Savills reports that the German market for residential portfolios picked up in 2009, in particular the second half of the year saw residential portfolios actively transacted compared to H2 2008. 107 residential portfolios comprising a total of some 56,000 residential units changed hands last year.
The total transaction volume of these properties amounts to an estimated 3.2 billion which is almost half the amount of 2008. A tranche of 3.4 billion also occurred in this time period through the sale of 93,000 LEG apartments in North Rhine-Westphalia. Disregarding the LEG transaction the market was noticeably more active in 2009 than in 2008 both with regard to the number of transactions and the number of units sold.
Overall 11 transactions of portfolios comprising in excess of 1,000 residential units each traded, which adds up to over half of the total number of units sold in 2009. Matthias Pink of Savills Research says: "Approximately 75% of the portfolios sold a total of less than 500 residential units each. This shift towards smaller-sized portfolios is due to the buyer structure having changed. In addition to private investors and public and private housing associations, the most active buyers were closed-end funds as well as special funds. Having bought six portfolios comprising a total of just below 1,600 units DeWAG Group played the most active part among the buyers. Meanwhile vendors included municipal housing associations, insurance companies and some listed property companies."
Investors focused very clearly on high-quality stock and project developments in prospering metropolitan areas. This is also reflected in the weighted average price of approximately 55,000 per unit which can be determined in those cases where the purchase price has been disclosed. "This figure does, however, not reflect an overall increase in values of German residential property but rather points to a deficit in supply at the prime end of the market," explains Benjamin Poddig, Associate Director of Savills and specializing in the valuation of residential properties.
Savills reports that various residential property funds along with private investors continue to look for suitable properties. However, latent fears of inflation and the lack of alternative investment opportunities will cause owners to remain reluctant to sell in 2010. It further remains to be seen whether lower quality stock of which the majority is still in the hands of opportunistic investors will be able to attract buyers.