FRANKFURT, GERMANY-Opportunistic investors, especially foreign vehicles with a strong equity base, are ready to enter Germany with about $14 billion and are on the hunt for retail in regional centers and new developments. They also await distressed sales in prime locations, but the pressure on banks is not yet sufficient to precipitate sales, says CB Richard Ellis head of investment Germany Fabian Klein.

“Banks want to sit this one out,” added head of investment Frankfurt Burkhard Plesser. He said at a recent press conference that there is $2.9 billion of investment in the pipeline for Frankfurt alone and investment in the city during the first quarter grew 45% to $366 million, more than half of which was by foreign investors. Opportunistic buyers also represented 58% of the total, up from 12% in 2010. Given the money in the pipeline investment in the city this year should significantly exceed the 2010 total of $2.6 billion.

The positive investment outlook is mirrored by the leasing market where first quarter take-up rose by 38% to nine million square feet but, crucially, driven by growth rather than space optimization and cost cutting, the motive in recent years according to head of agency Germany Carsten Ape. He expects office leases in Frankfurt to total 5.5 million square feet this year despite supply shortages.

Inquiries from the banking sector are particularly strong says CBRE, but there is a positive mood across the board and companies are recruiting staff.

Prime rents remained stable at $54 per square meter per month, but average rents have risen to $25.72 per square meter from $23.83 per square meter. The pipeline of new development is narrow and not likely to increase quickly. “A lot of people are in concrete discussions at the moment, as financing has become a little easier,” said Ape but developments still have to be 50% pre-leased to find a financier.

Allan Saunderson is a managing editor of Property Investor Europe and a contributor to GlobeSt.com.