GERMANY IN THE SPOTLIGHT
Good in parts Germany’s safe-haven status has been challenged by COVID-19, with transaction volumes down year on year. But Europe’s largest market is still well placed to deal with the economic and structural correction ahead, writes Graham Parker
T
HE GERMAN real estate sector has been a byword for stability, attracting long-term investors with steady if unexciting growth. But the pandemic has shaken some of the assumptions that underpinned the market and investor confidence will take time to recover. The authoritative pbbIX index from specialist property lender Deutsche Pfandbriefbank tracks the performance of Germany’s Big Seven office markets and it shows that the sudden downturn in the second quarter of 2020 has continued well into 2021. According to the bank, office market activity is now back at levels seen after the dot.
com bubble burst in the early 2000s. It was only weaker during the global financial crisis (GFC). According to Real Capital Analytics, the inflow of funds into office properties fell from €7.3bn in the Q4 2020 to €2.1bn in Q1 2021. Deutsche Pfandbriefbank says investors have been cautious in the light of a pandemic-driven decline in macro-economic activity. But it also points to data from the occupational markets, which implies such caution may be misplaced: letting activity has shown relatively little change through the pandemic, although office vacancies have edged up slightly to average 4% across the Big Seven. The bank also highlights some regional disparities: Ber-
Beuth University plans to place students into the former Tegel airport terminal building in Berlin as part of the Berlin TXL campus
MIPIM ONE BOOK
52
SEPTEMBER 2021
