Strong first quarter for German residential portfolio investment says Savills

The German residential portfolio investment market recorded a total transaction volume of approximately ?3.77 billion in Q1 2013 according to Savills research, representing a five percent growth year-on-year. Furthermore, over 68,600 residential units changed ownership during this period, marking a three percent increase compared with the first quarter of 2012 and a five-year-high. The international real estate advisor highlights that both of these growth figures are largely the result of the Initial Public Offering of LEG NRW in which 50% of the company’s share certificates, comprising 90,000 residential units, found new owners. This generated a transaction volume of approximately ?2.37 billion.

Karsten Nemecek, Managing Director Corporate Finance – Valuation at Savills Germany, says: “The residential portfolio market has remained strong in the first quarter of 2013. Even if we disregard LEG’s IPO the number of transacted residential portfolios increased by a fifth year-on-year, which is proof of the ongoing high demand for residential property in Germany.”
Savills data reveals that in Q1 2013 the majority of buyers (56%) came from abroad, moving away from a previously domestic dominated market. In 2012 German investors accounted for over three quarters (77%) of the transaction volume. Buyers from continental Europe seeking secure investments represented the most active investor group, accounting for a 27% share of the total volume, followed by North-American investors (22%). The firm notes that international investors continued to focus on large-scale and opportunistic stock. Two of the eight transacted packages of over 1,000 units in Q1 were distressed portfolios and both were sold to foreign buyers.
Developers and building contractors were the dominating players on the vendor side in the first quarter of 2013, followed by private equity funds and close-ended funds. Eight development portfolios totalling 964 residential units were sold for approximately ?270m in Q1, almost reaching the overall 2012 figure of ?310.

Matthias Pink, head of research at Savills Germany, comments: “The development pipeline has started to catch up with the high level of investor appetite for prime residential property in urban centres that we have witnessed since 2009, however there is currently still more demand than supply. With such a sustained level of demand 2013 may yet surpass the high transaction volume of ?10.66 billion in 2012 as more and more owners are looking to benefit from a favourable market environment and wish to sell part or all of their residential portfolios. The IPO of Deutsche Annington initially envisaged for Q4 2013 at the earliest and now scheduled for July is a good example of this.”

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