【Savills】Fewer transactions, fewer buyers - and still rising volumes

• In July, the transaction volume on the investment market for commercial and residential real estate amounted to around €6.8bn. The rolling twelve-month volume was €73.9bn at the end of the month and rose by 5.7% compared to the previous month. The rolling volume has thus been rising since March 2021. Residential property accounted for around €1.0bn last month, while commercial property changed hands for around €5.7bn. July was thus the second strongest month in terms of turnover on the commercial property market since the beginning of the COVID-19 pandemic in Germany.
   
• The rising volumes on the commercial property market are mainly driven by a few large-volume transactions. These include the sale of the Frankfurt office tower T1 for approximately €1.4bn to a joint venture of Allianz and BVK as well as the sale of 34 former Real hypermarkets to x+bricks. In the year to date, the ten largest transactions have accounted for around 26% of the total transaction volume. No upward trend can yet be discerned in the number of transactions. In the last six months, an average of 148 transactions per month took place. This is lower than in the first and second half of 2020 (154 and 159 transactions per month, respectively). Since May 2021, the number of transactions has even been slightly decreasing.
   
• Because the number of transactions is low and a large part of the volume is attributable to only a few purchases, the invested capital is concentrated on a few buyers. The ten largest investors (measured by purchase volume) accounted for around 35% of the volume in the last six months. On average over the past five years, the top 10 buyers accounted for only 20% of the volume. In total, about 360 investors known by name became buyers of commercial properties in the last six months. This was approximately 4% less than in the second half of 2020 and even almost 11% less than in the first half of 2020. This reflects the shortage of supply, as the number of interested investors and the capital to be invested have tended to increase. For the foreseeable future, there is therefore a great deal of capital available for property purchases, which should stabilise the transaction volume at a high level. Particularly in the case of core products and types of use that are in focus, the investment pressure will ensure persistently high or even slightly rising prices in the further course of the year.

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