“Record figures wherever you look” - German Logistics and industrial property market 2017

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​Press release including chart [PDF]

 

FRANKFURT, 5th January 2018 – After what turned out to be an exceptional year, the German logistics and industrial property market registered a transaction volume of €8.7 billion in 2017. “Even though at the beginning of 2017 we had already considered a new record year to be both possible and probable, the result still exceeds our wildest expectations, with record figures wherever you look,” said Willi Weis, Head of Industrial Investment at JLL Germany. With an increase of 84% compared to 2016 (€4.72 billion), the “logistics-industry” asset class recorded the strongest year-on-year growth. In particular, the 166% increase over this sector’s own five-year average (€3.27 billion) is unrivalled when compared with other asset classes. In the corresponding comparative statistics, hotel investments were in second place with +45% while office property investments were third with growth of 39%. 
 
The logistics share of the total commercial transaction volume has never been so high; the asset class accounts for over 15% of the total. “It is therefore not surprising that logistics transactions played a prominent role in the top commercial property deals in 2017. Among the top 10 transactions in Germany, the asset class appears three times. What’s more, the almost €2 billion German share of the Logicor deal in the second quarter represents the largest commercial property transaction of the year,” said Weis.
 
The formidable result is attributable to a number of significant portfolio transactions. Total revenue from portfolio sales amounted to €6.23 billion. “That alone would have been enough to secure a new record year,” said the logistics property investment expert. Individual transactions also contributed towards this remarkable performance of the German logistics and industrial property market. Such deals generated a volume of €2.47 billion in 2017, which was in line with the previous year and more than a third above the five-year average.
 
Other record figures:

  • It took only six transactions with a total volume of €4.8 billion in 2017 to surpass the overall result of the previous year.
     
  • The top 5 deals in 2017, with a volume of approximately €4.57 billion, also represent the five largest logistics deals ever registered and correspond to 52% of the 2017 transaction volume  (2016: 25 %). The top 5 deals in effect took place without any German participation: the sale of the Logicor portfolio by Blackstone to China Investment Corporation; the disposal of the Hansteen Germany portfolio to Blackstone and M7; the sale of the Gazeley portfolio by Brookfield to Chinese asset/fund managers; the disposal of the Gramercy portfolio to AXA Investment Managers; and the sale of the Geneba portfolio by Catalyst Capital GmbH to Frasers Centrepoint Ltd from Singapore. 


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The share of foreign investors reached a whopping 72%, mainly due to the large number of major transactions. The foreign share of the five-year average increased to 52% in 2017 from 37% in 2016. “The logistics investment market was heavily influenced by foreign capital in 2017, including new players with a predominantly Asian background,” said Weis. He added: “The fact that foreign players also dominate the sellers’ side with an almost equally high share clearly illustrates that they tend not to be very long-standing asset holders but focus more on short-term gains.”
 
It is only logical that yields would also react to the kind of market movements that took place in 2017. In no other asset class did yields drop as sharply in 2017 as in the logistics sector. During the year, the average prime yield in the Big 7 (Berlin, Düsseldorf, Frankfurt am Main, Hamburg, Cologne, Munich and Stuttgart) fell by 50 basis points from 5.00 % to 4.5%.
 
Willi Weis concluded: “For 2018 we again expect a strong result on the logistics and industrial property market in the range of €5 billion-€6 billion. Although more portfolio holders will exploit the favourable economic conditions to sell assets, it is unlikely that such a number of long-planned platform sales as seen in 2017 will be repeated in the current year. However, the prime yield will fall moderately. This will lead to increased demand for products with a higher return in the industrial/light industrial segment.”