E & G Office Market Report Munich 2017-2018

Investment market significantly
above the 10-year average.
Investment properties. Purchasers & vendors.
Forecast.
Top deals
Kustermannpark: BlackRock purchased the property from Ares Management for approx.
EUR 280 million.
Kap West: Allianz Real Estate paid some EUR 224 million to OFB for the property.
Eastside Offices: InfraRed Capital Partners acquired the property from Officefirst for a price in
the region of EUR 235 million.
Office properties again the most sought-after asset class.
The investment market for commercial real estate in Munich achieved a transaction volume of approx.
EUR 5.9 billion in 2017. This represents a decrease in turnover of some 7.8% over 2016, which was
an outstanding year. The transaction volume was, however, still significantly above the 10-year average.
13 deals each with a purchase price volume of EUR 100 million or above accounted for around
47% of total turnover.
Transaction volume munich in bn euros
Investment properties
With an approx. 55% market share of
the total transaction volume, office
space once again proved to be the
most sought-after asset class in 2017.
With the exception of the months April
to June, performance in each quarter
was roughly the same. The fourth
quarter was unable to match the agility
of previous years since the final stage
of a number of major transactions was
postponed until the beginning of 2018.
The year’s largest deals included the
sale of the “Kap-West” project (Friedenheimer
Brücke) to the Allianz insurance
group in the first quarter for approx.
EUR 225 million and the transfer of the
“Karstadt am Hauptbahnhof” property
from RFR to Signa Holding for significantly
in excess of EUR 300 million. In
2017 the market share of portfolio sales
in Munich was less than 10%.
As expected, the net prime yield for
office space continued to remain under
pressure during the course of the
Top yields for office properties in %
year, ending at 3%. Demand in 2017 remained
at a continued high level across
all asset classes, with competition correspondingly
fierce. The decrease in
transaction turnover is most definitely
not due to falling demand but rather to
the growing scarcity of products.
Purchasers & vendors
In 2017 Munich’s investment market
was once again characterized by the
large number of domestic investors,
who accounted for some 60 % of turnover.
Conversely, foreign capital comprised
approx. 40 % of investment in the
market. International investors were
primarily active in transactions above
the EUR 100 million mark, participating
in just under 50 % of these major deals.
On the purchaser side, open funds/
special funds and pension funds were
again the largest groups; were not, however,
as dominant as in previous years.
The situation was the same with
regard to vendors.
Forecast
There are no indications that conditions
on the commercial real estate
market in Munich will develop negatively
in 2018. A high volume of
transactions is already expected in the
first months of the year due to the fact
that the final stage of a number of major
deals in late 2017 was postponed
into the following year. Total commercial
real estate turnover ranging from
approx. EUR 5.5 to EUR 6 billion is forecast
for the entire year..
5.87
3.70
4.15
6.40
4.50
4.40
4.97
5.45
4.00
3.50
3.25
3.00
2010 2011 2012 2013 2014
2012
2013
2014
2015
2016
2017
2010 2011 2012 2013 2014
2012 2013 2014 2015 2016
2017
Source: Research E & G Real Estate GmbH © Stand: 31.12.2017
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