17. Dec 2018 - Immobilien Wirtschaft

Discreet deals

by Richard Haimann

Nowadays, more and more professional transactions are taking place in the form of off-market deals. According to a recent study both buyers and sellers are turning their backs on bidding procedures and addressing large swathes of the market because such procedures take up too much time – and far too often fall through.

Real-estate investors increasingly prefer discreet back-room deals to bidding procedures in data rooms. This is revealed by a study conducted by the real estate research company Bulwiengesa on behalf of the Berlin-based consulting company HPBA Off-Market Solutions. Accordingly, last year saw commercial real estate and apartment portfolios with a value of some 40 billion euros change owner without the seller previously addressing the whole range of potential buyers. [...]

This article was originally published in German only. A summary in English is available.

According to the HPBA Off-Market Study, the off-market segment on the German real estate investment market encompassed a volume of 40 billion euros in 2017. The general public is excluded from the bulk of these transactions, and the deals are therefore not included in the quarterly reports of the major brokers. Among other things the study shows that the market liquidity is significantly higher than assumed to date, as Andreas Schulten, the fully authorised representative of Bulwiengesa AG, underlines. Critics at Savills and JLL maintain the estimated number of unreported cases for such transactions is lower, yet fail to put forward an empirical counterproposal. There is agreement, however, that numerous investors prefer off-market processes to a classical bidding procedure. John Amram, the founder and managing director of HPBA Off-Market Solutions, states that factors like the proven greater deal security and strategic flexibility of off-market procedures can be just as important criteria for investors’ decisions as the possibility of higher selling prices.