The market for investments in commercial properties in Hamburg produced a new record result at the start of 2018. Figures compiled by Grossmann & Berger, a member of German Property Partners
(GPP), show a 1st-quarter investment volume of €1.3bn generated by 28 transactions. Year on year the number of transactions has doubled, resulting in a total nearly three times as high. One single trade accounted for 30 % of the transaction volume. At the start of the year, the biggest known single investment trade ever recorded in Hamburg was finalized. A joint venture comprising the MOMENI Group and Black Horse Investments sold the “Springer Quartier” (Kaiser-Wilhelm-Strasse, City), an office complex now under construction, for some €400m to a company that manages professionals’ pensions. Commenting on the market, Axel Steinbrinker
, managing director of Grossmann & Berger says, “The mood on the investment market is very positive. Quite apart from the “Springer Quartier” transaction, the other trades alone make up 900 million euros, equal to the previous record for a first quarter set in 2016.”
Five transactions for more than €50m each
Above all, the strong 1st-quarter result was driven by five transactions for over €50m, which accounted for 62 % of the total volume. In addition to the €400m paid for the “Springer Quartier”, the mixed use property “LaHoMa” (Langenhorner Markt 1-18, Hamburg East) sold for more than €100m. In the City district one other large transaction involved the “Deichtorcenter” (Oberbaumbrücke 1) which was sold to Westbrook Partners for some €90m.
Industrial/logistics properties second most popular assets
Owing to the “Springer Quartier” transaction, office properties retained their usual slot as most popular class of asset, accounting for 51% (€664m) of total transactions and seven of the properties sold. However, second place in the 1st quarter went to logistics and industrial properties, which took a 12 % share of the transaction volume (€156m). “The shortage of office blocks, commercial buildings and core properties in central locations has induced investors to turn increasingly to a different class of asset, namely industrial and logistics real estate. Core properties in this segment are currently highly sought-after, although here too there is a shortage,” remarks Steinbrinker
. Retail assets were third in popularity, accounting for a share of 10 % (€130m). Sales in this sector included the designer department store “Stilwerk” (Grosse Elbstrasse 68) sold by its owner, Alexander Garbe, for an amount in the tens of millions.
Three hotels in Hamburg change hands
Each with a 9 % share of total trading volume, mixed use property assets (€118m) and hotel real estate (€117m) occupy fourth place. Three hotels were sold during the 1st quarter. Britain’s Whitbread Group bought two hotels under development for its “Premier Inn” chain, each costing in the tens of millions:
Simon-von-Utrecht-Strasse 41 (St. Pauli, about 230 rooms) bought from Strabag Real Estate
Nordkanalstrasse 44-46 (City South, about 280 rooms, 30 apartments) bought from GBI.
Another hotel property featuring a boarding house/apartments concept also changed owners. This property is in one of the non-central districts; the “simplify your life campus” at Kronsaalsweg 88 (Stellingen, Hamburg West, 347 apartments) was purchased by Catella Residential Investment Management for one of its funds at a cost of some €43.5m.
First signs that yields are stabilizing
The first signs are now visible that prime yields on Hamburg properties are beginning to slow their decline. The prime net yields on office properties and commercial buildings remained unchanged against the previous quarter at 2.9 %. The increased demand for investment grade logistics properties squeezed the prime net yield on this class of asset from 4.6 % to a new low of 4.2 %.
Six transactions in Harburg and six in Hamburg East
In terms of sub-market locations, the transactions did not follow the normal pattern of distribution. Due to the sale of the “Springer Quartier” City retained its accustomed top slot, with a share of 40 % (€519m), but the City South sub-market (4 %, €58m) and HafenCity (no transactions) were practically invisible. Instead, the peripheral sub-market Hamburg East moved into second place with 18 % of the total (€232m and six transactions). This result stems above all from the previously-mentioned sale of the “LaHoMa” in Langehorn, the second-biggest transaction in the 1st quarter. Next place was taken by Harburg sub-market, which reached 9 % of the total (€118m) and also recorded six transactions. These included the sale of a former job centre at Am Werder 1, which the developer Areo Welling purchased from investor RDR Beteiligungs GmbH.
International actors keep a low profile
National players dominated both the buying and selling sides of investment activity in the 1st quarter of 2018. International investors were reticent, accounting for 27 % of the volume traded (€346m). In the 1st quarter of 2017 they made up 51 % of the market. Foreign investors kept an equally low profile when it came to selling property, with a share of 28 % (€364m). In the same quarter of 2017 they comprised 64 %. The most active group of investors were various types of pension funds, involved in a third of the total volume (€424m), most notably due to the purchase of the “Springer Quartier”. This outlier transaction ensured that, as vendors, developers took the biggest share of the market – 55 % (€709m).
“Since there are still several large transactions in the pipeline that are likely to be concluded this year, the investment market should continue to register brisk activity in Hamburg. However, the trading volume may be held back by the shortage of properties, especially those in the 50-million-euro category that tend to be the most popular trades in Hamburg. Our forecast for 2018 is an overall result of some 4.0 billion euros, slightly higher than in 2017,” says Steinbrinker
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