INVESTMENT ACTIVITY IS SMALL-SCALE SO FAR; BUT LARGER DEALS ARE IN THE PIPELINE
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In the third quarter, the Frankfurt investment market confirmed what had already been observed in the first half of the year: while the pipeline of sales-driving approaches which are still in the marketing phase remains at a high level, only a few rather smaller properties have been sold in the first nine months.
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Overall, the transaction volume currently stands at around €551 million at the end of the third quarter, with an average investment volume of just over €20 million per deal — a very low figure. However, there has been a slight upward trend in the smaller segments, as evidenced by the fact that around 57% of the interim result was generated in the past three months.
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The exceptionally strong performance of the office occupier market is likely to have a positive impact on investment activity in Frankfurt in the future and restore confidence in the market. The highest take-up in 20 years was reported, and prime and average rents continue to remain under upward pressure. Given the immense importance of large-volume office investments for the location, this boosts confidence in current and future marketing processes.
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As no reference deals have been recorded in the absolute prime segment to date, and ongoing processes do not suggest otherwise, prime yields are largely holding steady. Top office properties are trading at 4.50%, while the best high street assets remain at 3.75%. Prime yields for logistics properties have increased by 15 basis points to 4.40%.