Germany - Transparency, Logistics
Germany - Transparency, Logistics
Transaction volumes on Germany’s logistics markets have fallen by 31% in Q1 year-on-year, while the net prime yield for logistics properties has fallen below the 4% threshold for the first time, according to latest figures from property advisor CBRE.
The transaction volume on the German logistics market came in at a good €1.2 billion in the first quarter of 2019, reflecting a decline of 31% year on year. According to Kai Oulds, Head of Logistics Investment at CBRE Germany, “The first quarter dropped significantly below the level of all four quarters in 2018, therefore affirming the difficulty investors are having in finding suitable properties. The market has been swept clean and new construction cannot keep pace with user and investor demand.
The net prime yield for logistics properties has fallen below the 4% threshold for the first time and now stands at 3.9%. This represents a decline of 0.5 percentage points compared with the year-earlier period.
Oulds said, “The prime yield for logistics properties has therefore settled at the level of first rate shopping centers. This is further proof of the impressive development that logistics real estate as an asset class has undergone in recent years.”
Yield compression has been ongoing, not only in the last 12 months but also in comparison with the last quarter of 2018. “Another recent yield decline shows that the slight dent materializing in the economy has so far by no means diminished the appeal of logistics real estate from an investor standpoint,” said Oulds’ colleague Marcus Thormann, Associate Director Valuation Advisory Services at CBRE Germany.
So, who’s doing all the buying? Oulds said that the supply shortage was affecting international investors more. Compared to Q1 of 2018, the share of German investors has risen by 30 percentage points to 55 percent. Compared with the full year 2018, this represents an increase of 16 percentage points. “Against the backdrop of the supply shortage, German investors are increasingly able to gain ground. The fact that international investors are interested specifically in larger portfolios and therefore feel the effects of the supply shortage more intensively plays a certain role,” said Oulds.
The share of portfolio transactions in the overall volume dropped by six percentage points to 65% in comparison with Q1 of 2018, and so is still well above the value of the overall investment market.
