DEGI Deutsche Gesellschaft für Immobilienfonds mbH sees the German property market on track for a new record for the third year in succession. When the results for the year's first half are extrapolated for the year as a whole, the record figures of 2006, with a total investment volume of €46 billion, would be exceeded by 38%.
"The market is still booming," says Dr. Thomas Beyerle, Head of Research and Strategy at DEGI. The first half of 2007, though, he says, has been characterized by a high number of large portfolio transactions, so that the total transaction volume will reach almost €60 billion by the end of this year.
For 2008, DEGI Research expects a turning point in the German investment market, and a subsequent end to the series of records extending back to 2005. "But there's not going to be an abrupt decline, the resellers alone will see to that," comments Beyerle. It can also be anticipated that the majority of potential REIT candidates are waiting to assess the effects of the corporate tax reform in Germany scheduled for January 1, 2008.
Hesse is the regional front-runner
On a state-by-state comparison, it is notable that properties in Hesse, with a volume of €5.82 billion, were most in demand during the first half of 2007. North Rhine-Westphalia comes second, with a transaction volume of €3.1 billion. While Saxony-Anhalt brings up the rear among the states with a transaction volume of €19 million, the east German front-runner Saxony comes seventh nationwide, with €1.18 billion. Frankfurt is Germany's most active location, with a volume of €3 billion. DEGI's analysts have observed a significant shift in investment activity away from retail properties towards office properties, attributable primarily to a different focus in this year's major portfolio transactions compared to 2006.
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