According to international real estate consultancy firm Cushman & Wakefield (C&W), commercial properties and development sites changed hands for approximately EUR 3.4 billion on the Frankfurt real estate market in the first half of 2022. This corresponds to an increase of 89 percent compared to the same juncture last year. The H1 five-year average was exceeded by 34 percent. The positive first-half result was mainly due to the very strong first quarter, when the alstria acquisition and the "Marienturm" sale took place. In contrast, transaction volume fell to only around EUR 1.1 billion in the 2nd quarter.
More than 80 percent of transaction volume contributed by the office segment
Office properties accounted for the lion’s share of transaction volume in the first half of the year, some EUR 2.8 billion or 82 percent. In the second quarter, approximately EUR 960.0 million was invested in this asset class, to which the forward deal for "Oststern" in Hanauer Landstrasse and the transactions of the "k.26" in the banking district and "Prisma" in Niederrad above the EUR 100 million mark made a significant contribution. The ailing Adler subsidiary Consus Real Estate sold two properties from its portfolio to the developers Garbe and Quarterback.
In the logistics and industrial real estate segment, a transaction volume of EUR 310 million was registered by mid-year 2022, corresponding to around 9 percent of the total CRE transaction volume.
Michael Fleck, Head of Capital Markets Frankfurt at Cushman & Wakefield, summarises: "The uncertainty in the financial markets in connection with the changed financing environment has not yet had an impact on the transaction volume in Frankfurt. However, investors are currently extremely selective in their purchases and are making price reductions across all asset classes. To what extent investment products currently on the market will find new buyers in the second half of the year under the given conditions remains to be seen."
Rise in yields for office and logistics properties in the 2nd quarter
The net initial yield for first-class office properties in prime locations is currently 2.85 percent and in non-central locations 4.55 percent. This corresponds to an increase of 25 basis points compared to the first quarter. The significant increase in financing costs is being clearly reflected in the level of purchase price bids and will probably result in further yield increases by the end of the year. This development could be exacerbated by an impending economic slowdown due to uncertainties in the energy sector.
First-class logistics properties are trading at a prime yield of 3.10 percent. This corresponds to an increase of 10 basis points compared to the previous quarter. The prime yield for inner-city and city centre commercial properties is 3.40 percent at mid-year 2022 and is thus stable compared to the previous quarter.
