Risk parameters for German office markets “becoming increasingly intermingled”
The average prime yields for German office real estate in different city categories are converging, according to an analysis by Catellla. A year-on-year decline of 24 basis points (bp) to 3.05% was observed in Germany’s seven “A” markets, dropping below 3% in Munich and Berlin. In the “B” and “C” markets, the declines in yields were close together at -27 bp to 4.08% and -26 bp to 5.89%, respectively, with “D” markets experiencing the highest rate of inflation at -28 bp to 6.7%. In prime rents as well, the B and C markets were close together with +4.08% to €15.54/sqm and +5.03% to €13.35/sqm, respectively. Thomas Beyerle, Head of Group Research at Catella, commented that this is being seen “as an indication that the risk parameters or the investor profiles from core to value-add to opportunistic are becoming increasingly intermingled.”
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