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The Hamburg Investment Market Revives

The turnover volume on the commercial transaction market in Hamburg accounted for some 300 million euros in the first quarter of 2010. As compared to the same period of the previous year, with a transaction volume of 150 million euros, the result has therefore nearly doubled. "At present, investors are mainly looking for secure, long-term cash flows in good to very good locations and real estate. In view of this, the market is astonishingly lively and has definitely put the low levels of the past year behind it," said Christoph Ringleben, Managing Director of Colliers Grossmann & Berger.

No Bubble Here

The supply in this segment is very limited, however, for two reasons: on the one there are hardly any new projects under development and on the other, owners are at present loathe to part with their real estate. "For the additional funds released as a consequence there is at present no alternative form of investment with similarly good returns," said Ringleben. He considers the asking prices of those properties coming onto the market as reasonable. They reflect the level of return for 2005 and earlier. "We see no risk of a bubble forming on the Hamburg investment market at present," assured Ringleben.

Higher Awareness of Risks

In view of the continuing high investment pressure from institutional investors, the importance of alternative real-estate investments will increase again in the future. The risk awareness of the investors will rise slightly, and more-management-intensive properties will be offered with higher returns. Corporate activity will again come to the fore.

Insurances Constitute Strongest Buyer Group

With a share of almost 30 percent of the overall turnover, the biggest single investor was a private-capital investor with the purchase of a long-term-lease portfolio. Insurances and open-end real estate investment trusts accounted for market shares of 37 percent and 22 percent respectively, followed by the project developers with 8 percent. On the seller side, the project developers accounted for 53 percent and the open-end real estate investment trusts for 38 percent.

Good Prospects for 2010

As previously, the banks are refraining from putting great pressure on investors that, due to the devaluation of their portfolios, are failing to meet their credit agreements. There are, however, exceptions: the first portfolios have gone back to the banks, which promises to lead to further movements on the market. "The development of the economy in the Hanseatic city is showing upwards tendencies and the medium-term prospects are good. This has a positive influence on the mood on the investment market and gives reason to expect a lively year in 2010," concluded Ringleben, based on the quarterly figures.