The commercial real estate investment market in Duesseldorf and its extended logistics market area achieved a transaction volume of 230 million euros in the first quarter of 2023. In a year-on-year comparison, the results could not have contrasted more: In the first quarter of 2022, the total was around 1.5 billion euros, in part due to the alstria takeover and there has thus been a sharp decline of 85 percent. At around EUR 270 million, the transaction volume in the first quarter of 2021 was at a similarly low level. The result fell short of the Q1 5-year average of 680 million euros by 66 percent.
Transactions were limited to only two asset classes
The low number of transactions to date scarcely enables any qualitative conclusions to be drawn about investors’ purchasing or demand behaviour. Office properties account for around 28 percent of total transaction volume or around 65 million euros, representing a new low compared to the last ten years. The sale of one of the two office development projects in the “maxfrei” quarter is the most important transaction to date. Barmenia Krankenversicherung acquired the project in the Kennedydamm submarket from Interboden and Hamburg Team in a forward deal.
The remaining 72 percent of the transaction volume was accounted for by sales of logistics and industrial real estate. In the Duesseldorf logistics market area, which also includes the municipalities surrounding Duesseldorf, the volume reached around EUR 165 million. This result is around 38 percent higher than a year ago. The sale of the Areal Böhler site in Meerbusch is responsible for the majority of transaction volume. US firm Jamestown acquired the 23-hectare site from the Voestalpine Group for around EUR 160 million.
Mirko Kittler, Partner Capital Markets Duesseldorf, explains: “It was foreseeable that the difficult mixture of high and volatile interest rates on borrowed capital and persistent inflation would continue and put a heavy damper on investment market activity. Both institutional investors and owners are exercising restraint as the market is still in a price correction phase. While price adjustments are already well-advanced internationally, sellers in Germany are still acting very cautiously. On both sides, however, there are increasing signs of convergence and acceptance of new, realistic purchase prices.”
Prime office yield rises to 3.90 percent
The prime yield for high-quality and modern core office properties has been rising steadily since the turnaround in interest rates in the second quarter of 2022. At the end of the first quarter of 2023, the prime office yield was 3.90 percent and has thus returned to the level of 2017. Compared to the previous quarter (Q4, 2022), this was an increase of 40 basis points.
The prime yield for prime retail properties is currently 3.50 percent and is thus 30 basis points above the level of the previous quarter. The prime yield for first-class logistics properties has exceeded the 4 percent mark and is now 4.15 percent.