Market in Minutes: Investment Market Germany

Second strongest year ever for the residential investment market

• The transaction volume on the investment market for commercial and residential property amounted to approximately €5.4bn in November. The rolling twelve-month volume was €87.2bn, down 1.9% on the previous month.
  
  
• On the commercial investment market, the number of transactions in the year to date is 17% lower than in the same period last year. A rapprochement to the previous year's level has so far failed to appear in the fourth quarter as well. Nevertheless, the volume of commercial transactions since the beginning of the year has already reached around €49.8bn, a level that was often not expected at the beginning of the pandemic.
  
  
• On the residential investment market (transactions with at least 50 units), properties worth around €17.9bn have been traded so far this year. This means that the full-year result for 2019 has already been exceeded. Thus, 2020 was the year with the second highest transaction volume ever after 2015. The coming years are likely to be characterised not only by continued high, but even increasing investors' demand. While the demand for real estate will remain high overall in the zero-interest rate world, uncertainty arise regarding the level of future space requirements for office and retail uses. Having a roof over our heads, on the other hand, is one of the basic existential needs of us humans. Residential property offers us exactly that and is therefore a non-substitutable good. This alone means that residential property is gaining in importance on the investment market. In addition, the COVID-19 pandemic and its accompanying symptoms could even strengthen the status of housing as an essential good. The lockdown experience could lead to an upgrading of the apartment as the centre of life and, together with other effects such as the increasing acceptance of working from home, could lead to a higher demand for living space. Such considerations should attract additional capital to flow into the residential property market.