Aberdeen Property Investors is forecasting an increase in prime rents across all sectors in Germany for the period 2011-2014, ranging from 1.5 per cent to 2.7 per cent per annum.

A report by the firm says the German economy should benefit from the revival of the world’s economy, but in the short term it will be negatively impacted by reductions in the workforce and the associated drops in consumer optimism and private consumption.

In combination with a moderate level of completions during the current year, this should result in a slight decline in prime rental levels (office 2.4 per cent, retail 3.9 per cent, industrial 3.2 per cent). For the period 2011-14, Aberdeen expects an increase in prime rents across all sectors.

Driven by low yields in other asset classes and improving investor sentiment, Aberdeen expects decreasing prime yields (office 20 bps, retail 10 bps, industrial 20 bps).

For prime yields, it anticipates reductions of up to 50 bps during the next five years. This will therefore result in five year average all property total returns of more than five per cent per annum.
 
Based on a change in the mood of the German market and improved financing terms, Aberdeen anticipates a further increase in transactions in 2010.

Dr Thomas Beyerle, head of global research, says: “We expect for Germany that the largest investor group in 2010 will again be domestic investors who will seek assets that provide a high degree of secured income and are expected to invest with moderate gearing."