STARTING OFF WITH SOME MORE MOVEMENT: INVESTMENT VOLUME INCREASES AT A LOW LEVEL
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Investment turnover of €174 million was recorded for the Frankfurt commercial property market in the first quarter of 2024. Although this represents an 81% increase in transaction volume compared to the same quarter of the previous year, it is still at a very low level. A glance at the long-term average, which stands at around €1 billion for the first quarter, shows just how low the transaction volume is.
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The fact that the Frankfurt investment market continues to lack momentum is hardly surprising given the prevailing uncertainties surrounding the office asset class, which is so important for Frankfurt and dominates the market. On the one hand, demand for office space is somewhat subdued, not least due to the ongoing economic downturn; on the other hand, the future path of interest rates and, accordingly, financing conditions is not yet fully foreseeable.
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Against this backdrop, there has been little movement on the market to date, particularly with regard to large-volume office transactions, which dominated transaction activity during the zero-interest rate phase.
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Driven by falling inflation rates, the majority of market participants are already pricing in several interest rate hikes in the current year. Accordingly, net prime yields are likely to stabilize at the current level for the time being. Compared to the previous quarter, a sideways movement can therefore be reported for all asset classes. While office properties are quoted at 4.50%, logistics properties are expected to yield 4.25% and retail properties 3.75%.