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Development of the German investment market in the first half of 2020

In the first half of 2020, the investment market in Germany is under the influence of the Corona crisis. While large transactions still dominated the market in the first quarter and the transaction volume increased once again compared to 2019, the second quarter is characterised by restraint. According to Real Capital Analytics (RCA), the transaction volume was around € 5 billion in the first quarter. This corresponds to an increase of approximately 5% compared to the previous year.

By contrast, the real estate climate deteriorated strongly in the second quarter. According to bulwiengesa, an expert survey revealed a decline of around 37% in the German Hypo Real Estate Index (Deutscher Hypo Immobilienindex) in April 2020. This is not surprising and reflects the uncertainty in the market. However, a strong differentiation must be made between asset classes. Retail and hotel properties are most affected. An increase in insolvencies is expected for many commercial transactions from the second half of the year onwards. This will certainly have an impact on future rent levels and yields. In some cases rents are deferred, suspended or renegotiated. The new rentals are regularly at a lower level but instead with new contract periods.