By the end of the year the volume of investment transactions on the Hamburg property market had reached a new high of €4.0 billion. Only in 2007 was the figure even higher. Compared with the prior year, this represented an increase of 10 %. “Posting a volume of €850m, the fourth quarter was not quite in the same league as quarters two and three with back to back results of €1.2bn. However, these figures were essentially due to portfolio sales of a size not seen in the last quarter of the year,” says Axel Steinbrinker,
managing director of Grossmann & Berger, commenting the market situation.City South/St. Georg making big strides in 2015
Investors concentrated on the central sub-markets of City, City South/St. Georg and HafenCity. These sub-markets accounted for over half of the total volume of transactions. The lion’s share of 30% went to City, where 35 properties with a total value of €1.2bn were traded. The 1st-quarter sale of Section C of the former Axel Springer headquarters, bought for €130.6m by the Free and Hanseatic City of Hamburg for the Mitte Borough Council (Caffamacherreihe 3), was the biggest transaction of the year in the City sub-market. With around 20% of total turnover, City South/St. Georg placed second. “In 2014 this sub-market accounted for only about 10% of the volume traded, but in 2015 more than 20 property transactions were completed,” says Steinbrinker
summing up. The district was also the scene of 2015’s biggest single sale when Morgan Stanley sold the “Berliner Tor Center” (Beim Strohhause 17-31) office complex for €270m to the Zurich Versicherung insurance company. The largest transaction of the 4th quarter also took place in City South/St. Georg. The “SonninKontor” project development (Nordkanalstrasse 22+24), now under construction and pre-let to four tax offices, was sold by the developer Aug. Prien to the R+V insurance group for a price in the double-digit millions. Grossmann & Berger acted in a consultancy role.Portfolio sales account for 30% of the transaction volume
As in the prior year, office properties were the most traded assets, accounting for 66% of the total. Portfolio trades valued at some €1.2bn made up about 30% of the total volume, whereas in 2014 they accounted for only about €430m. Four sizeable office property packages were sold in 2015. In the 2nd quarter, for example, Standard Life acquired the “Lilli Portfolio” which included the Hamburg properties “Deichtorcenter”, “Hanse Forum” and “Hansa Carree”; from its “Odin Portfolio”, Credit Suisse sold three office buildings in Hamburg to Orion Capital. In the 3rd quarter GE Capital sold its Germany Portfolio, which likewise included three office buildings in Hamburg, to Kildare Partners, a private equity company from the UK.
Taken together with Norrporten’s package sale of three properties in HafenCity to Pembroke, these four portfolio transactions alone add up to about €600m.
In 2015 considerably more was invested in hotel real estate, some €540m compared with about €250m in 2014. One of the major hotel transactions was the sale of the “Radisson Blue” at Dammtor (Marseiller Strasse 2, Alster West) which Azure Hotels bought back from Invesco for a sum in the three-digit millions. Retail properties were the third most popular asset class, comprising some 7% of the volume of transactions.Yields at an all-time low
Year on year, Hamburg saw premium returns decline appreciably to the lowest levels registered to date. For office and retail assets, the yield fell from 4.5 to 4.0% and for warehousing, logistics and industrial real estate from 6.9 to 6.0%. “High demand and the stable rents on the Hamburg market, allied with increasing interest from international players and the ongoing favourable conditions for property loans combine to compress yields,” comments Steinbrinker.International players very active
In 2015 international players took a livelier interest in the market for investments in commercial real estate in Hamburg than national investors, and accounted for about 57% of the total volume of transactions. Most of the investors came from the UK, France and Switzerland.
the biggest single group was comprised of open-end/specialist funds with a share of some 25% (about €1.0bn) of the transaction volume. Asset managers/portfolio holders took the second-highest share with €560m, or 14% of the total. Among vendors,
open-end/specialist funds were also the most active group, selling commercial real estate in Hamburg for around €1.3bn, and accounting for the biggest share (32%) of the transaction volume. Developers and builders followed in second place with a share of some 14% (€572m).Outlook 2016
“The investment environment is set to remain favourable in 2016. However, it is rather unlikely that the volume of transactions will continue on a record-breaking track because there is a shortage of suitable investment properties for sale. We would expect to see the volume of transactions close at a figure somewhere between the totals for 2014 and 2015,” says Steinbrinker
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Permission is given to reproduce the chart (source: Grossmann & Berger).