Germany remains one of the key players in real estate transactions on the global commercial investment market. Knight Frank comes to this conclusion in a current market report. According to the report, the German market also successfully resisted a general negative trend in the first half of the year. The COVID 19 crisis has led to restrained investment activity in real estate transactions worldwide in the first half of 2020. Compared to the first half of 2019, the total volume of all global, cross-border transactions in the first half of 2020 fell from USD 109.6 billion to USD 91.6 billion. This represents a decrease of 16%. Including domestic investments, the volume worldwide even fell by 21% to USD 320 billion. This is the result of the report “Active Capital 2020” by the international real estate consultancy Knight Frank.
Germany benefits from an uncertain environment
Due to the uncertainties caused by the pandemic, stable, and secure investment locations such as the German commercial real estate market in particular benefited. Germany is one of the few countries where the volume of investment has grown. In the second quarter of 2020, cross-border and domestic capital flows into the German commercial real estate market amounted to 16.6 billion dollars. In the same period of the previous year, this figure was only 13.1 billion dollars, 27% less. Germany was also the second most popular destination for global real estate investors after the USA ($32.3 billion).
European market leader across all sectors
A closer look at the individual asset classes shows Germany as the second leading global investment market in the sectors of a senior citizen and nursing homes, industrial, retail and residential real estate for domestic and cross-border transactions. In-office real estate, Germany ranks third among the most popular international investment destinations. On a European level, Germany is the market leader across all sectors.
Residential and care properties are growing particularly strongly
From the second quarter of 2019 to the second quarter of 2020, the greatest growth was seen in the German submarkets of residential real estate, which grew by 66%, and senior citizens’ and care homes, which grew by 41%. However, even office (+11%) and industrial (+10%) grew at double-digit rates. The largest share of the overall German market is accounted for by residential real estate at 51%, followed by office real estate at 25% and industrial real estate at 9%.
Exceptionally good handling of the crisis
“Germany has handled the crisis extraordinarily well so far,” comments Ole Sauer, Managing Partner at Knight Frank in Berlin. “Rapid and resolutely implemented measures such as short-time work benefits and a rent moratorium show the efficiency with which the German government has steered against a severe economic downturn. International investors would also see this if they were looking for low-risk and at the same time high-yield locations. Although the German sub-markets are not as liquid as London or Paris, for example, they are recovering remarkably quickly from critical influences, according to Sauer. All in all, Germany remains one of the most attractive investment locations for global capital due to its market stability and resistance. (mh) Picture: © Jürgen Fälchle – stock.adobe.com