Cologne investment market structured more fragmented in the 2nd quarter – increase in prime yield in all asset classes

The size class distribution underlines the currently more fragmented market structure. With
€142 million, or 41% of the transaction volume, is represented by trades between €25 million and €25 million.
50 million € and even exceeded its long-term average (Ø10 years: 116 million €). Large deals above €50 million, on the other hand, remain in short supply, achieving a market share of only 26%, while this segment accounted for an average of around half of the total volume over the past ten years.

The central locations continue to have a significant impact on market activity. City and Cityrand account for a cumulative 74% of the transaction volume (Ø10 years: 78%). Secondary locations and periphery each contribute 13% to the overall result. The periphery in particular thus achieves an above-average market share in a long-term comparison.

The market stabilisation is expected to continue in the second half of the year. The solid transaction frequency and brisk activity in the mid-market segment underpin the continued investor demand. The high volume in the office segment, which is based on a broad deal basis, is also positive.

At the same time, the framework conditions remain challenging. The financing environment, geopolitical risks and the continued fragility of the economy can delay larger transactions in particular and have a negative impact on market activity in the short term. Accordingly, the recovery of the investment market is likely to continue to be gradual.

Nevertheless, Cologne should benefit from its diversified economic structure, a broad investor base and a well-filled pipeline. "Against this backdrop, a moderate revival in transaction activity seems likely for the year as a whole. However, an annual result above the billion mark and thus at the level of the two previous years will probably require further major transactions in the segment above € 100 million, which have so far failed to materialise this year. However, a result at the level of the long-term average is likely to remain out of reach," explains Lars Faßbender, Cologne branch manager of BNP Paribas Real Estate GmbH.