Sharp rise in number of German portfolio transactions in Q1
4 May 2011
A market study just released by property brokers Jones Lang Lasalle shows that about €1.45 billion of residential property portfolios were transacted on the German market in the first quarter of 2011. This represents an effective doubling of the volume in the same period last year.
The figures further underpins the strength of the upswing in the German residential sector, where the increase in the number of actual transactions was also notable, rising to 55 deals in the period versus 19 in the same quarter last year.
According to Andrew Groom, the head of valuation and transaction advisory at Jones Lang Lasalle Germany, "The level of interest from investors for residential investments was high last year, but deals were often hindered by the widely diverging perceptions of cost and value. But this year we're actually expecting to see a real investment boom in the residential sector."
By far the largest transaction in the first quarter of this year was the acquisition of a majority stake in Colonia Real Estate AG by TAG Immobilien AG for 800 million. Other notable deals were two large acquisitions by the Swiss-based Corestate Group for about €155 million, and Bouwfonds' purchase of a large portfolio for its European Residential Fund for €61 million.
Leaving the TAG deal aside, the average transaction size of the portfolios was about €12 million in the quarter. "Given the shortage of supply of larger portfolios, even smaller deals are beginning to feature more prominently for institutional investors. Smaller property packages are often synonymous with higher quality", said Groom.
Where did most of these deals take place? Heading the list was Germany's most highly populated state of North Rhine-Westphalia, with 12 transactions and a total transaction volume of €239 million of which there were four deals in the Ruhr area for about €183 million and five deals in Düsseldorf worth about €40 million.
In Berlin 11 portfolio deals worth €108 million were concluded, while thanks to the Bouwfonds acquisition, Bavaria also put in a strong performance, with nine transactions worth €100 million, of which about €70 million were in Munich.
Groom also commented on the increasing importance of foreign investors on the German market, who were responsible for 19% of the deals at the end of March. "Germany is increasingly the focus for international investors with the residential market offering stability and a regular cash flow", he said.
Across town, at Savills, the figures for the first quarter differ slightly from those at Jones Lang Lasalle, but the basic thrust is the same. Savills' figures put the number of portfolio transactions at 45 for the quarter, involving more than 17,500 residential units at a total value of €880 million. This represents a transaction volume 9% higher than last year, given an average price per unit 10% lower than last year. Savills too notes the trend to smaller deal sizes, and the renewed interest by international investors.
Judging from reports coming in to REFIRE from the various broker groups, this quarter looks as if it's shaping up to be even better. April has already seen residential portfolio deals worth more than €337 million being booked.
These include the acquisitions by French investor Foncière Développement Logements (FDL) for more than €80 million (see elsewhere in this issue), and acquisitions from the Israeli-Dutch group Brack Capital for €73 million and the Augsburg-based Patrizia Immobilien AG's €50 million spend. By mid-April, the total value of €1.8 billion for the year already represents more than half of last year's total volume.