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Office market Q3 2023

As expected, the German office markets still have to wait for an upward economic trend, as the German economy has not yet been able to regain momentum in a difficult global market environment. The ECB's tough stance on inflation during the summer compounded the problem. Germany's key leading indicators from ifo and ZEW in particular reflected the pessimistic outlook. Accordingly, the postponement of growth and investment decisions remained on the agenda, with direct consequences for letting activity on the office markets. The letting activity remains at a below-average level, but an increasing number of locations showing signs of stabilization and initial signs of a catch-up trend. Take-up in the eight locations of Berlin, Cologne, Düsseldorf, Essen, Frankfurt, Hamburg, Leipzig and Munich totaled just under 1.9 million m² in the first nine months of 2023.

Commercial investment market Q3 2023

Activity on Germany’s commercial investment markets remained subdued in Q3 but nevertheless posted a slight upturn compared with previous quarters. Commercial transaction volume came in just shy of €16.3bn at the end of September. That put transaction volume down roughly 63% compared to the previous year’s record result; however, the significance of this comparison is limited due to the drastic shift in the debt environment. The current result also fell 55% short of the 10-year average, which highlights the current lacklustre momentum. Many investors are still adopting a wait-and-see stance, although we are seeing a tangible uptick in investor interest. Based on the perspectives, we expect transaction volume to stay moderate for the remainder of the year, however, with a slight upward trend as seen in Q3. Yields should continue to rise slightly before stabilising next year. We also expect to see a slight increase in transaction volume in H1 2024 in response to economic recovery and the anticipated planning certainty around the debt environment.

The investment volume in certified green buildings in Germany in 2022 remains at a very high level of approximately €11.2 billion. Although the volume, like the investment market as a whole, declined slightly in absolute terms compared to the previous year, the relative share of certified assets in the investment market rose to an all-time high of 30.6 %.

In a challenging and uncertain situation, certifications are perceived as a reliable signal for ESG and sustainability. ESG criteria have achieved a very high status in asset management and investment decisions in a short period of time with the new regulatory framework of the Taxonomy and Disclosure Regulation of the EU.

Logistics market Q3 2023

In the current year, the nationwide logistics market was faced with the challenge of having to follow up on the two record results from the previous year's periods. Even though it was unable to do so, with warehouse and logistics take-up totalling around 4.5 million m² after the first three quarters (-32 % compared to Q1-3 2022), the demand situation can be assessed as somewhat more restrained due to the economic and geopolitical uncertainty factors, but overall still as good (only -12 % compared to the ten-year average). The most important determinants that have had a limiting effect on the overall result in take-up include first and foremost the challenging framework conditions for project developments, the further shortage of space in and outside the major logistics regions and the increasing importance of contract extensions in existing properties. In the course of the tightening of the supply-demand relationship outlined above, rents are also under further upward pressure. However, it is unlikely that this will continue to develop as dynamically as it has in recent years.

Retail market Q3 2023

At the end of the third quarter, the letting situation on the nationwide retail market continues to be differentiated: Driven by the large-scale retail segment, the overall result shows an exceptionally high take-up with a simultaneous moderate number of lettings and openings. Fewer, but often larger and more modern stores in very carefully considered micro-locations and with a well-thought-out customer approach are now one of the most important objectives of well-known retailers when improving their own branch network. With a total take-up of almost 440,000 m² in German innercity-locations, the nationwide retail market has already exceeded the overall result from the previous year after the first three quarters (Q1-4 2022: around 390,000 m²). Even if this data initially sheds quite a positive spotlight on the development of demand within the stationary retail landscape, the letting situation must be assessed in a very differentiated manner depending on the city, location, shop and sector. Nevertheless, it should be noted that retailers are currently playing a more active role in shaping the transformation processes within innercity-locations than in previous years and are attempting to position themselves in the best possible way for the future as a result.

Residential Dashboard 2023

The course of 2022 so far has been characterised by different, very dynamic developments. On the one hand, with the ongoing transition of the Corona pandemic into an endemic, the usual movement is slowly returning to society and the housing markets. On the other hand, the Russian war of aggression and the strong increase in inflation created a new challenging market environment. Rising SWAP rates and worsening financing conditions have caused an overall slowdown in market dynamics. Overall, the housing markets are thus in a phase of consolidation. On average, rents and prices are currently stabilising. However, there are clear local differences.

Residential rental & purchase price navigator

The residential markets of the most popular metropolises in Germany have been dominated by rising rental and purchase prices for years. But what is the situation in the rest of the country? BNPPRE investigated this question and analyzed all 108 independent cities in Germany. With the BNPPRE Residential Navigator, which is updated every six months, you can make further progress through the numerous residential markets and keep an eye on rental and purchase price developments (for condominiums) in the new builds and existing stock as well as other key figures.

Hotel Dashboard 2022

Given the outlook of further interest rate increases and a slowing economy, the hotel investment market has to face various uncertainties at the beginning of 2023. In addition, the diverging price expectations of sellers and potential buyers continue to restrain investment activities. Nevertheless, the tailwind on the operator side is getting noticeably stronger given the quick recovery in the number of overnight stays and especially the performance key indicators. This improves the predictability of possible investments, allowing market activity to pick up considerably again by the middle of the year.

The Hotel Dashboard from BNP Paribas Real Estate provides an overview of the development of hotel investment and performance indicators in the various top markets in Germany.

BNPPRE Tourism analyser

On the German hotel market, after the impactful Corona years of 2020 and 2021, all key performance indicators suggest that the recovery of tourism in Germany has gained significant momentum, especially since summer 2022. With a total of around 349 million overnight stays between January and the end of September, the figures for 2021 as a whole (around 310 million guests) had already been outperformed by almost 13% before the start of the fourth quarter. On a monthly basis, the number of overnight stays has been on a par with the level of 2019 since August due to the renewed demand impulses in city and business tourism as well as among guests from abroad. An analysis by BNP Paribas Real Estate on the most important developments and trends in the German hotel market shows how the Corona crisis has affected the general conditions in the hospitality industry and influenced travel behaviour in Germany.