German residential portfolio transactions, which reached a five-year high in 2012, are set to slow in 2013 as fewer large groups of properties are offered for sale and foreign investors look to other markets for higher returns.
Institutions, including insurers, pension funds and private-equity firms, bought 7.05 billion euros ($9.2 billion) of German multifamily homes in the first half, little changed from a year earlier, Chicago-based broker Jones Lang LaSalle Inc. (JLL) said in a statement today. The investors are on track to complete 10 billion euros of deals by the end of the year. In 2012, they bought homes valued at 11.1 billion euros, the most since 2007.
“The German market has become a little too expensive for international investors in the past year,” said Oliver Schoetz-van der Hoff, head of regional residential investment at Jones Lang LaSalle Germany.
German home prices are rising as institutional and private investors seek safe and profitable investments amid the European sovereign debt crisis. Apartment prices rose 8 percent in the 12 months through May, according to data compiled by Berlin-based online broker ImmobilienScout24. In 2012, deals were fueled by the sale of almost 100,000 apartments by owners who needed to pay debts from last decade’s buyout boom.
The biggest deal of 2013 was the sale of about 30,700 Bavarian apartments by German bank BayernLB to a group of pension funds and savings banks led by Patrizia Immobilien AG (P1Z) in a transaction valued at about 2.5 billion euros, Jones Lang said. The second-biggest was Deutsche Wohnen AG’s purchase of 7,800 Berlin apartments from Blackstone Group LP for about 420 million euros.
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