Market Report Office Germany H1 2014 | KGAL Real Estate


The German economy is on course for solid growth. The economic situation also appears promising for 2014 and 2015. The international environment, however, is only gradually recovering and southern Europe remains under pressure despite some signs of relief.

Germany’s strong economy and its solid position as a robust pillar of the Eurozone are also boosting the domestic real estate market. The ongoing crisis in the Eurozone is another significant factor in the growth of the commercial investment market. High-value commercial real estate is a magnet for domestic and foreign investment capital. This is shown by the dynamic growth in the volume of commercial transactions, which totaled €30.7 billion in 2013. Revenues were also the best since 2007, and increased 21 % over 2012.

The office real estate asset class accounted for almost half of all revenue (46 %) in 2013 at €14.1 billion, a rise of 33 % in investment volume compared with the previous year (EUR 10.6 billion). We expect volume to rise again in 2014, unless it is slowed by supply bottlenecks. Initial yields from prime office real estate have been down slightly and stable. However, returns could continue their moderate downwards trend if demand remains high for top real estate in prime locations.

(This article features excerpts from the full report – please download it here)