Investment Hamburg 2Q2015

Sales of nearly €2bn for first new record since 2007

Press release | Hamburg

The volume of investment transactions involving commercial property in Hamburg came to just under €2bn at the end of the 1st half of 2015. With year on year growth for the quarter at 34%, investments have set the first new record since 2007. Some 45% of the volume of transactions in Hamburg concerned packages of more than one property. Three portfolio sales alone contributed more than €500m. “In some ways the market is reminiscent of 2007. International players are highly active in Hamburg and the number of portfolios sold has appreciably increased. But the situation is different today. The checks made in advance of a purchase are considerably more thorough, although one might have thought otherwise in view of the extremely large amounts of cash available, especially on the books of financial intermediaries. However, the current state of the market is reflected in the low returns,” comments Axel Steinbrinker, managing director at Grossmann & Berger.

Investment Hamburg 2Q2015Investment Hamburg 2Q2015
27 properties sold in central sub-markets
Most of the investment turnover in the 1st half year was concentrated in Hamburg’s central sub-markets City and HafenCity. Here a total of 27 properties valued at around €1.15m were traded. This is equivalent to around 60% of the total volume of transactions. Among the properties purchased was part of the Axel Springer-complex at Caffamacherreihe 3 (City) which was sold to the Free and Hanseatic City of Hamburg for €130.6m to provide offices for Hamburg-Mitte Borough Council – the biggest transaction of the year to date. The next most popular sub-market was the Bahrenfeld district, which accounted for 7.5% of the transaction volume. This result was primarily due to the sale of the Euler Hermes site (Friedensallee 254 and Gas Strasse 18) to property developer Quantum for a figure in the high double-digit millions.

Three large portfolios sold
As in the past, investors’ preferred asset class was the office building, sales of which accounted for some 70% of the total transaction volume. The properties in the three large portfolios sold also belonged to this asset class. In addition to the portfolio of three office blocks in HafenCity, “S-KAI”, “Hamburg-America-Center” and “Coffee Plaza”, which Norrporten sold to Pembroke Real Estate in the 1st quarter, three Hamburg office properties held in Credit Suisse’s Odin Portfolio were sold to Orion Capital Managers for some €200m. The next most popular asset class consisted of hotel properties, with transactions totalling some €250m and a share of 13%. Here a big contribution was made by the Hochtief sale of the new project development “Height 3” on the “Spiegel Island” (Willy-Brandt Strasse 23, City) to Commerz Real for the boarding house concept operated by Adina Apartment Hotels at a price in the mid-range of double digit millions. Retail properties worth €168m changed hands, representing a share of 7% of the total volume. Year on year the premium return for office and retail properties slipped by a further 0.2 percentage points to 4.3%, the premium return for warehouse, logistics and industrial properties fell from 7.2 to 6.5%.

Strong international presence
National investors slightly scaled back their activities on the Hamburg market for commercial properties in the 1st half of 2015 (from 56% to about 47%). The majority of properties were therefore acquired by international investors (53%). Non-German actors invested some €1.04bn. Many of these investors came from the UK, Switzerland, the USA and Spain. However, national players dominated the selling side of the market, with a 59% share of the volume of transactions, whereas foreign vendors only increased their activities from 36 to 41% compared with the prior year. Market players from Sweden, Luxembourg, the UK and France were among the biggest sellers of commercial properties in Hamburg.

Asset managers buy, open-end funds/specialist funds sell
On the buying side of the equation, asset managers were the single biggest group of investors in the 1st half of 2015; their outlay of €595m was equivalent to 31 % of the total transaction volume. Open-end/specialist funds took the second-highest share with €291m, or 15% of the total. Open-end/specialist funds sold commercial real estate in Hamburg for around €778m, accounting for a 40 % share of the transaction volume.

Outlook 2015
“With a transaction volume of about €2bn, investment trades in the first half of 2015 have already reached 53% of the total for 2014. Low interest rates, the strong economy in Hamburg and a general need for suitable investment opportunities will mean that the year will end with a total higher than the long-term average of €2.61bn,” says Steinbrinker.

Our detailed market survey will be ready for download on our website shortly.

Permission is given to reproduce the chart (source: Grossmann & Berger).

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