Owner-occupancy strengthens the office real estate segment
From January to the end of September, office real estate and office development projects were the strongest asset class, generating a total transaction volume of EUR 430 million. This corresponds to 60 percent of the total CRE transaction volume. This level was however still 8.0 percent below the very high prior-year figure of EUR 2.20 billion. More than 40 percent of the volume is accounted for by purchases for owner-occupancy. These included the largest office transaction – and at the same time the largest transaction in Hamburg's real estate investment market this year – with a volume of EUR 119 million. PPS Immobilien Holding sold the “Fritz Schumacher Building” on Gänsemarkt in the City Centre submarket to the City of Hamburg in the 2nd quarter.No transactions in the logistics segment
In the Logistics and Industrial real estate segment, not a single transaction took place in Q3. This means that the transaction volume here has remained unchanged since Q2 at around EUR 100 million, or 14 percent of the CRE total and is 71 percent lower than at this point last year (EUR 340 million). The largest single transaction was the sale of “Panattoni Park Hamburg Nord” to J.P. Morgan Asset Management and Cromwell Property Group in Q1 (over EUR 90 million).Transaction volume decline of 81 percent for retail properties
At around EUR 80 million, retail real estate generated 11 percent of the CRE transaction volume. This was 81 percent below the previous year's figure of EUR 420 million. One of the most significant single-property transaction was the sale of the “Tibarg Center” by Generali Deutschland Lebensversicherung to Hamburg-based asset management company Prof. Dr. h.c. Hannelore Greve for around EUR 50 million.Niklas Hensiek, Associate Capital Markets EMEA at C&W, explains: “The pricing phase continues and the restraint in the real estate investment market is expected to continue over the remainder of the year. However, the gap between buyers’ and sellers’ purchase price expectations is increasingly narrowing and concordance is coming closer. By the end of the year, a price level could be reached that would mark the beginning of a market revival in 2024.”
Yields continue to rise
The rise in yields for prime properties triggered by the interest rate turnaround in the summer of 2022 continued in the 3rd quarter of 2023. The net initial yield for first-class office properties in Hamburg’s central locations was quoted at the end of the 3rd quarter of 2023 at 4.40 percent, which is 125 basis points higher than a year ago. The prime yield for commercial buildings in 1a locations is currently 4.30 percent. The year-on-year increase was 60 basis points. For first-class logistics properties, the prime yield is also 4.30 percent, which is an increase of 70 basis points since Q3 2022.
After the tenth increase by the ECB in September 2023, the key interest rate now stands at 4.50 percent. Due to the fact that interest rate changes precede prime yields, C&W expects further increases in yields in these asset classes in the final quarter of the year.
