savills-market-in-minutes-residential investment market Q1 2017

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Market in Minutes - Germany residential investment market Q3 2017

Smaller locations and portfolios, more new builds and even higher prices

  • The transaction volume for German residential property in the first three quarters of the year totalled around €9.5bn, representing an increase of 27% compared with the corresponding period last year (Table 1, Graph 1).
  • While A-cities remained the most sought-after investment locations, accounting for 45% of the transaction volume, B-cities and D-cities also witnessed significant growth in investment activity (Table 1). This can be attributed to the significantly lower price levels (Graph 4) and, to some extent, better availability of product.
  • However, the stronger demand for smaller locations is also resulting in accelerating price growth. Prices per apartment in D-cities have risen by 68% within a year compared with 18% growth throughout Germany as a whole. Conversely, the price curve for A-cities is flattening (Graph 4).
  • Acquisitions of development projects remain a significant driver of the investment market. These have accounted for 26% of investment during the year to date, which is materially ahead of the five-year average of 11%. Owing to the increase in development deals, the average transaction size has remained low at 524 apartments (Graph 2).
  • With long-term investors continuing to add to their holdings (Graph 7) and finding a corresponding supply of developments and smaller portfolios, the transaction volume this year is likely to reach approximately €15bn.