London, UK – While economic growth has slowed in recent months, Germany’s office market has remained robust. Indeed, increasing occupier demand for office space is likely to put upward pressure on rents in Germany’s major cities, particularly Frankfurt and Munich, as this year progresses. As a result, these cities are expected to outperform in the short-term. However, occupiers may be drawn to look outside of these cities where rental growth is relatively stable.
Germany will continue to remain a “power house” as the second largest market for investment in Europe. It is considered a safe haven for investors with its steady rental growth, falling vacancy rates and stable yields.
Heena Kerai, Analyst, International Research, Knight Frank, commented; “Regardless of economic trends, German real estate continues to offer a good depth and breadth of opportunities for investors. Apart from the size of the market, key attractions include yield stability and the prospect of rental growth as the supply of prime office space continues to fall over the coming year.”
Joachim von Radecke, Partner, Head of German Desk, Knight Frank, commented; “We expect Germany to be once again one of the most sought after investment destinations in Europe in 2015, with an increase of transaction volumes and more international investors buying in Germany. Given the weight of capital trying to buy commercial real estate in Germany, we will see more investors shifting their focus from core to core+ and value add not just in the top 5 cities but also in second tier markets and therefore prices to increase, also helped by more attractive financing terms available on the market.
