 percent for logistics properties. 

Munich is the most expensive office market with a prime yield of 3.50 percent, followed by Berlin, Frankfurt and Hamburg (each 3.80 percent), Düsseldorf and Cologne (each 3.90 percent). Stuttgart, at 4.10 percent, has already exceeded the 4 percent threshold. For high-street mixed-use properties, Munich and Düsseldorf are the highest at 3.40 percent and 3.50 percent. Yields for logistics properties are quoted at 4.15 percent in all seven top markets. 

Alexander Kropf, Head of Capital Markets Germany at Cushman & Wakefield, emphasises: "Market participants agree that yields must continue to rise for transaction activity to increase again. Sellers and buyers will approach a price level that is assessed as sustainable in small steps from opposite sides. This correction phase will probably take a few more months. I do not expect the knot to unravel until the last quarter of the year. Capital, not least from abroad, is already waiting in the wings." 

Berlin top of the top-7 markets in terms of transaction volume

Around 2.6 billion euros of commercial real estate transaction volume was generated in the top-7 markets in the 1st quarter, which corresponds to 52 percent of the German total. The decline compared to the same period last year (by 73 percent) was just as strong here as in the regions outside the top-7. 

With transaction volume of around 1.2 billion euros, Berlin leads the ranking by a wide margin ahead of second-placed Munich (505 million euros). Stuttgart (275 million euros), Düsseldorf (230 million euros) and Hamburg (215 million euros) each broke the 200-million-euro threshold. Frankfurt reached 165 million euros and Cologne, with 70 million, fell short of the three-digit-million-euro range. All markets saw substantial declines in turnover, Berlin saw the smallest decline, at 39 percent.


Investment Germany Q1 2023  Investment Top7 Q1 2023

Investment Deutschland Spitzenrendite Q1 2023  Investment Germany Transaktionsvolumen Q1 2023




verena bauer
Verena Bauer

Head of Business Development Services, Germany • 60311 Frankfurt am Main


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