German property portfolio sales surge

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Germany has confirmed its status as the strongest economic player in Europe, with last year seeing the highest transaction volume of sales since 2007.

Residential property portfolios saw around €10.45bn (£8.7bn) change hands, marking an extremely strong 46% year-on-year increase, according to international property advisor Savills.

Although high-end priced luxury properties made up a significant proportion of the total, the increase was seen across the board with the average deal size more than doubling compared to the year before.

Expectations in this market sector for the coming year are mixed, as there are fewer portfolio sales with more than 10,000 units pending in 2013 compared with 2012.

However, higher risk assets with refinancing difficulties that are due to mature this year could influence the final outcome and lead to above-average investment volume in the sector in the next twelve months.

The recent trend for transactions of above 10,000 units was last seen in 2008. In 2012 the number of transacted units increased by 65% to almost 200,000, although the actual number of transactions decreased to 159 from 207 in 2011.

Perhaps also highlighting the strength of the domestic financial position relative to the rest of Europe, German investors were behind 75% of residential portfolio transactions in 2012.

The vibrancy of the market has attracted interest from foreign private equity funds and it is expected that this year will see an increase in activity from overseas buyers.

Germany’s financial stability has meant that many investors looking to take advantage of depressed markets in other countries have been ignoring the residential property market there, but many risk-averse investors, especially financing banks and insurance and pension funds, have been taking advantage of the conditions which are unique in Europe at the present time.

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