Foreign buyers break records in German commercial property market
Foreign buyers were responsible for more than 50% of all commercial property investments in Germany, setting a new record and injecting €78.4 billion into the German market, according to the International Consortium of Real Estate Associations(ICREA). Previous highs were set in 2007. Berlin attracted the largest share of foreign investment.
In 2015, foreign investors spent €28.1 billion on commercial property in Germany, representing 51% of the total investment amount in the market according to global real estate services company JLL.
The retail and office sectors drew the largest percent of foreign funds; 42% and 39%, respectively. Growing wages, low vacancy rates and a strong German economy made these sectors highly attractive to foreign investors.
The retail sector, in particular, drew investors with 61% of all retail property investments coming from abroad, according to Savills. In the office sector foreign buyers represented 50% of the total investment volume with Europeans being the largest group at 28% of the sum, followed by US buyers (15%) and Asia-Pacific buyers (4%).
Industrial property investment was also dominated by foreign capital at 63% of the segment. However, industrial properties accounted for only 9% (€4 billion) of the total commercial property volume.
The outlook is bright for 2016, according to industry experts. Forecasts are for commercial investment volume to remain strong, but buyers may struggle to find opportunities in their favorite sector as supply will be in issue in areas with the highest demand.