German residential property attracts €6.1bn of investment in 2011

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Transaction volumes across German residential property portfolios of more than 50 units increased by 44% year-on-year to €6.12 billion in 2011, new research from CBRE has revealed.

The number of traded residential units also increased by 27% to around 92,000 units within 194 transactions, indicating that the market for large portfolios of over 1,000 units has regained momentum.

The demand for residential units in Berlin was particularly strong. The federal capital traded around €2.3 billion and more than 32,300 residential units last year, which accounts for 37% of the registered investment volumes and 37% of all residential units in Germany. As a result of the large transaction volumes and high-end development projects in Berlin, the average price per m² increased to €1,033.

CBRE attributes the run on German housing stock to the impact of the European sovereign debt crisis, which is driving German and international institutional investors towards tangible assets and the country’s stable residential market.

Konstantin Lüttger, Head of Residential Investment, CBRE Germany, said: “German residential is regarded as a secure investment at a time when the European sovereign debt market is in crisis and international capital markets are volatile. This has resulted in a strong year for the country’s housing industry. Developers have benefitted from a strong demand for individual sales as well as capital investments, not least because rents are increasing in both large and prosperous medium-sized cities and university towns where there is a shortage of supply. The confidence of both national and international investors in the German residential market is clearly reflected in last year’s impressive trading levels.”

Listed property companies dominated the investment market with an overall volume of 32%. In conjunction with closed-end investment vehicles, private investors were also very active and accounted for more than 13%. Investments were also made by open-ended (special) real estate funds (13%) as well as the public sector (10%). 

Domestic investors accounted for €4.35 billion (more than 71%) of the overall investment figure. They were followed by investors from the USA (5.7%), Sweden (4.2%) and Austria (3.4%). 

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