Figures from Grossmann & Berger show that 2016 ended with a total of €4.5bn invested in commercial properties in Hamburg, thus matching the record level seen in 2007. In the 4th quarter alone, properties were sold for a total of €1.3bn. “The 15 per cent rise in the volume of transactions shows there is continuing high demand for investment properties. Investors value Hamburg for the stability of the office-letting business in the city. Although they secure rights to properties at an early stage, they undertake very intensive investigations during the due diligence process. High demand is not shortening the time it takes to sell a property,” remarks Axel Steinbrinker
, managing director of Grossmann & Berger.
More than half of trading volume is outside City and City South
The City sub-market posted trades of €1.6bn and a share of 35% of the total, thus placing first in the ranking of sub-markets. Hamburg East and City South tied for 2nd place with 9% each (€387m and €383m). Harburg sub-market was third with a share of 7% (€293m). This result was mainly due to Blackstone Group’s 4th-quarter take-over of Officefirst Immobilien AG, a property subsidiary of IVG, since nine of the 23 assets are located in Harburg Upriver Port. The Hamburg properties in this package were purchased for a total of €509m and thus accounted for some 11% of all trades within Hamburg city limits. “Only two of the properties in the Officefirst portfolio are in the Hamburg City sub-market. Even discounting this outlier, 56 per cent, i.e. more than half of the volume sold, does not stand in the classic office locations in City and City South,” says Steinbrinker
No trades for more than €100m in the 4th quarter
Some of the top individual transactions in Hamburg include sales finalized in the first three quarters; the project developer Art-Invest transferred the “Alter Wall” development (Alter Wall 2-32, City) to a pension fund in the context of a share deal. As part of the “Cloud9” portfolio sale, ownership of the “Sprinkenhof” (Altstädter Strasse 6-10, City) passed from Allianz to Patrizia, and the developer TAS KG sold the “Telekom Campus” (Überseering 2, City North) to Amundi.
In terms of price, the volume of transactions grew most in the €26m to €50m segment, which surged from 20 to 32% (€1.4bn). Sales of commercial real estate in the price range between €51m and €100m totalled around €1.0bn (23%) followed by the segment of €100m upwards, which accounted for €860m (19%). As Steinbrinker
remarks, “No properties in Hamburg were traded for more than 100 million euros in the fourth quarter.”
Hotels beat logistics properties
With a share of 73% of the transaction volume (€3.3bn), offices remained the top favourites with investors in commercial real estate. Apart from the Officefirst portfolio, Savills Investment Management sold a package of office properties from its SEB settlement fund to WealthCap; the transaction included four properties in Hamburg valued at €162m. “Due to the shrinking pool of office-only properties, investors are becoming more flexible on the issue of asset classes. A combination of varying classes of asset is becoming more widespread, as are properties that combine housing and commercial uses, so that more mixed-use real estate is coming onto the market and selling well,” says Steinbrinker
. Of the other asset classes, retail was in second place with 10% of the volume traded (€437m), closely followed in third place by hotels with 8% (€374m). One hotel traded was the NH Collection Hamburg (Feldstrasse 53-58, St. Pauli), sold as part of a portfolio in the 4th quarter by Invesco Real Estate to Pandox AB.
Year on year the prime net yields* fell on all classes of asset: for offices and retail properties from 3.7% and 3.6% respectively to 3.3%, and from 5.4% to 4.9% for industrial/warehousing/logistics properties.
Two thirds of buyers are German
Whereas in 2015 foreign investors outnumbered national players, accounting for 57% of the volume of commercial properties traded in Hamburg, roles were reversed in 2016 when German investors constituted a two-thirds majority. Most of the international investors came from the USA, Switzerland, France and Great Britain. At the end of the year international vendors made up only 20% of the market, down from 50%.
Collectively, open-end/specialist funds were the most active buyers, accounting for 34% of the volume traded (€1.5bn). Opportunity/equity funds were in second place with a share of 14% (€644m). The most prominent vendors were project developers/builders with a share of 33% (€1.5bn) of the total, followed by property AGs with 11% (€492m).
“Business will remain good in 2017. There is unabated, high demand. This is apparent not only because market players agree on terms more rapidly than in the past; it also shows in the considerable willingness of investors to enter into forward deals and thus secure greater numbers of development projects for themselves. As long as properties and projects come onto the market in sufficient numbers, we expect to see transactions reach a volume of 4 billion euros,” forecasts Steinbrinker
The full market survey will soon be available and can be downloaded from our website
*The prime attainable yield is the initial return that may be made on a property that has been let on normal market terms (tenants with good credit ratings), has top quality structure and fit-out, and stands in one of the very best locations. It is stated as net initial yield in per cent, i.e. the ratio between the annual rental income less non-apportionable ancillary costs and the gross purchase price (net purchase price plus land acquisition tax, entry in the land register, notary fees and agency commission).