The commercial real estate investment market in Düsseldorf and its extended logistics market area achieved a transaction volume of EUR 3.26 billion in 2022 as a whole. Compared to the very restrained previous year, this corresponds to a strong increase of around 41 percent and is close to the average transaction volume of the previous five years (EUR 3.33 billion). Transaction volume varied greatly in the individual quarters. The first quarter stood out due to the Alstria takeover, while the rest of the year saw hardly any large-volume individual-property transactions and low transaction volume over longer periods. The final quarter was the second-weakest quarter of the year.
Investment focus on office properties
Office properties continue to be in demand and are responsible for 65 percent of 2022’s total transaction volume; some EUR 2.11 billion and around 21 percent above the previous year's result. Nevertheless, a weaker willingness to invest is apparent, in view of the increased and very volatile financing interest rates. Large-volume office sales in the core or core-plus risk categories were therefore rare.
In the Düsseldorf logistics market area, which also includes the surrounding municipalities, logistics and industrial real estate transactions totalled around EUR 145 million, contributing around 4 percent of the year’s total CRE transaction volume. For the first time since 2019, this asset class has suffered a year-on-year decline in transaction volume of just under 4 percent.
The retail property transaction volume stabilized in 2022. At around EUR 60 million, the result is significantly above the level of the previous year (+58 percent). The focus was particularly on high-street properties with sustainable prospects for value growth.
Mirko Kittler, Partner Capital Markets in Düsseldorf at Cushman & Wakefield, explains: "In 2023, prices for core real estate will gradually approach a low point. Against the current background of the high interest rate structure and restrictive lending, large-volume office transactions in this category will play a subordinate role for the time being. In contrast, we expect higher demand for manage-to-core and value-add product in established office submarket locations with attractive re-letting potential, also in terms of ESG compliance. Here, investment managers with solvent private equity structures or family offices are increasingly likely to come into play."
Rise in prime yield to continue in 2023
The prime yield for high-quality and modern core office properties continued to rise for the fourth consecutive quarter and currently stands at 3.50 percent. Compared to a year ago, this corresponds to an increase of 70 basis points.
The prime yield for retail properties is currently 3.20 percent. For logistics properties, the prime yield is quoted at 4.00 percent and has thus reached the 4 percent mark again for the first time since 2019.
At the end of the 2022, the European Central Bank (ECB) already announced further interest rate increases for 2023 in order to combat inflation. In view of the difficult pricing phase for high-priced core product, prime yields are expected to continue to rise for all three commercial real estate sectors.
