Cushman & Wakefield, one of the world's largest real estate consultancies, has recorded a transaction volume of €6.13 billion in the German commercial investment market at the start of 2025. Compared to the same period of the previous year, this corresponds to an increase in turnover of around 9 per cent.
Tina Reuter, CEO Germany at Cushman & Wakefield said: ‘ The current mix of geopolitical crises, US tariffs and a weakening economy, combined with the billions in special funds for infrastructure and defence measures that the German government has had approved by the Bundestag, are causing mixed feelings among consumers and investors and high volatility on the capital markets. From a current perspective, however, the momentum for property investments remains extremely attractive due to the current risk/return ratio."
Simon Jeschioro, Head of Capital Markets & Investment Advisory Germany at Cushman & Wakefield, explains: "The commercial investment market has made a promising start to the new year, underpinning both the clear stabilisation of the market and the strong interest in commercial real estate. Investor confidence is gradually returning and is growing again, particularly in the office segment. Due to the ongoing stabilisation of yields for core products, the willingness to make acquisitions can be expected to remain high thanks to attractive investment opportunities, despite the volatile market and financing environment."
Transaction volume: strongest start to the year since the interest rate turnaround in 2022
- For the first time since the 4th quarter of 2022, the commercial investment market in Germany exceeded the €6 billion mark again. While the volume of portfolio transactions fell to €1.40 billion (-11 per cent compared to the same period of the previous year), turnover from individual sales rose to €4.73 billion (+17 per cent).
- The 5-year and 10-year averages for the first 3 months were undercut — still significantly — by around 45 per cent.
- Of the total of nine major transactions in the three-digit million euro range, five are attributable to individual sales. One of the largest transactions was the sale of the Upper West property in Berlin. The Schoeller Group secured the tower block from the Signa insolvency for 450 million euros.
- The largest portfolio transaction was the purchase of a total of 45 food stores by Slate Asset Management worth around 420 million euros.
- Many investors were much more willing to buy and were therefore prepared to enter into larger transactions again. The number of sales in the €50 million to €100 million range increased significantly and totalled €1.36 billion. In the same period of the previous year, investments of this size only contributed 850 million euros to the transaction volume.
- Institutional investors from abroad are increasingly exploring the German market and looking for opportunities with an attractive risk/return ratio. The participation of international investors rose by 14 per cent compared to the first quarter of 2024 to a total of €2.22 billion. Their share of the total German transaction volume was therefore 36 per cent (34 per cent in Q1 2024).
- The transaction volume of the top 7 markets rose only slightly (by around 5 per cent) to €2.92 billion at the start of the year. The share of the total transaction volume at the end of the quarter was just under 48 per cent (50 per cent share in Q1 2024).
Yields: Yield stability across the board, debt package causes uncertainty
- In Q1 2025, prime yields in the three main types of use — office, retail and logistics — remained stable. With the exception of an increase in yields for first-class office properties in the second quarter of the previous year, prime yields for commercial properties in prime locations and logistics properties have remained constant since the beginning of 2024.
- At the end of March 2025, the average prime office yield for core properties in the top 7 markets was 4.91% and has therefore remained constant for three consecutive quarters. Compared to the first quarter of 2024, the average prime yield has thus increased by just 13 basis points.
- The lowest prime office yields are currently being achieved in Munich and Berlin at 4.60 per cent and 4.80 per cent respectively. Düsseldorf and Cologne have the highest yields at 5.10 per cent each.
- The average prime yield for city centre commercial properties in the top 7 markets was unchanged at 4.46% at the end of the first quarter of 2025 compared to both the previous quarter and the beginning of 2024.
- The average prime yield for core logistics properties was also unchanged at 4.50 per cent in the 1st quarter of 2025.
- The outlook for prime yields remains stable for the time being, with a possible slight downward trend towards the end of the year. However, the uncertain economy, US tariffs and the new debt package are causing continued volatility, especially in long-term bond yields, which have a direct impact on property financing and therefore on pricing.
Types of use: logistics industrial properties, office and retail each account for over 20 per cent of sales
- Logistics and industrial properties remained the driving force on the commercial investment market at the start of the year, achieving a transaction volume of €1.57 billion (26 per cent share). Compared to the previous year, the result fell only slightly by just under 2 per cent.
- Office properties exceeded the previous year's result by a strong 58 per cent. Accordingly, the volume in the first three months totalled 1.53 billion euros. Office properties have thus caught up strongly again and have become the second strongest asset class. The sale of the Upper West in Berlin contributed significantly to this development. In total, there were three sales of office buildings above the 100 million euro mark.
- With a turnover share of around 20 per cent and a transaction volume of 1.26 billion euros, retail properties also recorded a significant increase in turnover of almost 64 per cent. The bulk of the transaction volume was generated by Slate Asset Management's purchase of a food portfolio valued at 420 million euros.
- The transaction volume of hotel properties totalled €400 million in the first quarter of 2025, exceeding the previous year's result by 55%. In Hamburg and Cologne alone, three hotel transactions totalling just over €200 million were recorded.
