Boston, MA -- (SBWIRE) -- 12/03/2014 -- Germany boasts one of the most developed and investor-friendly commercial real estate markets in the European Union, with a dynamic export sector and strong consumer environment supporting steady growth in rental rates in the post economic-downturn era. However, we see slowing GDP taking some of the momentum out of the market with rental rate growth likely to be moderate over the coming year.

Germany's commercial real estate sector has retained something of a 'safe haven' status over recent years as a strong internal and external demand environment have supported continued growth in rental rates and investment flows. 2013 saw Germany record its highest level of commercial real estate transactional activity since 2007, with investment flows directed primarily towards the office market. The retail sector has also enjoyed steady expansion over our review period as low unemployment and strong consumer spending have supported growing demand for retail space, particularly in the shopping mall segment.

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However, Q414 saw Germany's macroeconomic environment begin to deteriorate, with contracting manufacturing output reflecting slowing export volumes to major markets, such as China and the eurozone, particularly affecting the industrial segment.The industrial segment is, however, not the only area of the commercial real estate market expected to come under pressure over the coming quarters. A more moderate GDP outlook for 2015 (growth is forecast by our Country Risk team at a below-consensus 1.4%) will lead to slowing demand across the sector, leading rental rates to remain largely unchanged across much of the market. Despite a more challenging leasing environment, we expect transactional activity to remain steady over 2015-2016 as investors continue to find value in market with prices yet to return to pre-downturn levels.

Recent Developments

- US-based Westcore Properties' Europe Division acquired the Anthropolis office complex in Berlin. The...

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