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Strong start on the Stuttgart Investment Market due to one-off effect

Investmentmarket Stuttgart Q1.2022

In the first quarter of 2022, around 530 million euros have been invested on the Stuttgart Property Market. According to the latest research by E & G Real Estate, this is more than double the volume of the previous quarter with 260 million euros.

“The year 2022 has started calmly into the first quarter. Without the one-off effect of the stock takeover at alstria office REIT-AG by Brookfield Asset Management, the transaction volume in the first quarter would have been significantly lower than in the previous year. Looking at the current pipeline for property disposals, we expect significantly increasing transaction activities over the course of the year. The capital market has already seen a first rise in interest rates. Assuming stable interest rates in the short term, this could boost market dynamics in the coming months. Yet, it remains to be seen, how the war in Ukraine and the on-going Covid-situation will affect the investment market and the willingness of banks to provide financing”, concludes Björn Holzwarth, Managing Partner of E & G Real Estate GmbH.

“Office property remains in the investment focus, while retail and operator-run products are facing strong reluctance by investors”, reports Mr Holzwarth.

All in all, only a handful of transactions were concluded in the first quarter. Investors have been focusing on office property, accounting for 88 per cent in transaction volume. Mixed-use property achieved a market share of ca. 10 per cent, while around 2 per cent can be allocated to hotel deals.

On the buyer side, Fund Managers were the dominating investor group with a share of around 77.5 per cent in the overall transaction volume. Further significant market share was created by Corporates with 12 per cent, as well as by Open-ended Real Estate Funds/ German Special Funds with 10 per cent in transaction volume.

On the vendor side, stock market listed Immobilien AG’s/REITs were in the lead with a market share of approx. 89 per cent, followed by Private Owners with a 10 per cent share in the overall transaction volume. All other market players played only a marginal role.

“Due to the current uncertainties regarding interest rates, the war in Ukraine and the continued pandemic situation, any projections for the Stuttgart Investment Market remain to be rather challenging”, says Holzwarth. “In view of the expected deal pipeline and taking the one-off effect of the aforementioned stock takeover into account, a transaction volume comparable to the previous year and to the amount of 2 billion euros seems still feasible.”

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