E & G Investment market report 2017-2018

The Stuttgart property market.
Top-3-deals
Merceces-Benz Bank: The State Foundation of Baden-Württemberg has acquired this
office trophy with long-term lease from Hines for around 120 million euros.
City Plaza: Zurich Group Germany bought this office and business property from a
Spanish family office for ca. 105 million euros.
Mittlerer Pfad 13-15, Weilimdorf: Ceberus receives around 95 million euros from La
Francaise Real Estate Partners for this office property rented by Porsche.
Transaction volume breaks the billion barrier again.
With a transaction volume of 1.42
billion euros in 2017, the investment
turnover in Stuttgart was significantly
lower than in the previous years.
While 2016 was hailed as a record
year, the transaction volume slumped
in 2017 by 580 million euros or 29 per
cent. Despite this decline, the billion-euro
mark has been exceeded for
the sixth time in succession.
The first quarter of 2017 kicked the
year off with a rather moderate
investment volume of 190 million
euros. Thanks to upbeat activities
in the second quarter (EUR 580 m)
and the third quarter (EUR 360 m),
the property investment market
was catching up with the extraordinary
run of the previous year. With a
turnover of 330 million euros, the
fourth quarter could unfortunately
not keep pace with the strong finish
in recent years, as several double- and
triple-digit million transactions were
not brought to a close before the end
of the year.
In the reporting period, a total of 65
property transactions were concluded,
of which half ranged at double-
and triple-digit million volumes.
Investors were showing a keen interest
in office property. This asset
class alone accounted for around
67 per cent of the total investment
volume – not least due to the top
sales of “Mercedes Bank”, “City Plaza”
and “Porsche Haus”. Residential property
achieved a share of 14 per cent
of the turnover, followed by plots and
development projects with around
8 per cent.
Buyers were predominantly openended
funds/German special funds
with around 23 per cent, as well as
insurances with a 16 per cent share
in the total transaction volume.
11 per cent of the transactions was
generated by private investors/
family offices, while property owners,
opportunity funds and public
investors accounted for 9 per cent of
the transaction volume.
On the vendor side, project and property
developers were the most active
players on the Stuttgart investment
market achieving a total share of 21 per
cent. They were followed by private
vendors and family offices with
15 per cent, and opportunity funds, as
well as the vendor group corporates/
owner-occupiers/non-properties -
each with around 11 per cent of the
overall transaction volume.
Compared with 2016, the share of
foreign investors buying property
has decreased moderately, ranging at
around 37 per cent. As vendors,
foreign market players have generated
40 per cent of the transaction volume,
a significantly higher share than in
2016.
Fully let office property at inner city
locations reached comparable multipliers
as in the previous year. Top
yields with a multiplier of up to 26.0
corresponded to a gross initial yield
of ca. 3.8 per cent. Also for high
street property, yields have remained
stable on a high level with multipliers
of up to 29.0 (3.4 per cent gross
initial yield). Long-term, fully let
office property in city fringe and
peripheral locations gained multipliers
between 18 and 22 (approx.
5.5 to 4.5 per cent gross initial yield).
In the reporting period, the property
investment market in Stuttgart
has continued to perform on an
above-average level. By the end of
the year, the projected transaction
volume of 1.5 billion euros was nearly
achieved.
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