The commercial real estate investment market in Düsseldorf and the extended logistics market area achieved a transaction volume of EUR 635 million in the first half of 2024, according to research by Cushman & Wakefield, one of the world’s largest real estate consultancies. Compared to the same period last year, the Düsseldorf investment market has thus increased by around 17 per cent. Two large individual transactions are largely responsible for the increase in turnover.
Simon Jeschioro, Head of Capital Markets & Investment Advisory Germany at Cushman & Wakefield, explains: “Following weak quarterly turnover, the Düsseldorf investment market has gradually stabilised again. Both the volume and the registered transactions give us confidence that the moderate upward trend will continue. Against the backdrop of high demand for attractive office space in very good locations, investors are increasingly focusing on the repositioning and value enhancement potential of office properties close to the city centre”.
Transaction volume: Two large individual transactions, but no increasing market momentum
- There were two transactions in the triple-digit million euro range in the first half of the year. The first was B&L’s acquisition of a 35 per cent stake in the Centrum Group's mixed-use property “KII” in Schadowstrasse in the first quarter. Secondly, the sale of the former Galeria department stores’ at Wehrhahn 1 by the insolvent Signa Holding to the City of Düsseldorf in the second quarter falls into this size category.
- Overall transaction activity remains subdued and, with 23 registered sales, is only slightly higher than in the same period of the previous year (21 transactions). The 5-year and 10-year averages for the first half of each year were missed by just under 48 per cent and around 43 per cent respectively.
- Nevertheless, the 2nd quarter achieved the best quarterly result since the 4th quarter of 2022 with EUR 375 million. Around EUR 260 million was invested between January and March 2024.
- On the buyer side, institutional investors continued to adopt a wait-and-see attitude due to the high and volatile interest rate environment. The share of institutional capital increased only slightly from 17 per cent in the previous year to 25 per cent in the first half of 2024.
Yields: Only prime office yields continue to rise quarter-on-quarter
- The market for core office investments remains very subdued and the willingness of institutional investors to invest and sell is very low.
- The prime yield for core office properties stood at 5.10 per cent at the end of the 2nd quarter, a further slight increase in yields of 10 basis points compared to the 1st quarter.
- Compared to Q2 2023, the prime yield has thus risen by 85 basis points.
- The prime yield for commercial properties in prime locations remained unchanged from the previous quarter at 4.45 per cent and was therefore 35 basis points higher than in the second quarter of 2023.
- Cushman & Wakefield recorded a prime yield of 4.50 per cent for core logistics properties at the end of the second quarter of 2024. This corresponds to that of the previous quarter, but is an increase of 35 basis points compared to the same time last year.
- Cushman & Wakefield expects prices and yields to stabilise across all asset classes over the course of 2024. The European Central Bank’s first cut in key interest rates heralded the start of an imminent recovery on the financial markets and thus falling bond and borrowing rates.
Types of use: office transaction volume catches up; clear focus on value-add and core-plus
- Office properties have once again become the strongest asset class among the classic types of use on the Düsseldorf investment market in the year to date, achieving a transaction volume of EUR 170 million and a 27 per cent market share. This represents a slight increase in turnover of 3 per cent compared to the previous year.
- Structural change in the office sector and uncertainty regarding future space requirements continue to have a firm grip on the office investment market, particularly in older existing properties outside city centre locations and established office submarkets.
- While there were still no core office transactions, investors and owner-occupiers took advantage of the favourable market situation for core-plus and value-add investments with the aim of repositioning and potential for value appreciation. These two risk classes account for around 90 per cent of the total office transaction volume.
- The investment volume with retail properties was significantly influenced by the sale of the former Galeria department stores' for just over EUR 100 million, meaning that the retail volume totalled EUR 130 million in the first half of 2024 (20 per cent share of sales).
- The strongest type of use was other types of use with around EUR 220 million and a 35 per cent share of sales. This also includes the acquisition of shares in the mixed-use property “KII” from Centrum to B&L. The market was also characterised by a number of property sales.
- All logistics and industrial property sales took place in the municipalities surrounding Düsseldorf (extended Düsseldorf logistics market area) and achieved a transaction volume of around EUR 90 million in the first half of the year (13 per cent share of sales). Compared to the previous year, this represents a drop in turnover of around 50 per cent.
