Properties in the German residential investment market changed hands for a total of approximately €12.5bn in the first half of the year, according to Savills (for transactions of at least 50 apartments). This transaction volume is almost double the amount invested in the corresponding period last year. The firm notes that a large proportion of these figures is down to the acquisition of Adler Real Estate by Ado Properties in March.
While transaction activity in April and May, in particular, was subdued, June saw investment figures of more than €1.7bn, back above the five-year average of approximately €1.37bn. The international real estate advisor says it appears likely that last year's investment volume of €17.6bn, the second-highest total in the last ten years, will be matched this year.
Karsten Nemecek, Managing Director Corporate Finance – Valuation for Savills Germany, said: “Owing to the Covid-19 pandemic, the residential investment market has also temporarily witnessed appreciable decline inactivity. Overall, however, the sector is likely to exhibit significantly milder effects than other use types since the stable rental income and broad risk diversification across many tenants are qualities sought by investors in times of crisis. With the number of investors and the amount of capital expected to increase and supply likely to remain limited, we expect prices to remain stable.”
Matti Schenk, Associate Research, Savills Germany, added: “Reports showing that significantly less than 1% of apartment tenants have deferred rental payments illustrate that income from residential property is very secure. Consequently, residential property is the most likely alternative to bonds from creditworthy issuers, particularly since bond yields are likely to tighten even more following the further expansion of bond purchases by the European Central Bank. Therefore, it appears likely that demand in the residential investment market will reach unprecedented levels going forward.”