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Marked slowing of Berlin investment market despite major transaction


For the 1st quarter of 2023, international real estate consultancy Cushman & Wakefield (C&W) recorded commercial real estate transactions in Berlin with a volume of EUR  1.16 billion. This is 39 percent less than a year ago and 43 percent less than the Q1 5-year average.

Partial sale of KaDeWe dominates transaction volume

With a transaction volume of EUR 730 million, some 63 percent of the CRE total, retail properties were the focus of Berlin's commercial real estate investment market activity in the first quarter. This was largely due to the sale of 49.9 percent of KaDeWe by Signa to Harng Central Department Store.

The transaction volume for office properties was low at EUR 160 million and a 14 percent share. Compared to a year previously, the decline amounts to 86 percent and compared to the previous quarter, 63 percent.

All other types of real estate also fell below the transaction volume of the 1st quarter of 2022. Proceeds from the sale of high-street commercial properties totalled EUR 116 million, which corresponds to 10 percent of the total. Logistics and industrial properties contributed EUR 60 million (-71 percent compared to a year ago) and mixed-use properties achieved a volume of EUR 34 million. (-90 percent). The hotel segment was at EUR 30 million, 75 percent below the level of the end of March 2022.

The distribution between the risk classes was significantly influenced by the KaDeWe transaction, which is why Core properties account for by far the major proportion of transaction volume at 67 percent. This is followed by Value-add at 12 percent, Opportunistic at 11 percent and Core+ at 10 percent. The most important investor types were investment and/or asset managers who were responsible for 83 percent of transaction volume. Developers accounted for 10 percent and corporates for 5 percent.


Investment market Berlin Q1 2023


Clemens von Arnim, Head of Capital Markets Berlin at Cushman & Wakefield, assessed the situation as follows: "The end of the cycle of interest rate increases is not far away, which could be a positive factor for the second half of the year. But due to the current stress on the banks, it may be assumed that the lending institutions will tighten their standards and financing transactions will therefore become even more difficult. Increasing risks in the letting market are also putting pressure on volumes and prices. Overall, 2023 will therefore be a weak year in terms of transaction volume. Opportunities are largely restricted to buyers with a lot of equity."

Further increase in prime yields for all use types

The new interest rate environment continues to lead to rising net initial yields across all property use types, as the spread to risk-free government bond yields is still very narrow despite value adjustments already having been made. However, as few transactions are currently taking place, the prime yields are partly derived from negotiation processes and expert discussions, and not from actual purchases.

The prime office yield rose by 120 basis points over the past twelve months and 20 basis points over the first quarter to stand at 3.80 percent. The spread to the 10-year German government bond is approximately 155 basis points, which is still only about half as much as in the average low interest rate environment which prevailed between the beginning of 2010 and the beginning of 2022. The adjustment of the prime yield will continue in the course of the year.

The prime yield for logistics properties also rose again and is now 4.15 percent. This is 15 basis points more than in the previous quarter. The difference compared to twelve months ago is 115 basis points. The revaluation is also underway for city centre high-street commercial properties in prime locations. At 3.80 percent, the prime yield here is 30 basis points above its level the previous quarter and 50 basis points above that of Q1 2022.



verena bauer
Verena Bauer

Head of Marketing & Communications Germany, Cluster Lead • 60313 Frankfurt am Main


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