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ePaper created 2014-04-15, 13:56:41 | version 1.30.00
Management report 19 The break-down of transactions by types of property barely changed: office properties remained top-ranked with a 48 per- cent share of total transactions followed by retail properties with 25 percent. Investor interest was focused on core properties. This is why re- turns in this segment remained under pressure. On average, top yields for office properties in the best seven property locations (Berlin, Cologne, Düsseldorf, Frankfurt, Hamburg, Munich, and Stuttgart) were less than 5 percent. Turnover recorded for the office rental market was below the previous year’s level. Turnover of space in the aforementioned cities was 2.93 million square metres, or 3.5 percent less than in the previous year. The average vacancy rate fell from 8.8 percent to 8.3 percent. Investment in residential property portfolios also increased sig- nificantly rising by almost 25 percent to € 13.7 billion. Commercial property – international Demand for commercial property across Europe was also signifi- cantly stronger than in the previous year. The volume of trans- actions rose by 20 percent to over € 150 billion with the vast majority generated by the UK, Germany and France. The London property market remained one of the key target mar- kets for international property investors within the UK. Turnover in London in 2013 was over 14.5 billion GBP, the highest since 2007. While international investors primarily sought out increas- ingly scarce core properties, British investors responded more and more to favourable signals emanating from the rental mar- kets and extended the range of their investing activities to other regions. The difference between returns attainable in primary and secondary markets began to narrow. The British financing market was in good condition even though opportunities to finance core properties tended to decline due to the scarcity of these properties. As a result, competition among providers of financing intensified significantly, which led to low- er margins and higher lending value ratios. Financing activities therefore shifted increasingly to alternative properties in regional markets. France’s difficult economic situation also burdened the com- mercial property market as the volume of transactions fell by 3.6 percent. Turnover of rental office space was last seen at such a low level in 2003. Above all other locations, Paris was seen as a safe investment target as the volume of investments recorded in 2012 was again achieved last year. Purchase prices remained stable with maximal initial yields of 5 percent. The trend towards properties with visible potential for further de- velopment or value growth, referred to as core-plus properties, was a notable development in 2013. Core-plus properties’ share of total transactions in the greater Paris area rose to 40 percent from 21 percent up till November 2013. The Dutch commercial property market recorded favourable de- velopment for the first time again. The volume of transactions rose by almost 30 percent to € 4.9 billion. This figure was still significantly shrinking in the previous year. International investor interest in Holland rose again in 2013. Office properties repre- sented about one-third of the total volume of transactions. The commercial property market in the USA strengthened again as investor interest remained focused on the core markets of New York City, San Francisco, Washington D.C., Boston, Seattle, Houston, Chicago and Los Angeles. Demand for core properties continued to exceed supply. As a result, investments were again increasingly being made in the fringe areas of primary markets as well as better locations within secondary markets. The financing market for commercial property in the USA was stable and sufficiently liquid while competition among provid- ers of financing services was strong. Providers of securitisation paper (commercial mortgage-backed securities) were again very active. Financing providers preferred to make loans to first-class borrowers investing in properties with long-term rental con- tracts in the aforementioned core markets in addition to select- ed deals involving higher-risk and higher-yield properties in secondary markets, as well as properties located on the fringes of primary markets.