Investments in European retail real estate are expected to decline in the 4th quarter. But buyers would continue investing in Germany in the last 3 months of 2011 and in 2012.
Cities including Frankfurt, Munich, Hamburg, Dusseldorf and Berlin are less impacted by economic uncertainties and speculation over the euro zone future than other European markets. “Germany is the preferred choice for investors because of the size of its economy and property markets as well its geographic structure, with a fragmented market through five top cities and business centers so there is a distributed risk profile” according to CB Richard Ellis Germany.
Investments in Europe retail real estate rose 13% to € 77 billion in the first nine months of the year 2011 compared with the same period one year earlier according to BNP Real Estate. In Germany, € 12.62 billion were spent during this period up from 10.8 billion in the whole year 2010 according to the same source.
German cities registered the strongest growth of the sector so far this year as demand from international retailers pushed rents upwards offering fair returns to investors. Consequently, the country overtook United Kingdom in the third quarter for the first time as Europe’s largest market for commercial real estate investments.
The office sector was also very active as the rental space rose 18% to 2.45 million sq.m in the main 8 cities. The vacancy rate continues declining.
Cash-rich funds that are looking for defensive assets will continue acquiring shops and offices in Germany as this market is resisting remarkably despite the crisis.
Real estate investment in the first nine months of 2011 (in € bil) Europe : 2010 : 67.82 2011 : 76.62
including in Germany respectively, 9.6 and 12.62 according to BNP Paribas Real Estate