BNP Paribas Real Estate publishes market figures for Q1 2025
In the first quarter of 2025, office properties have regained their traditional leadership role, which they had lost in logistics real estate over the past two years. With an investment turnover of around €1.75 billion, they were able to double their previous year's figure. With a share of almost 30% of the total result, they have so far been the asset class with the highest turnover. The sale of the Upper West in Berlin contributed well over €400 million to the good result. But even without this benchmark transaction, offices would have secured first place. This is the result of the analysis by BNP Paribas Real Estate.
This is due on the one hand to an increased number of sales, but on the other hand also to a noticeable increase in the average purchase price from a good €17 million (Q1 2024) to currently around €30 million per sale. "A number of transactions were registered, especially in the mid-market segment between €25 million and €100 million. This shows that investors are increasingly regaining confidence in the medium and long-term development of the German office markets," says Franc Gockeln, Managing Director and Head of Office Investment at BNP Paribas Real Estate GmbH.
The situation with regard to yield development has currently changed considerably. This is due to increased financing costs in recent weeks and higher yields on German government bonds. As a result, net prime yields are unchanged at the beginning of the year. For offices, they are 4.36% on average for A locations. Munich remains the most expensive location with 4.20%. It is followed by Berlin and Hamburg with 4.25%. In Cologne and Stuttgart, 4.40% are quoted and in Frankfurt and Düsseldorf 4.50% are to be estimated.
Sales in A locations decline in the first quarter
Investment turnover in the German A locations amounted to just under € 1.19 million and was significantly higher than the previous year's result (+82%). Berlin is in first place with around €665 million. Not least due to the sale of the Upper West, sales have increased almost eightfold. Munich ranks second with €373 million, up 115%. The podium is completed by Frankfurt. €73 million was invested in the Main metropolis (-48%). Stuttgart follows in second place with €41 million, Düsseldorf with €18 million (-69%), Cologne with €11 million (-78%) and Hamburg with €6 million (-96%).
Even though market activity in the big cities has generally become somewhat livelier, there are still relatively few major deals. In the first three months of the year, only two trades in the three-digit million range were recorded. Against this background, a sometimes very different development can be observed within the individual markets
Prospects
How the office investment markets develop further depends on a wide variety of factors. Possible effects result from both national and international contexts, the dynamics of which are difficult to predict. On the one hand, there are major risks for the entire global economy that result from the announced tariffs by the USA and could lead to a full-blown trade war. The occurrence of the worst-case scenario would have dramatic consequences for the further economic development of many countries.
On the other hand, the special fund decided for Germany, in conjunction with the greater financial leeway for defence spending, could provide additional growth impulses. Economic growth could be higher than currently forecast, which should benefit the user markets.
"Tailwind is also likely to come from the office leasing markets. They have been developing stably overall since the summer of 2024 and are slowly picking up speed. Take-up in Q1 2025 was almost 16% above the previous year's level, including some signalling deals such as that of Commerzbank with 73,000 m². Furthermore, there are signs of significant rent growth in rental prices both at the peak and on average, driven by the increasing demand for modern space with persistently low construction activity," predicts Franc Gockeln.
From today's perspective, an accelerated recovery of the German economy is the most likely scenario, which will make investments more attractive again. In addition, many investors are likely to turn more towards the safe asset class of real estate. As a result, the transaction volume should continue to increase slightly in the course of the year. The situation is different when it comes to yield development. Due to the changed conditions, yields are very likely to remain stable in the coming quarters.
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