BNP Paribas Real Estate publishes data on the logistics investment market for Q3 2023 - Logistics investment market volume increases in the third quarter

The logistics investment market achieved a transaction volume of € 3.67 billion by the end of the third quarter. Following the exceptionally high record result from the previous year, this represents a decline of 57%. Against the backdrop of the changed interest rate environment and the ongoing adjustment processes on the investment market, the ten-year average was also missed by around a quarter. This is the result of an analysis by BNP Paribas Real Estate.

However, the increase in portfolio transactions in the third quarter is particularly pleasing. After hardly any sales were attributed to this segment in the first half of the year, €1.40 billion was registered here in the last three months. This is the third-highest quarterly result in the last five years and is around 75% above the ten-year average. The largest deal is attributable to Deka Immobilien, which acquired 50% of the shares in a portfolio comprising five properties from VGP for around €560 million. "The volume of individual deals, on the other hand, remains below the long-term average, which is primarily due to the very few sales in the three-digit million range. Despite generally strong demand, this is due to the changed financing conditions," explains Christopher Raabe, Managing Director and Head of Logistics & Industrial at BNP Paribas Real Estate GmbH.

Leipzig and Düsseldorf in the lead

The current overall lower level of transaction activity is also reflected in the major locations, which together accounted for investments totalling just under €900 million, around 27% below their long-term average. Leipzig is at the top of the rankings thanks to a proportionately included portfolio sale and a record volume of a good €237 million. Düsseldorf follows close behind with around €200 million. The city on the Rhine benefited from the largest single deal of the year to date: the sale of the "Areal Böhler" business park for more than €150 million. Stuttgart is in third place with a strong €163 million, to which the sale of a business park for just under €100 million made a significant contribution. Most of the other locations remain well below their long-term averages.
 
The distribution of the investment volume by size class in the segments up to €50 million is comparatively close to the long-term average, particularly in percentage terms. Among the larger deals, transactions in the three-digit million range remain significantly below the level of previous years, particularly in absolute terms, while investments between € 50 million and € 100 million are the only segment to beat the average in absolute terms.

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

The distribution of investments among the individual buyer groups is led by a clear margin by special funds (just under 31%), which thus remain the most popular investment vehicle. More remarkable is the second place and the associated high investment volume of open-ended funds, which contribute 16% to the result. The aforementioned portfolio purchase by Deka Immobilien made a significant contribution to this. Third place was taken by Immobilien AGs/REITS with a good 11%. They are followed by investment/asset managers (8%), sovereign wealth funds and project developers (around 7% each).
 
In terms of the origin of the capital, investors from Germany account for the majority of the total volume at just under 59%. This above-average figure is mainly due to the fact that fewer large-volume transactions are taking place overall. Foreign investors in particular appreciate the advantages of portfolio deals in order to quickly place a high investment volume. As with the long-term average, North American buyers (18%) invest a higher volume than European investors (just over 13%). A further 7% came from the Asian region.

Yields increased again slightly in Q3

As expected, net prime yields rose slightly once again in the wake of further interest rate hikes by the major central banks. With an increase of 10 basis points in the third quarter, they now stand at 4.10 % in the A locations. In Leipzig, the figure is slightly higher at 4.30 %. As inflation rates remain high, a further slight increase in interest rates by the central banks in the fourth quarter seems realistic, meaning that yields are likely to be adjusted upwards again as a result.

Prospects

"Logistics remains a very attractive asset class for investors to diversify their portfolios from a risk/return perspective. Fundamental demand remains high and the intact user markets offer further potential for growth in rental prices due to the shortage of supply, particularly in the core markets. However, due to the changed financing conditions, the search for a functioning price level for buyers and sellers is currently leading to lower transaction activity. Against this backdrop, it can be assumed that once interest rates have peaked, investment activity will pick up significantly in 2024. Nevertheless, the growth in investment activity already observed in the third quarter is likely to continue in the coming months. Opportunities continue to present themselves, particularly for investors with a strong equity base," says Christopher Raabe.

Volume on the logistics investment market increases in the third quarter | BNP Paribas Real Estate

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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