Lack of supply held back German logistics investment in 2019 - report

The German industrial and logistics real estate investment market achieved the third best annual results on record in 2019, despite supply shortages hampering deal volumes, Colliers International found.

Investors ploughed €6.6 bn into the asset class, achieving gross prime yields of just over 4%, and with deals worth more than €100 mln boosting market results.

However, 2019 lagged behind the preceding two years, including the record year for volumes in 2017 (€8.7 bn) and 2018 (€6.8 bn).

Industrial and logistics was also again the third biggest asset class in German real estate, with a market share of more than 9%.

Colliers found almost the same amount of capital was invested in Q4 2019 as in Q1 and Q2 combined (Q4 2019: €2.3 bn, or 35%). The advisor said results would have been even better had more product been available.

More deals exceeding €100 mln were carried out in 2019 compared to previous years, particularly in the final three months. These accounted for €3.3 bn - roughly half of total annual transaction volume.

Foreign investors were also active in the German market, investing around €4 bn in logistics and industrial assets. This reflects a 60% market share, up 13 percentage points year-on-year. Asian investors such as Frasers and GIC (Maximus portfolio) accounted for €1.6 bn alone. UK investors (roughly €1.1 bn) and US investors (€981 mln) were also active.

‘High-quality assets featuring long-term leases and low-risk tenants have become quite rare on the German market,’ said Hubert Reck, head of industrial & logistics, Stuttgart.

‘Intense competition for these assets is having a significant impact on the market. Demand for logistics space is quite high at the moment and even investors with less experience are increasingly starting to venture into this asset class. This trend will significantly boost purchase prices with multipliers following suit.’

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