Investment Hamburg 3Q2016

Transaction volume defies shortage of top products

Press release | Hamburg

In a climate that remains investment-friendly, transactions in Hamburg continued to soar in the 3rd quarter of 2016. The 3rd-quarter transaction volume of some €1.2bn was higher than the already good figure seen in the previous quarter. Overall, since the beginning of the year commercial properties valued at some €3.2 bn have been traded. Compared with the prior year, this represents an increase of about 2%. “Despite the perceived lack of properties, more than 100 pieces of commercial real estate changed hands in the first three quarters of the year. Trading activity was increasingly focussed on assets such as hotels and retail properties and on buildings in non-central parts of the city,” remarks Axel Steinbrinker, managing director of Grossmann & Berger.

Investment Hamburg 3Q2016Investment Hamburg 3Q2016
A lot happening in the east of Hamburg
Following top-ranking central sub-markets City and HafenCity, whose joint transaction volume of €1.5bn made up some 47% of the total traded, Hamburg East placed second, accounting for some 12% of the trading volume (€384m). This resulted from 20 sales altogether, including five fairly large retail properties that accounted for some €230m of the total. One such sale was of the “Marktkauf Centre Bergedorf (Alte Holstenstrasse 30-32, Hamburg East) which DIC Asset purchased from a private investor in the 3rd quarter.

The following sales were among the top trades in Hamburg: in the 2nd quarter 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. And as part of the “Cloud9” portfolio trade, Allianz sold the “Sprinkenhof” (Altstädter Strasse 6-10, City) to Patrizia in the 3rd quarter as well. In the 1st quarter the developer TAS KG sold the “Telekom Campus” (Überseering 2, City North) to Amundi.

Office properties remain in front
Accounting for 67% of the volume traded, office properties remained the preferred class of asset. Like the “Sprinkenhof” transaction, two other office properties sold in the 3rd quarter for prices in the tens of millions were share deals. Triuva purchased the “Hamburg Two Towers” (Lübeckertordamm 5, St. Georg) a tower office block currently rented by the Commerzbank, from Orion Capital partners. Developer DWI sold the Work-Life-Center (Gorch-Fock-Wall 1a, City) to Eastern Property Holdings.

Retail properties were second in popularity, accounting for a share of 15% and a transaction total of €493m. With around 9% of the market (€291m) hotels were in third place. In total, ten hotels were sold in Hamburg. They included the “Holiday Inn Hotel City Nord” (Überseering 3, City North) that is now under construction, which Union Investment bought from the developer TAS KG in the 3rd quarter.

Year on year the prime yields on office and retail investments fell from 4.0% to 3.8 % and yields on industrial/warehousing/logistics assets slipped from 6.5% to 6.0%. “Contracting yields are the result of the current situation on the market for commercial properties in Hamburg. Property owners should investigate whether or not to seize the present market opportunity and reap the benefits of higher market values generated by ongoing yield compression,” advises Steinbrinker.

National investors lead the market
At the end of the 3rd quarter of 2016 national players remained predominant on the market for commercial property investments in Hamburg. Only some 22% of the volume of transactions may be traced to foreign investors, mostly from the UK, France and Switzerland. Year on year, their volume fell by 57%. The volume of trades by international vendors also fell year on year, dropping by 62%.

On the buying side of the equation, funds/specialist funds were the single biggest group of investors with an outlay of some €1.4bn, or 43% of the total transaction volume. Pension funds/pension insurers took the second-highest share with €426m, or 13% of the total. The top-ranking group of vendors were the property developers/builders who sold commercial real estate in Hamburg for around €1.3bn, thus accounting for a 41% share of the transaction volume.

“The market will continue to see dynamic activity for the rest of the year. The trend towards investing in "concrete gold" may be observed wherever one turns on the Hamburg market. A record year-end result of four billion euros is within reach and might even be surpassed. The ongoing mismatch between supply and demand is reducing the time it takes to sell property and encouraging further investment in non-central districts. However, the shortage of properties for sale will continue to dictate market moves next year too,” predicts Steinbrinker.

The detailed market survey will be ready for download on the G&B-website shortly.

Source graphics: Grossmann & Berger GmbH

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