According to Savills €12.1 billion was invested into residential real estate portfolios in Germany in 2014, a slight decrease of 14% year-on-year. However, the number of both portfolios and residential units transacted remained largely stable. In total over 225,800 units changed ownership totalling 201 deals compared to 223,500 units in 217 transactions in 2013. 

Karsten Nemecek, managing director of corporate finance and valuation at Savills Germany, comments: "Transaction activity in the residential market was similar to 2013 but the regional pattern changed completely. The activity in the German residential portfolio market largely took place in Berlin and Southern Germany whereas last year almost every federal state recorded the sale of several thousand units."

Savills finds that despite the much broader regional market activity Berlin retained its leading position in 2014, however, it accounted for just 14% of all transacted residential units compared to 44% in 2013. The other prime markets* accounted for a total share of 4% of all transacted units compared to 9% in 2013. The firm attributes the decrease in volumes to the shift away from the top locations and towards the smaller cities.  Due to the prices beyond the major cities being lower the average price per residential unit dropped by 15% to approximately €53,400 year-on-year. The average price per residential unit in Berlin was approximatly €76,000 with investors targeting secondary locations and Grade B properties.

Savills reports housing associations listed on the Stock Exchange were the largest group of buyer in 2014 acquiring over €6 billion in residential properties in Germany. Privately held housing associations followed accounting for €2.1 billion. Looking at the investor origin, 77% of the total transaction volumes were attributable to domestic buyers, 9% to Austrian and 5% to US buyers. Private equity investors, other fund and asset managers were active vendors disposing of residential properties worth €2.0 billion and €1.3 billion respectively with the majority of sellers coming from Germany (51%), USA (21%) and Switzerland (9%).

The firm predicts that listed property companies are likely to continue to dominate the transaction activity in the German residential portfolio market in 2015. However, this year many of the large-scale transactions may no longer take place as asset deals but in the form of company acquisitions and mergers on the capital markets. This includes the upcoming merger of Deutsche Annington and Gagfah.

* Markets covered include Berlin, Cologne, Düsseldorf, Frankfurt, Hamburg, Munich and Stuttgart

View the German residential portfolio market 2014

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