Companies are reluctant to sell their properties

Sales proceeds fall for the second time in a row - logistics accounts for the largest share

FRANKFURT, 3 July 2024 - The total value of Corporate real estate sold in the EMEA region has fallen for the second year in a row: Around 18.4 billion euros were realised in 456 transactions in 2023, significantly less than the previous year's figure of 25.9 billion euros. With a drop of 31 per cent, the five-year average was also significantly undercut, as shown in the latest JLL report "Raising Capital from Corporate Real Estate".

At 28 per cent, industrial and logistics properties accounted for the largest share of the total value of corporate real estate sold, closely followed by retail (25 per cent) and office properties (22 per cent). The retail sector is responsible for the largest deals: among others, US-based Reit Realty Income acquired 25 branches of the British supermarket chain Asda for 750 million euros and the Decathlon portfolio for 527 million euros with 82 properties in several European countries. In both cases, this was a sale and leaseback transaction, as was the Life Science Park Rheintal in Stein, Switzerland: the pharmaceutical group Novartis sold this to the energy service provider Getec for 355 million euros and remains the largest tenant on site.

The transaction volume also decreased in Germany: At 2.8 billion euros with 79 disposals, the previous year's result of four billion euros was missed. industrial and logistics properties accounted for 61 per cent of turnover in Germany. Data centres followed far behind with eleven percent and offices with seven percent. This puts Germany behind the UK (4.7 billion euros) and ahead of France (2.2 billion euros). While the Netherlands recorded the largest drop in the EMEA region at 79 per cent, the figure in Spain and Switzerland bucked the trend and rose slightly.

"An important driver for company sales is private equity, which wants to refinance itself through sales and pay off high acquisition debts," says Helge Scheunemann, Head of Research JLL Germany. "This is happening in the industrial and logistics sectors in particular. In the office sector, scepticism about the impact of hybrid working models continues to prevail, which is one of the reasons why significantly fewer office properties were sold in 2023. Private equity firms are also concerned that non-ESG-compliant properties could become stranded assets in the long term."

More sale and leaseback transactions expected in 2024

Initial economic forecasts are cautiously optimistic again and inflation is no longer rising as strongly as in the past two years. Nevertheless, economic expectations are not optimistic in all sectors. There is also increased pressure to transform in some industries, such as the automotive sector. "Interest rates are likely to remain higher than in the previous cycle. For companies that want to adapt their portfolio to the changed circumstances and free up capital in the process, the sale of real estate therefore remains an attractive option," emphasises Martina Williams, Head of JLL Work Dynamics DACH & CEE, EMEA Consulting Lead. "Work Dynamics offers companies property services and technologies, specific consulting, corporate real estate and facility management as well as portfolio and project and development services.

"By selling, companies gain additional flexibility and resilience and can focus on growing their core businesses," adds Williams. "However, due to the current price level, they must expect that they will not realise the same revenues as just a few years ago."

JLL anticipates further company sales in 2024, particularly where private equity firms are involved or companies are undergoing a major transformation. Sale and leaseback transactions are likely to become increasingly interesting for investors looking for low-risk, long-term returns.

Contact: Martina Williams, Head of JLL Work Dynamics DACH & CEE, EMEA Consulting Lead
Phone: +49 (0) 69 2003 1029
Email: martina.williams@jll.com

Contact: Helge Scheunemann, Head of Research JLL Germany
Phone: +49 (0) 40 3500 11225
Email: helge.scheunemann@jll.com

About JLL

For more than 200 years, JLL (NYSE: JLL), a leading global commercial property and investment management firm, has helped clients acquire, build, occupy, manage and invest in a wide range of commercial, industrial, hospitality, residential and retail properties. As a Fortune 500® company with annual revenues of $20.8 billion and offices in more than 80 countries worldwide, our approximately 108,000 employees offer the power of a global platform combined with local expertise. Driven by our mission to shape the future of property for a better world, we help our clients, employees and society - true to our motto "SEE A BRIGHTER WAY". JLL is the brand name and a registered trademark of Jones Lang LaSalle Incorporated. All contact details and press information for JLL Germany can be found at: jll.de/press