RUECKERCONSULT
When Jörg Hingott, Deputy Head of the Defence Capabilities Division at the Federal Ministry of Defence, took the podium at Berlin's Real Asset Finance & Debt Summit, the numbers he laid out were of a scale that stopped the room. Germany's regular defence budget has risen from €50 billion in 2022 to €82.7 billion today. Add the €25.5 billion still flowing from the original €100 billion Sondervermögen, and total defence spending in 2026 reaches €108 billion. Factor in NATO's new target of 5% of GDP for defence and Germany is looking at annual expenditure of between €215 and €225 billion, roughly 40% of the entire federal budget.
The infrastructure dimension alone is staggering. Hingott outlined a construction requirement of around €67 billion through to the mid-2030s, against a current annual delivery capacity of €2.2 billion. The arithmetic is unforgiving. To house the Bundeswehr's planned expansion to 460,000 personnel, Germany needs around 7,000 accommodation places in container-based construction this year alone, followed by 300 buildings at 90 locations from 2027 under the G-Cabin 1 framework contract, and up to 40 entirely new barracks from 2029 under G-Cabin 2. Awards under G-Cabin 1 are expected this summer.
The panel discussion that followed was charged with answering the question: where does private capital fit in all of this?
The Oktoberfest test
Moderator Karsten Mieth of KINGSTONE Infrastructure Investments framed it with characteristic directness. "The Bundeswehr and the federal government have written the menu," he said. "We just need to establish who orders, who eats and who pays." Around the table: Prof. Dr. Alexander von Erdély, spokesman of the executive board of BImA, the Federal Agency for Real Estate Tasks; Martin Czaja, Managing Director of GARBE Insite GmbH; and Hingott himself.
Von Erdély drew the essential distinction quickly. Purely military tasks will be funded from the federal budget as planned. Around them sits what he calls the Peripherie: logistics, general infrastructure, energy supply. Between the two lies a zone of overlap where the case for private involvement is strongest. His example: a geothermal plant built to supply a nearby barracks could simultaneously serve private users and businesses in the surrounding area. "These are the really interesting overlapping areas," he said.
Czaja confirmed that GARBE is already active in the sector, with tenants spanning research, development and production rather than pure logistics. His assessment of the opportunity was measured but positive, with one significant caveat: while running yields on defence-related assets look attractive, the exit is uncertain. Mixed-use buildings with defence tenants alongside others offer a more straightforward investment case, he suggested.
Mieth's most memorable contribution was an analogy that landed perfectly. He described the defence investment landscape as an Oktoberfest. The traditional beer tents, sovereign and politically protected, are strictly off limits for private capital. "Nobody who wanted to invest at the Oktoberfest would approach the traditional breweries." But surrounding the tents stand shooting galleries, pretzel stands, the dodgems and the big wheel. That is where private investors can and should be looking.
Hingott drew the red line explicitly. Weapons-system-specific infrastructure that must be operated sovereignly for security reasons is absolutely off limits. Everything else, from logistics and warehousing to energy infrastructure and accommodation, is potentially open. On warehousing specifically, he was direct: the volumes of material arriving from Sondervermögen procurement will far exceed what the Bundeswehr can house through its own construction. "I see that as a point where civilian investors could offer commercial logistics and storage facilities," he said. For the real estate and logistics sector, that is a significant signal.
The Ukraine lesson
One of the panel's most striking exchanges concerned energy. Russia's systematic attacks on Ukraine's power infrastructure destroyed around 25% of the country's electricity generation capacity. The strategic lesson Hingott draws is unambiguous: centralised energy production and supply is dangerously vulnerable. Germany is now planning, together with BImA, to establish a federal company tasked with creating redundant, decentralised energy production and storage at individual Bundeswehr locations, with civilian partners involved in financing and operating that infrastructure. "If one production facility is destroyed, you still have supply security through other routes," said Hingott.
Von Erdély added a dimension that may surprise many. On serial and modular construction, the only realistic way to deliver the required volume of buildings at speed, Germany is NOT behind the curve. It is ahead of it. When von Erdély recently presented Germany's approach to an association of European BImA equivalents, the reaction was astonishment. In commercial-scale modular construction, Germany is genuinely among the top countries in Europe. Financing and expanding that industrial capacity is, in his view, a compelling investment opportunity that will outlast the current defence buildup and find application across the broader construction market.
Capital is not enough
The panel closed with von Erdély's most direct appeal to the audience. What Germany needs from the private sector is not merely capital. "Just putting money on the table and expecting a return — fine, you can do that," he said. "But the tasks we have sketched here are so extensive, so complex, undertaken at a scale and speed this country has never attempted before, that we also need management competence, implementation competence and planning expertise. When you combine that with capital, real added value is created." His conclusion was unequivocal: "It will not work without the private sector."
Czaja had the last word. The contact points between private capital and defence are many, from logistics through ÖPP structures to production facilities. "The roadmap exists," he said. "It is not yet finished. But it shows the first path."
For real estate investors, the panel's central message was straightforward: the defence buildup is structural, not cyclical, the big wheel has begun to turn, and across the many layers of that buildup — from logistics and energy to modular construction and mixed-use development — there is sufficient breadth of opportunity for investors to find the points where their own strategies and capabilities genuinely align.