- Germany profits most from the Brexit vote
- Returns in prime locations in Germany on the decline, rents on the rise
- Demand for objects in B and C locations is booming
GB investment volumes might drop by up to 25 percent due to the Brexit vote and the ongoing precarious situation in the markets. The other EU countries could profit by a plus of up to 10 percent. This is the conclusion drawn by real estate experts of the EMEA Capital Market team from Cushman & Wakefield in their current “Brexit and the European Property Investment Market” report. Germany will probably profit most.
“Some investors are still hesitant and prefer observing how the GB market will turn out,” says David Hutchings, author of the report and team leader of EMEA Investment Strategy at Cushman & Wakefield. “Most of the investors, however, have a very high liquidity and are therefore under a high pressure to invest.” The effects of this development can already be felt, says Brian Tucker, team leader of Shopping Center Investments in Germany: “Foreign open-end real estate funds in particular, having preferred to place their money in the British market up until recently, are now feverishly looking for sustainable investment options in other established markets.”
This is why foreign investors look into objects in German B and C cities like Mannheim, Nuremberg or Münster – there is not much leeway left in the prime objects market in cities like Berlin, Frankfurt or Munich. Returns are increasingly being put under pressure. More than ever, Germany is regarded as a safe harbour: “A democracy with a reliable jurisdiction, liquidity and stability in times of crisis, as shown in the post-Lehman era. Investors currently place these features even higher than the initial return,” says Brian Tucker. Cushman & Wakefield sees a significant increase in demand for Germany, especially for office spaces, but also in shopping centre investments. In the medium term, returns will decline, not only in the prime locations, but also in B and C locations. Rents, however, will probably rise due to the high demand, says the report.