On the occasion of the real estate trade fair EXPO REAL in Munich, the property expert from Greif & Contzen have published an update about Cologne’s investment market.

Following a long-term low observed in 2023 with a transaction volume of EUR 800 million generated with commercial real estate, there are some clear signs of recovery in Cologne’s property investment market. However, no significant increase in dynamics is likely to occur unless interest rates decrease significantly. Until this is the case, the market is expected to continue to recover slowly, as has been the case since the start of the year.

This sustained recovery can be attributed mostly to the end of the ECB’s cycle of interest rate rises in autumn 2023, which led to a considerable decrease of investment risks on the financing side. This applies all the more since the start of the interest rate turnaround this June. Thorsten Neugebauer, Head of the Investment Division of Greif & Contzen Immobilienmakler GmbH describes the overall situation, pointing out that geopolitical uncertainties and inflation risks continue to apply, nevertheless.

In the year to date, a transaction volume of around EUR 1.1 billion was realised on Cologne’s investment market – more than three times as much as the EUR 300 million recorded in the same period last year. This development was due in particular to two large transactions that shaped the market situation.

On the one hand, the City of Cologne bought the trade fair halls numbers 6 to 9 with the Congress Centrum Nord from RFR and the new office building ROSSIO that is the last missing piece to be added to the large-scale development MesseCity Köln. One the other, Hanse-Merkur Grundvermögen took over the northern plots of the Laurenz-Carré development and is now acting as the final investor.

In addition to these large-scale projects, a number of industrial and logistics properties changed hands, including a business park in Cologne-Rodenkirchen with almost 20,000 square metres of rental space. The office property segment was meanwhile characterised by reluctance. Buyers have been demanding significant price reductions to account for necessary modernisation work, despite a stable net prime yield of 4.40 percent.

Institutional investors tend to focus on newly built apartments and logistics facilities for the time being, while private investors are acting rather selectively. Market participants expect the investment spectrum to broaden again in the medium term in line with decreasing interest rates.

While the situation has bottomed out, it is likely that recovery will take place more slowly than envisioned by many market players. However, if the far greater reliability of interest rates compared to last year is considered, there are many opportunities available for investors in the current market environment. This is why it is not surprising that the experts from Greif & Contzen have been observing an increase in interest in the asset classed mentioned above, especially from high-equity investors.

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