Investment market: Financial crisis reaches German market
At the middle of the year, the facts document what all the actors on the market have expected: the German investment market has caught a cold. The financial market crisis has Germany, too, fully in its grip. According to an investment market report compiled by Jones Lang LaSalle (JLL), after €7.9bn in the first quarter of 2008, a commercial transaction volume (without residential properties) of only some €4bn was registered between April and the end of June. At €11.9bn, the result of the first half of the year was thus 57% below that of the same period during the prior year. The number of deals fell by 43% compared to the first six months of 2007. Most of the transactions were only in the €10mn to €100mn price range. On the buyers’ side, asset and fund managers, with 25% of the transaction volume, were clearly ahead of the property corporations listed on the stock exchange (12%) and the private equity and hedge funds (11%). In both 2007 and 2008, some two thirds of the equity invested came from abroad. On the sellers’ side, German players dominated with nearly 70% of the transaction volume. The strongest asset class during the period in question was retail properties with a 38% share of the transaction volume (approximately €4.5bn), followed by office properties with 33%. For twelve months now, the report says, a sharp increase in net initial return for office properties can be observed. JLL expects that by the end of the year at the latest, market participants will have grown accustomed to the new price structure and will then somewhat enliven the German investment market. A reported limiting factor is and will remain the banks’ financing policies.