Figures from Grossmann & Berger, Berlin, show that the year on year volume of investment transactions in commercial real estate in Berlin rose to a total of some €4.0bn thanks to numerous big-ticket purchases and a very large number of property sales. This is the third-highest total ever registered in Berlin. Year on year, total turnover rose by 17.6%.
Almost a quarter of the transaction volume in Mitte sub-market
Comparing the results on the same cut-off date of the prior year, the sub-markets “Ku'damm plus side streets” and “Mitte” have changed places at the top of the table. At the end of the 4th quarter of 2014 “Mitte” accounted for about 24% of the total investment volume. Just three transactions involving over €100m each were instrumental in this result, together with a large number of closures for between €20m and €75m. The three big transactions were the sale of the “Hackesche Quarter”, for which Deka/WestInvest InterSelect paid an IVG specialized property fund more than €150m, the acquisition of the “Tacheles” building site, purchased by Perella Weinberg for about €150m, and the sale of the “Nordbahnhof Carré” as part of a portfolio transaction. Altogether, a total turnover of some €944m was recorded in the “Mitte” segment of the market. The next most sought-after market was “Ku’damm plus side streets”, which accounted for about 20% of the total (about €796m). Here, major contributions to the total were made by the sale of “Upper West”, an office, hotel and retail project now under construction, for which RFR-Holding paid Strabag over €250m, and by Ballymore Properties, which sold the “Ku’damm Carré” to Cells Bauwelt for over €155m. These two closures, together with the three transactions in “Mitte” described earlier, represent the five most expensive transactions in the year 2014. The next biggest transactions involved the sale of the “Mosse Centre” office building (Schützenstrasse 18) which Real I.S. acquired from a private Romanian investor at a cost of over €90m, the sale of the office and hotel complex “Am Zirkus” (Am Zirkus 1), which passed from the Peach Property Group to KanAm, and an association’s purchase of a property in “Mitte” for its own use. “Thanks to the large number of big-ticket transactions, the result for 2014 was close to that of the boom year 2006, when the total was €4.3bn; the year 2007, however, with a total of €6.5bn, still marks the all-time record,” says Holger Michaelis,
managing director of Grossmann & Berger.
Office buildings are the most-traded assets
In 2014, as in other years, investors continued to focus on office properties. The transaction volume in this segment was about €2.3bn (57%) and thus some 17% higher than the value of around €2bn recorded in the same period a year ago. Year on year the volume of trade in retail properties fell by about 19% to €750m due to a drop of around 21% in the number of sales. Hotel properties accounted for a share of about 14% of the total and a transaction volume of €568m. Year on year, no change was recorded in the premium returns for office and retail properties, which remained at 4.75% and 4.5% respectively.
Increasing influx of international investors into the capital
In 2014 overseas investors were a little more reluctant to sell commercial properties in Berlin than in the year before (42%), whereas international players were far more active as buyers (55%). The biggest international investors were asset managers, specialist funds and private individuals. “More than half of the capital invested in commercial properties in Berlin now comes from non-domestic sources, because the city’s status as national capital carries weight abroad,” says Ulrich Denk
, investment consultant and researcher at Grossman & Berger Berlin.
Private individuals buying, developers selling
Family Offices formed the most active group of buyers, accounting for some 21% of the transaction volume. Open-end funds took about 15% of the market and asset managers 11%, thus holding on to double-digit shares of the total. Ranked by volume sold, project developers head the tables at 21%, in particular thanks to the sale of the big-ticket “Upper West”. They are followed by open-end funds/specialist funds, opportunity/equity funds and private investors, with shares of about 15%, 14% and 13% respectively; in each case large individual transactions made up much of the total.
Demand at similarly high level in 2015
Grossmann & Berger Berlin estimate that the investment market will continue to flourish as it did in 2014. The property consultants expect the total result to be more than €3.5bn. “The German capital has become an established market for international investment, although it is becoming increasingly difficult to obtain attractive products.”
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