In the wake of a good first half-year, the market for investments in Hamburg commercial real estate closes the 3rd quarter of 2018 with a new record result. The volume of transactions soared by 74% to €4.0bn and a total of 105 trades, thus climbing to a new all-time high. At the same time, posting €1.7bn, the 3rd quarter was the second-highest on record. “Hamburg is heading for a new record result by the end of this year. Growth was helped by the sale of a great many new build developments plus a relatively high number - for the Hamburg market - of big, expensive existing buildings changing hands,” reports Axel Steinbrinke
r, managing director of Grossmann & Berger, a member of German Property Partners
(GPP). Indicators of this growth trend are the numerous properties still on the market, including buildings in the portfolio of Officefirst, a Blackstone subsidiary, and the two office blocks “Watermark” and “Shipyard” which form part of the “Intelligent Quarter” in HafenCity.
Big-ticket trades comprise about half of transaction volume
This excellent result owes much to the comparatively large number of trades for properties priced at over €100m. The transaction volume in this price category was about €2bn, a share of some 47% of the total. Year on year, this translates into growth of 251%, and accordingly, trades of this magnitude increased by far more than any other category. Second place was taken by trades in the €50m to €100m category, where eleven sales generated €836m (21%). The sale of the “Springer Quartier” (Kaiser-Wilhelm-Strasse, City) remains the biggest transaction of the first three quarters; a joint venture comprising the MOMENI Group and Black Horse Investments sold the property for €400m to a company that manages professionals’ pensions. Another top transaction was the sale of the “Olympus Campus” (Wendenstrasse 14-18, City South), announced in the 2nd quarter. The Ärzteversorgung Westfalen-Lippe, a regional manager of medical doctors’ pensions, paid Olympus / Zech more than €250m for the property. In the 3rd quarter insurance company Allianz sold the “Hanse-Viertel” (Grosse Bleichen 36, City) for a nine-figure amount to CBRE Global Investors.
Increased share of mixed use properties
As before, offices remain the most-traded asset, accounting for a share of 55% (€2.2bn). Both “Springer Quartier” and the “Olympus Campus” fall into this category, which also included a number of other 3rd quarter trades in the one hundred million euros or higher price range. One such trade was the “Hanse Forum” (Axel-Springer-Platz 3, City), that Warburg-HIH Invest Real Estate bought from Standard Life Investments for €100m. Another big-ticket trade was the office portfolio “The Channel” (Karnapp, Harburg) that the Blackstone subsidiary Officefirst sold to J.P. Morgan Asset Management for a total of €100m. Mixed-used properties were the next most popular asset, making up 14% of the total traded. Both the “Hanse- Viertel” and the “LaHoMa” (Langenhorn Markt 1-18, Hamburg East) fall into this category. Assets classed as “Other” comprised 11% to take third place. The reason for this ranking was the sale of 13 “Pflegen & Wohnen” care homes owned by Oaktree Capital Management to Deutsche Wohnen in the context of a share deal.
Prime yields contract further
Compared with the 2nd quarter, prime yields on all types of asset have contracted further in the face of large amounts of cash chasing limited investments, sliding to 2.70% on commercial buildings and 2.80% on office blocks. “At the moment properties are being traded for more than 30 times their annual rental income. This applies not only to trophy buildings in the City, but even to large properties located on the periphery,” comments Axel Steinbrinker.
Prime yields on logistics properties also softened to 4.5%, 0.1 percentage points lower than the preceding quarter.
City South and Hamburg East post equal results
14 trades totalling €1.3bn propelled City and HafenCity to the top slot among sub-markets (share of 33%). City South and Hamburg East each took 15% of the market (€600m in each case). One of the properties traded was the “HanseAtrium” (Wendenstrasse 8-12) in City South, which Blackrock bought from Next Estate Income Fund (NEIF), a special fund managed by BNP Paribas REIM Luxembourg.
Many vendors are project developers
In the first three quarters of 2018, national buyers
dominated the market for commercial property investment in Hamburg. A mere 23% (€900m) of the investment trades originated abroad, mainly in the USA and Great Britain. The lion’s share of 20% went to pension funds and professionals’ pension schemes. Listed property investment AGs/REITs accounted for the second-highest share with 13 % of the total (€516m).
on the market, by contrast, were actors from abroad making good use of the attractive conditions. The proportion of property sold by international vendors rose by 63% year on year to €1.5bn. The most prominent vendors were project developers, whose share of the volume traded was 31% (some €1.2bn).
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