The commercial real estate investment market in Düsseldorf and its wider logistics market area achieved a transaction volume of just EUR 545 million in H1 2023, reports international real estate consultancy firm Cushman & Wakefield (C&W). Compared to a year earlier, this corresponds to a decline of around 70 percent. The last time transaction volume was even lower was in H1 2012. However, transaction volume for in April to June 2023 were around EUR 315 million, more than in Q1. Transaction activity so far this year has been characterised by sales below the EUR 50 million mark.
Office transaction activity very cautious, more activity in retail real estate
Due to the turnaround in interest rates that began last year, transaction momentum continues to be severely impeded. The number of transactions noted so far remains modest, with six office transactions. Around EUR 165 million, or 30 percent of the transaction volume, was generated by office properties H1. This result is also the lowest half-yearly result of the last 10 years.
The sale of one of the two office projects in the "maxfrei" neighbourhood development was the largest transaction this year to date. Barmenia Krankenversicherung acquired the development project in the Kennedydamm submarket via a forward deal with Interboden and Hamburg Team. While institutional investors such as banks and pension funds have so far been very cautious, most acquisitions have been made by family offices and property developers.
There has been a significant increase in the retail real estate transaction volume, which rose to around EUR 115 million in H1 2023 (21 percent of the CRE total). In the equivalent period last year, transactions in this segment were almost completely absent. The main reason for this is Commerz Real's 20 percent stake acquisition in ten SIGNA Galeria department stores nationwide, two of which are in Düsseldorf: Am Wehrhahn 1 and Königsallee 1–9 in the best high-street location in Düsseldorf.
A further 31 percent of the transaction volume in Düsseldorf is attributable to sales of logistics and industrial properties. The city’s surrounding municipalities are also taken into account here. With a total of around EUR 170 million, H1 result is 17 percent higher than that of last year. The sale of the Areal Böhler site in Meerbusch is responsible for the majority of this figure. US firm Jamestown acquired the 23-hectare site from the Voestalpine Group for around EUR 160 million.
Mirko Kittler, Partner Capital Markets Düsseldorf at Cushman & Wakefield, explains: "The recovery in the Düsseldorf investment market continues to be sluggish. Almost a year after the start of the turnaround in interest rates, we are slowly but steadily noting gradual convergence between buyers and sellers towards new, realistic purchase prices. On the seller side in particular, the willingness to accept purchase price corrections is increasing. The majority of activity will continue to focus on small-to-medium-volume transactions to the end of the year. Large-volume core office transactions will continue to be the exception rather than the rule."
Prime office yield exceeds 4 percent mark
Prime yields for all three main property-use types – office, retail and logistics – have continued to rise since Q2 2022. At the end of Q2 2023, the prime yield for modern core office properties was 4.25 percent, the same as in 2016, an increase of 110 basis points compared to the same juncture last year.
The prime yield for high-street commercial buildings in a 1a location is currently 3.50 percent, 50 basis points above the value from Q2 2022. The prime yield for first-class logistics properties is 4.15 percent, 105 basis points above the level of a year ago.
