In the first half of 2010 the German market for residential portfolios saw 60 residential packages comprising a total of just below 33,900 units change hands. This marks a slight fall compared to the second half of 2009 when 74 portfolios totaling 34,400 units were transacted. The total volume traded therefore declined marginally from approx. 2.1 billion in H2 2009 to approx. 2.0 billion in the first six months of 2010.
"In the first half of 2010 the market for residential portfolios was characterized by two trends: the portfolios sold were slightly larger and foreign investor activity increased significantly," reports Matthias Pink, researcher of Savills Germany. Savills recorded nine transactions comprising in excess of 1,000 units each. In 2009 just eleven transactions of this scale took place. Five of the extensive portfolios transacted so far in 2010 were purchased by foreign investors whereas in the previous year this was the case with two transactions only. In the first six months of 2010 foreign investors purchased approx. 18,500 units representing slightly more than half of the total number of units sold.
The data shows the market has continued to widen in terms of quality of the properties. "On the one hand closed-end funds purchased high-quality stock or project developments in prospering metropolitan areas, on the other hand we saw the return of opportunistic investments," Benjamin Poddig, Associate Director Corporate Finance - Valuation and responsible for the valuation of residential property at Savills, describes the market situation of the past months. This is also reflected in purchase prices as various transactions took place both in the range between 250/m² and 500/m² and the segment of 2,500/m² and above. A similar situation prevails in terms of multipliers ranging from the seven-fold of the annual net rental income to in excess of the 20-fold.
In the second half of the year the market situation is expected to continue its shift towards the opportunistic sector. Whilst a surge of distressed sales continues to be unlikely the pressure of creditor banks on owners of distressed portfolios will be constantly increasing. Investment activity in the core sector is anticipated to match its level of the past twelve months. The investors' pressure to buy remains high but transactions are particularly limited by the lack of product. The total transaction volume Savills predicts is likely to outstrip its 2009 result in 2010 of approx. 3.4 billion.