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Hamburg's Investment Market With Spectacular Start

Investment transactions in Hamburg increased by one-third to a total of 750 million euro. Sale of the “W1” makes Wandsbek second-biggest sub-market

This emerges from figures released by property services provider Grossmann & Berger, which recorded barely any change in the actual number of transactions. “The pronounced upwards trend observed in 2014 proved its durability in the first quarter of 2015. To date, at least as far as Hamburg is concerned, we cannot confirm that the forecast influx of capital from Asia has materialised,” comments Axel Steinbrinker, managing director of Grossmann & Berger.

Sale of the “W1” makes Wandsbek second-biggest sub-market

In Q1, activity was concentrated in Hamburg’s central sub-markets, City and HafenCity. Altogether eleven properties valued at 480 million euro changed hands here, equivalent to some 64 per cent of the total volume of transactions. These included the purchase of part of the Axel-Springer complex at Caffamacherreihe 3 (City) which was sold to the Free and Hanseatic City of Hamburg for 130.6 million euro to provide offices for the district council of Hamburg-Mitte – the biggest transaction of the year to date. Wandsbek emerged as the second-biggest sub-market and strongest of the non-central city districts, accounting for about eleven percent of the volume of transactions. This was primarily attributable to the “W1” shopping centre, which is still under construction at Wandsbeker Marktstrasse 1-5, and was sold by the builder HBB Hanseatische Betreuungs- und Beteiligungsgesellschaft mbH to a specialist fund managed by the KGAL-Gruppe for a price in the upper double-digit millions bracket.

Hotel Assets Boosted By “Sofitel” Sale

Accounting for about 60 per cent of the volume of transactions, office properties remained investors’ preferred asset class in Q1. These included the portfolio sale of three office buildings, i.e. “S-KAI” (Am Sandtorkai 50, HafenCity), “Hamburg-America-Center” (Am Sandtorkai 48, HafenCity) and “Coffee Plaza” (Am Sandtorpark 2-6, HafenCity), which Pembroke Real Estate acquired from Norrporten for more than hundred million euro. The next most popular asset class was retail, with transactions totalling some 145 million euro and a share of 19 per cent. Two transactions served to move hotel properties into third place with a share of 15 per cent, largely due to the second-highest transaction registered to date, the sale of the “Sofitel” complex (Alter Wall 38-40, City) to Art-Invest Real Estate for a price in the upper double-digit millions bracket. Premium returns for office properties remained stable at the low level of 4.5 per cent.

National Investors Dominate The Market

In the first quarter of 2015, Hamburg’s investment market was dominated by national players, whose share of transaction volume totalled 68 per cent. Year on year, the proportion of foreign investors declined slightly from 36 to 32 per cent. International investors from countries such as the USA and the UK spent some 240 million euro on commercial properties in Hamburg during the first quarter of the year. Compared with the same period of the previous year, the share of foreign vendors grew from 19 to 42 per cent. Market players from Sweden, the UK and Luxembourg were among the biggest sellers of commercial properties in Hamburg.

Asset Managers Buying, Developers Selling

On the buying side of the equation, asset managers were the single biggest group of investors, with 204 million euro being was equivalent to 27 per cent of total transactions. Open end/specialist funds took the second-highest share with 182 million euro or 24 per cent of all investment. Project and property developers sold commercial real estate in Hamburg for around 200 million euro, accounting for a 27 per cent share of the transaction volume.

Outlook 2015

According to Großmann & Berger, demand is unabated in Hamburg. New project developments are, however, rare or have only recently been “flipped”. Prominent examples include the Stadthoefe, the Heights, the Burstah Offices, the Fleet Office and the southern Uebersee Quarter. Since stock properties such as the Dancing Towers and the Atlantic House were sold only last year, the range of available top-class real estate in Hamburg is not very large. With premium returns declining further, it could be hard to attain 2014’s excellent result. However, low interest rates, the location’s considerable economic strength and the general need to find investment opportunities will act in favour of transactions on the Hamburg market. Also, Großmann & Berger is observing a trend towards portfolio selling in Hamburg.

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