Southern Germany’s medium-sized cities offer attractive value

Fast-growing medium-sized cities in southern Germany represent fundamental value for investors, according to Savills Investment Management.

“The excess demand for inner-city office buildings is driven by institutional investors and financially strong private investors,” said Andreas Trumpp, head of research Deutschland with Savills IM, in a statement. “This has already pushed net initial yields in this segment, particularly in the A cities, far below the threshold of 4 percent. Nevertheless, investments remain attractive in this segment, as the yield spread is at a consistently high level compared to 10-year German government bonds. They are safe economic investments and provide security through stable cash flows, and are nonfungible due to the broad investment option and their non-replicable offer.”

The Savills IM German High Street Index shows cities such as Regensburg, Passau and Rosenheim benefit from factors such as a strong econom