BNP Paribas Real Estate publishes data on the logistics investment market for Q4 2023

- Noticeable recovery in the logistics investment market in the fourth quarter

The logistics investment market continued to pick up in the fourth quarter, reaching a transaction volume of € 6.1 billion for the year as a whole. Nevertheless, the result cannot match the record result from the previous year (-40%) and also remains around 15% below the ten-year average. This is the result of an analysis by BNP Paribas Real Estate.

"The first half of the year in particular was characterised by subdued market activity and a comparatively low number of deals against the backdrop of the sharp change in the interest rate environment. While the third quarter primarily benefited from larger portfolio transactions, the last three months also saw increased investment in individual properties, which is impressively underlined by the second-highest quarterly result ever recorded in this segment of €1.7 billion," explains Christopher Raabe, Managing Director and Head of Logistics & Industrial at BNP Paribas Real Estate GmbH. Together with parcel sales, the fourth quarter (€2.4 billion) closed well above the five-year average (+15.2%). Thanks to this final spurt and the weak performance of the office asset class (€6.0 billion), logistics properties are now just under the top property type for the first time in the total commercial investment volume of €23.3 billion.

Leipzig at the top

There was noticeably less investment overall in the eight major locations in 2023 than in previous years. At €1.43 billion, the decline compared to 2022 amounts to 29%. Leipzig took the lead with a volume of € 327 million, setting a new record. The sale of Demire's LogPark logistics property to HIH Invest Real Estate made a significant contribution to this, among other things. Munich followed in second place with €233 million (-23%) and Düsseldorf, which completed the podium with €203 million and benefited from the sale of the "Areal Böhler" to Jamestown in the first quarter. Berlin is very close behind with just under €200 million (-61%). Stuttgart (€163 million), Frankfurt (€162 million) and Hamburg (€126 million) followed suit, while only a very low result was recorded in Cologne (€14 million).
   
Large transactions in the three-digit million range again accounted for the highest share in 2023 at a good 41% - three quarters of the volume in this category was generated by portfolio deals included in the calculation. The high value of investments between €25 million and €50 million is noteworthy, with a share of around 22% compared to the previous year and the second-best result in absolute terms in the last ten years.

Specialist funds lead the investor ranking, buyers from Germany remain active

As in previous years, the distribution of investments by buyer group is led by special funds. At 22.5%, they lead by a wide margin, which is mainly due to numerous individual deals. Investment/asset managers achieved 12.5 %, putting them in second place. Sovereign wealth funds, on the other hand, mainly invested in portfolios and accounted for just under 11 %. Almost 10 % is also attributable to project developers who have secured smaller and larger properties for redevelopment and new development. Open-ended funds contributed a good 9% in total and were responsible for the largest deal of the year: Deka Immobilien acquired 50% of the shares in a portfolio comprising five properties from VGP for around €560 million in the third quarter.
   
German investors accounted for just over half of the investments and, with an absolute volume of around €3.2 billion, invested significantly less than in the record year of 2022, but still reached their ten-year average. International investors, on the other hand, remained noticeably below their long-term average overall, although they also made strong gains in the second half of the year and returned to an above-average volume in the fourth quarter. North American and European buyers were on a par for the year as a whole with a good 17%, while around 11% was invested from Asia.

Yields increased further in Q4 as expected

In 2023, net prime yields continued to rise in the wake of the interest rate hikes by the major central banks. In the fourth quarter, they rose by 15 basis points to 4.25 % in the A locations, with 4.45 % expected for Leipzig. This development was expected in view of the fact that the interest rate cycle of the major central banks has not yet been fully completed.

Prospects

"The positive development in recent months gives us grounds for optimism for 2024. Although economic development can only be expected to be subdued, once the interest rate peak has been reached and financing conditions are likely to improve, there are many indications that momentum will pick up again significantly and investment volumes will increase noticeably over the year as a whole. Logistics properties have established themselves as an asset class and continue to benefit from growth potential in rents, particularly in the major logistics hubs, due to the existing supply bottlenecks," says Christopher Raabe.

Press contact:
Chantal Schaum - Tel: +49 (0)69-298 99-948, Mobile: +49 (0)174-903 85 77, chantal.schaum@bnpparibas.com
Viktoria Gomolka - Tel: +49 (0)69-298 99-946, Mobile: +49 (0)173-968 60 86, viktoria.gomolka@bnpparibas.com

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