Germany's residential portfolio transaction market saw a significant boost in Q1 2012 when compared to the previous quarter and to Q1 2011 with 35 residential packages comprising approximately 56,000 units sold, according to Savills.
The total transaction volume, which totaled 2.92 billion included the sale of DKB Immobilien AG comprising approx. 25,000 residential units to TAG at approx. 960 million and that of LBBW's portfolio of 21,000 units at approx. 1.4 billion to a consortium headed by Patrizia. Total transaction volumes and the number of transacted units sold showed 232% and 222% rises respectively. In contrast, however, the number of transacted packages decreased by 26% compared to Q1 2011.
Karsten Nemecek, Savills Managing Director of Corporate Finance, says: "For the first time since 2007 residential packages of 10,000 units and more are being sold again to a significant extent. 2012 is set to be the year for big deals."
In terms of the wider market, over three quarters of the transactions comprised less than 300 units in Q1 2012. With the exception of the two large-scale portfolio sales the average number of units per portfolio remained almost unchanged compared to the previous quarter and was slightly in excess of 300 but down by 18% year on year.
"With the exception of core properties, typical bank financing is difficult to obtain" adds Matthias Pink, Savills researcher in Germany.
According to the data, German buyers dominated the residential portfolio market in the first quarter of 2012 and accounted for a share of 78% - this follows the 2011 trend which saw foreign investor share declining. In this regard, Savills suggests, the current market activity differs from the situation seen in the years 2004 to 2007 when large packages were bought particularly by foreign investors.
Following the trend from 2011, residential packages in Berlin were particularly sought after in Q1 2012. In the first three months of the year almost 6,000 units were sold in the federal capital (circa 12% of the total number of units and 48% without LBBW and DKB). The 21,000 apartments of LBBW are mainly located in Stuttgart and its catchment area while the properties of DKB are almost exclusively spread over locations in the eastern part of Germany.
At 2.92 billion the Q1 2012 investment volume total already amounts to 60% of the 2011 full year investment volume of 4.8 billion. In 2012 Savills expects a total of 6 billion will be exceeded.
Nemecek continues: "This volume will only materialize through further large-scale deals such as the proposed sales of Speymill and TLG. The market for portfolios below 1,000 residential units is likely to see continuous low activity albeit rising completions of residential developments will lead to a slight revival of this market."