Munich continued its development as a leading investment location in the turnover ranking of German A-cities in the second quarter. With a transaction volume of approximately EUR 1.24 billion, the Bavarian capital was the only metropolis to reach the billion-euro mark by mid-year. These results are based on an analysis by BNP Paribas Real Estate. The turnover increase of almost 35 per cent compared to the previous year signals a positive development, although the number of transactions decreased by almost 38 per cent in a long-term comparison.
Michael Morgan, Munich Branch Manager at BNP Paribas Real Estate GmbH, explained that both larger turnover drivers and a higher number of deals, last surpassed in 2022, contributed to this result. Among the prominent transactions in the first six months were particularly investments in the three-digit million range. A key example of this is the Alte Akademie, formerly part of the Signa portfolio, which is considered one of the largest German retail transactions of the current year.
Focus on office and city-centre locations
Two of the five largest office investments nationwide were also registered in Munich: the inner-city office properties at Prinzregentenplatz 7–9 and Sonnenstraße 15 (formerly Lindberg-Haus). Regarding prime yields, no significant changes have been visible in the retail high street segment (3.45 per cent) and the office sector (4.20 per cent) over the course of the year so far. In the logistics segment, upward pressure led to a slight adjustment of ten basis points to 4.60 per cent.
The turnover distribution in the first half of the year showed a clear preference for office investments and central locations. Office properties contributed almost 47 per cent to the total volume, and nearly 57 per cent of the result came from the city centre. In addition to the already mentioned large-volume office properties and the Alte Akademie, the Excelsior Hotel and serviced apartment properties in city-centre locations also changed ownership. This contributed to diversified investment activity in Munich's most important submarket. Outside the city centre, transaction activities were smaller in scale but included office properties, logistics, and retail or food retail sales. A good 43 per cent of the volume was generated outside the city centre.
- —Transaction volume in Munich: approx. EUR 1.24 billion in Q2
- —Turnover increase: approx. 35 % year-on-year
- —Number of deals: decrease of approx. 38 % in long-term comparison
- —Prime yields: Retail Highstreet at 3.45 %, Office at 4.20 %, Logistics at 4.60 %
Regarding size categories, investments were made almost equally in top properties exceeding the EUR 100 million mark and in medium-sized and smaller commercial properties up to this threshold, resulting in an average volume of approximately EUR 39 million per deal. Morgan stated that the Munich investment market had created a good starting point by mid-year to achieve a further increase in turnover compared to the previous year. The Bavarian metropolis's continued strong competitive position in city comparisons is underpinned by its leadership in the location ranking and by top office and retail deals, which rank among the largest nationwide investments in their respective asset classes.
The office letting market in Munich showed a solid performance in the first six months, with above-average take-up and rising rents. This further strengthened confidence in the office sector. Furthermore, larger high street transactions and hotel sales above the EUR 50 million mark were repeatedly recorded, indicating positive framework conditions in these sectors. Despite geopolitical uncertainties, financing conditions, and economic developments, which can influence the investment environment, the Munich metropolitan region possesses the fundamental prerequisites for a continuously increasing investment volume. The city is considered an economic powerhouse with a future-proof technology sector and innovative industries, which represents a crucial investment argument.
