OFFICE INVESTMENT MARKET STILL WITH ONLY SLIGHT MOMENTUM
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By the end of the third quarter of 2024, around €3.6 billion had been invested in office properties in Germany. This represents a further decline of around 20% compared to the already very subdued result of the previous year. Meanwhile, the 10-year average was undercut by around three quarters. The bottom line is the lowest result since 2009. In contrast to the other major asset classes of retail, logistics and hotel, the office segment has not yet seen any recovery, which means that it currently has a historically low market share of only around 20%.
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This weak performance is largely due to the virtual absence of large-volume transactions, particularly in the portfolio segment. Individual deals currently account for more than 90% of the volume. The largest registered deal of the year was the acquisition of the Rossio development by the City of Cologne for around €270 million from the public sector for its own use. In total, only three transactions above €100 million have been recorded to date.
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The office segment in particular is currently suffering from the economic headwind and the gloomy mood in the economy. For many investors, it is difficult to assess how demand for office space will develop in the future, although the letting markets are already sending the first positive signals again with rising take-up in the third quarter.
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Meanwhile, the price adjustment processes have lost momentum, meaning that a stabilisation has set in in the prime segment. The average net prime yield for offices in the A-locations is 4.36%. Munich remains the most expensive location at 4.20%, followed by Berlin and Hamburg at 4.25%.