Cushman & Wakefield, one of the world's largest real estate consultancies, has recorded a transaction volume of EUR 22.40 billion for the commercial investment market in Germany for the full year of 2024. This represents an increase of around 8 per cent compared to the same period of the previous year.
Simon Jeschioro, Head of Capital Markets & Investment Advisory Germany at Cushman & Wakefield, explains: ‘The German real estate market offers attractive opportunities for investors due to the current undervaluation of all assets. In particular, the office, retail, and logistics sectors have benefitted from the significant increase in yields since the shift in interest rates in 2022. Looking ahead to 2025, lower financing costs and the potential for rental growth will further strengthen the market and enable long-term value appreciation.’
Helge Zahrnt, Head of Research & Insight Germany at Cushman & Wakefield, adds: ‘The increase in transactions was largely driven by numerous large deals, although many of these transactions were based on insolvencies, owner-occupier purchases, share deals, and also transactions involving equity-rich family offices. With market conditions continuing to stabilize, we can expect to see a resurgence of yield-focused institutional investors in 2025, which will further stimulate competition among investors.’
Transaction volume: final quarter Records Highest Transaction Volume
- The anticipated end-of-year rally largely failed to materialise, yet the fourth quarter of 2024, with a total of nearly EUR 5.97 billion, remains the strongest quarter of the year. In the first three quarters, the transaction volume ranged between EUR 5.28 billion and EUR 5.61 billion.
- A positive contribution to the transaction volume came notably from a series of large-volume transactions in the triple-digit million-euro range. In 2024, a total of 44 individual and portfolio transactions exceeding EUR 100 million were recorded (approximately 45 per cent of the transaction volume). In the previous year, there were 33 such sales (35 per cent share).
- The largest transaction of the fourth quarter was the sale of Therme Erding near Munich. The Therme Group from Austria acquired the leisure property from the Wund family for more than EUR 350 million.
- The five-year average transaction volume stands at EUR 51.82 billion, which was undershot by approximately 57 per cent in the full year of 2024.
- International investors, including institutional investors, are once again showing increased interest in the German market. Overall, the share of international investors reached its highest level since 2022 at 41 per cent and a volume of EUR 9.29 billion. More than half of the large-volume transactions (over EUR 100 million) were made by foreign buyers.
- The transaction volume in the Top 7 markets has seen a significant increase. It rose from EUR 7.47 billion in 2023 to a total of EUR 11.76 billion in 2024 (+57 per cent). The share of the total German transaction volume accounted for 53 per cent at the end of the year (compared to 36 per cent in 2023).
- Many investors have taken advantage of the price and yield adjustments in the top 7 over the past twelve months, amid the declining and stabilising financing environment, to increasingly invest in value-add and core+ investments with attractive value enhancement potential.
Yields: Full year 2024 characterised by yield stability
- In the fourth quarter of 2024, prime yields remained stable. With the exception of an increase in yields for prime office properties in Q2, prime yields for retail properties in prime locations and logistics properties have remained stable since the beginning of 2024.
- By the end of the Q4 2024, the average office prime yield for core assets in the top 7 markets was 4.91 per cent. Compared to the Q4 2023, the average prime yield has increased by just 13 basis points.
- Munich and Berlin are currently achieving the lowest office prime yields at 4.60 per cent and 4.80 per cent, respectively. Düsseldorf and Cologne have the highest yields, both at 5.10 per cent.
- The average prime yield for city-centre retail properties in the top 7 markets was unchanged at 4.46 per cent at the end of Q4 2024, compared to both the previous quarter and the end of 2023.
- The average prime yield for core logistics properties also remained unchanged at 4.50 per cent in Q4 2024. The prime yield has remained steady compared to the previous year.
Types of use: logistics and industrial properties with the highest transaction volume, office properties catch up
- Logistics and industrial properties continued to account for the highest transaction volume in 2024, with a total of EUR 6.02 billion (27 per cent share). This result surpassed the previous year's by around 3 per cent. This result was mainly due to numerous transactions above the EUR 100 million mark. Nearly 40 per cent of all large sales were attributed to logistics and industrial properties, with high-volume portfolio transactions being particularly prominent.
- Office properties have regained their position as the second-strongest asset class over the course of the year. With a total volume of EUR 5.13 billion, the transaction volume was around 15 per cent higher than in the previous year, with office properties accounting for 26 per cent of the total transaction volume in Germany. One of the largest office transactions of the year was the sale of the ‘Rossio’ in Cologne in Q3 for EUR 270 million.
- With a turnover share of just under 18 per cent and EUR 4.14 billion in transaction volume, retail properties recorded a decline of nearly 6 per cent compared to the previous year. The sale of the KaDeWe department store in Berlin, valued at EUR 1.0 billion, provided a significant boost to turnover. However, the greatest transaction dynamics were seen in the smaller segment between EUR 20 million and EUR 50 million.
- The transaction volume for hotel properties amounted to approximately EUR 1.30 billion, exceeding the previous year's result by 10 per cent. Notably, BC Partners acquired a portfolio of 30 Ibis hotels from Accor for nearly EUR 100 million.
