The investment market for commercial properties in Berlin gathered considerably more momentum in the 3rd quarter than it had shown in the 1st half year thanks to numerous large-volume transactions. According to current figures from Grossmann & Berger, transactions in the 3rd quarter alone totalled some 1.4 bn €. The total result for the first nine months was some 2.6bn € and thus over twice as high as the half year figure of 1.2bn €. Year on year, total turnover rose by 15%.
“Mitte” is top-selling sub-market
Compared with the same period last year, the “Ku’damm plus side streets” and “Mitte” sub-markets have changed places in the ranking of transaction volumes recorded. At the end of the 3rd quarter of 2014 “Mitte” accounted for a good 29% of the total investment volume. Including the “Hackesche Quarter” and the “Tacheles” land, which were both sold for around 150m €, the “Mitte” section of the market reached a transaction volume of some 751m €. The “Ku’damm plus side streets” sub-market reported transactions totalling around 440m € and a share of some 17 % of total sales. The major transactions in this sub-market were the Family Office purchases of “Upper West” and Kurfürstendamm 217.
Numerous big-ticket transactions
The largest transactions in the past nine months concerned the previously mentioned office, hotel and retail project “Upper West”, which is still under construction and was sold by the project developer Strabag to RFR-Holding for over 250m €; the “Hackesche Quarter”, sold by an IVG specialist real estate fund to Deka/WestInvest InterSelect for more than 150m €; and an investment fund’s purchase of the “Tacheles” land from Perella Weinberg Partners. Other noteworthy transactions were the sale of the office property “Mosse Centre” on Schützenstrasse, acquired from a private Romanian investor by Real I.S. for more than 90m € and the purchase of a property in the “Mitte” sub-market that will be occupied by its new owner, an association. “The numerous big-ticket transactions in the 3rd quarter are a good illustration of the positive mood on the commercial investment market in Berlin,” remarks Holger Michaelis, managing director of Grossmann & Berger Berlin.
Office properties remain investors’ favourites
As in the past, office properties were the preferred asset class in the first three quarters, accounting for a share of 67% of the total transaction volume. This segment saw turnover of some 1.7bn €, around 41% above the volume recorded in the same period a year ago (1.2bn €). By the end of September 2014 properties in the hotel segment had changed hands for a total of some 330m €. Due to the low number of sales of retail properties, this asset class accounted for only about 11% of the volume of transactions (around 285m €). Premium returns for offices and retail properties at the end of the 3rd quarter were virtually unchanged against the 1st half year at between 4.75% and 4.5%.
Foreign buyers far more active than last quarter
In the first nine months of the year foreign actors on the Berlin market were more reluctant to sell their investments in commercial properties than they had been in the same period a year ago. Whereas international investors collectively accounted for 51% of the transaction volume, their share of property sold was only 39%. The most active international investors were asset managers and private investors. “The Berlin market remains a very attractive investment location for foreign Family Offices, because they still see good development opportunities ahead,” says Ulrich Denk, investment consultant and researcher at Grossmann & Berger Berlin.
Private investors biggest buyers
With a share of some 21% of the total volume of transactions, Family Offices comprised the biggest segment on the buying side (551.7m €), followed by asset managers with a share of 17.3% (447.6m €) and open-end funds with 11.4% (295.3m €). Developers were the buyers in 10.8% of total transactions by volume (280.5m €). On the selling side of the equation, developers ranked first, in particular due to the sale of the expensive “Upper West” project, accounting for 22.8% (591m €) of the transaction volume. Developers were followed by private investors, open-end funds/specialist funds and asset managers, whose shares of 16.7% (433.6m €), 13.6% (352.2m €) and 12.7% (330m €) respectively owed much to individual big ticket transactions.
Demand remains high in 2014
By the end of September 2014 the total was only 810m € short of the excellent result of the prior year, when the final figure was 3.4bn €. “The final quarter, which is usually very good, will paint a clearer picture of how important Berlin has remained this year, compared with the rest of the country, in the plans of commercial investors. It is still possible to attain a total for the year that is second only to 2007,” forecasts Michaelis.