20. April 2012     Print Print 

Residential investment on record trajectory

Investment in sizeable residential portfolios in the first quarter of 2012 was on track to set a new record. The registered transaction volume totalled 3.64 bn €, more than four times the prior-year figure and the best first-quarter result since the boom year of 2007. So, as was anticipated, the already very dynamic development observed last year has actually accelerated. The survey covered a total of 54 sales, involving just over 68,000 residential units. As the result of several major deals, the average volume per transaction has increased quite appreciably, to just over 67 million €. The most important deals included the sale of around 21,500 LBBW units for more than 1.4 bn € and the disposal of about 25,000 units by DKB Immobilien AG for around 960 million €. The very substantial transaction volume provides further evidence that German residential properties feature right at the top of the shopping lists of investors, many of whom regard stable economic conditions, guaranteeing secure cashflows, as more important than high yields.

Large existing portfolios well out in lead
Where the distribution of turnover according to asset classes is concerned, large portfolios of existing properties spread across several locations finished well out in front, as the result of several sizeable sales. Together, these portfolios accounted for over 87 % of all investment and thus for more than 3.17 bn €. In second place came stocks of older assets, which contributed nearly 7 % (253 million €) to the total. Project developments, situated without exception in the big cities, attracted a respectable share of just over 3 % (123 million €). Investments in stocks of modern properties (up to a maximum age of 10 years) and miscellaneous assets made only a minor contribution to the total.

* Block sales in one location

Large sales predominate
Since the first quarter saw the sale of several large portfolios, it is not surprising that the transaction size ranking was headed clearly by deals upwards of 100 million €; these accounted for more than 82 % of all turnover. Medium-scale sales of between 10 and 50 million € together produced the not inconsiderable share of around 12 %. Small investments, of under 10 million €, generated only just over 4 %, even though they were responsible for more than half of all sales transactions, with 31 registered deals.

Four investor group particulary active
In the first three months of the year, four groups of investors dominated the market, together generating more than 84 % of all turnover. In this connection it should be noted that the sale of the LBBW portfolio has been divided up according to the types of investors participating in the consortium. Accordingly, first place was taken by listed real estate companies, with a share of 28.5 % of aggregate investment. They were followed by pension funds, with just under 23 %. Then, some way behind, came equity/real estate funds (17 %) and insurances (nearly 16 %). Other investor groups deploying volumes of over 100 million € were specialpurpose funds (almost 6 %) and property firms (4 %).

German investors easily head the field
Where the origin of the active investors is concerned, German investors continue to head the field quite clearly; in the first quarter they generated 70 % of the transaction volume. This is on a par with the level achieved in 2011 as a whole. Foreign investors were responsible for 30 % of total turnover. Here, the list was topped quite easily by investors from the rest of Europe (more than 24 %), while those from North America contributed only just under 6 % to the overall volume. Buyers from other regions have so far played no role in market activity.

Purchase price levels
In the case of the large portfolios of existing properties, the average sales prices are in the range 700-800 €/m². In contrast, units in project developments in the large German cities command an average price of just under 3,300 €/m², with square metre prices ranging between around 2,800 and 4,000 €. In the case of smaller stocks, the prices for older units average out at 1,100-1,200 €/m², while the average figure for more modern units is around 1,800- 1,900 €/m².

Average sales prices according to asset classes
Q1 2012
Older properties*1,100-1,200 €/m²
Existing portfolios 700-800 €/m²
Modern properties*1,800-1,900 €/m²
Projects 3,200-3,300 €/m²
Miscellaneous2,600-2,700 €/m²

Investment turnover set to exceed prior-year result
Demand – particularly on the part of institutional and private investors – remains very high. Since their investment profile focuses more on stable and assured cashflows than on high yields and potential value enhancement, the very dynamic development can be expected to continue during the remaining months of this year. Another factor is that further large deals, such as the sale of 11,500 TLG residential units or 22,000 units in the Speymill portfolio, are in preparation or due for completion very soon. Against this background, it can definitely be anticipated that the transaction volume in 2012 as a whole will significantly exceed the prioryear figure (5.97 bn €). In view of growing competition, there is also the possibility that sales prices may go on rising somewhat.

Quelle: BNPPRE