SUBDUED TRANSACTION ACTIVITY IN THIRD QUARTER
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The underlying conditions for the German investment market remained challenging in the third quarter. Geopolitical uncertainty and rising financing costs continued to shape the market environment. As a result, investors spent the past three months recalibrating business plans and reassessing risk-return profiles and investment opportunities, which in some cases slowed acquisition processes. Accordingly, investment volume declined again quarter-on-quarter, with only around €4.9bn transacted in Q3, down 21% year-on-year. Despite a strong start to the year, total investment volume reached €17.1bn at the end of the third quarter, falling just under 2% short of the previous year’s result.
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The significant increase in financing costs is also reflected in yield movements. In the third quarter, net prime yields rose moderately across most asset classes, generally by between 10 and 20 basis points. For offices, the average net prime yield across the major markets increased to 4.56% (+7 bps), while logistics yields rose to 4.70% (+10 bps). Prime yields currently stand at 6.10% (+10 bps) for shopping centres, 5.00% (+10 bps) for supermarkets/discounters and 4.75% (+10 bps) for food-anchored retail parks. For high-street retail properties, the average net prime yield across the major markets stands at 3.94%, around 9 basis points higher than at mid-year.