VOLUME WELL BELOW AVERAGE BUT SENTIMENT IS IMPROVING
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By the end of the third quarter of 2024, around €285 million have been invested in the Leipzig commercial property market. The result is around 38% below the previous year’s figure and only around half the 10-year average. The third quarter in particular was very subdued with transactions totalling just under €60 million. The majority of the volume is attributable to the sale of the Allee Centre by EQT to Arrow Global, which is one of the largest transactions registered so far this year. In the segment above the €100 million mark, however, no transactions have yet been recorded.
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The below-average performance is due to the continued significant reluctance of institutional investors. Private investors, corporates and the public sector currently account for more than half of the volume on the Leipzig market. The long-term average is only 18%. Even if the figures speak a different language so far, there has nevertheless been an improvement in market sentiment since the middle of the year, including on the part of institutional investors. In addition to the ECB's interest rate cuts, the occupier markets in Leipzig in particular are also sending out positive signals. For example, despite economic headwinds in the office letting market, a very solid take-up of space has been recorded in the current year.
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Accordingly, there are many indications that pricing phase has come to an end, at least in the prime segment. Since the beginning of the year, net prime yields have stabilised. While office properties are currently unchanged at 5.30%, prime high street properties are currently trading at 4.80%. Meanwhile, logistics properties are still quoted at 4.45%.