Tritax EuroBox, the UK publicly listed logistics specialist, said it has reacted to current market conditions with purchases of part-vacant properties in countries such as the Netherlands and Poland.
In a Q&A event organised by US investment bank, Jeffries, Tritax fund manager Nick Preston was asked whether given the strength of the market in Germany, the company should have a higher weighting to the country.
Preston said: ‘We are a pan-European investment vehicle, but we really like the German market and we want to do more there to grow our current weighting.
‘We do see other good opportunities in other markets and in terms of price and performance prospects, the yields in Germany are the lowest in Europe. That pricing reflects the performance prospects, but we can also get good value in other markets.
'We believe Germany, the Netherlands and northern European markets will fare better economically than some of the eastern and southern European economies post-Covid.
‘We have already bought part-vacant properties with a leasing risk which is a good thing in certain markets, like the Netherlands and Poland, and we’re looking to do more of that in the future. The current conditions are very supportive and we can be a little bit more adventurous in the right markets and locations.’
During the same Q&A, Wolfgang Dietz, CEO of family-owned developer investor Dietz, with whom Tritax has a partnership, said the most sought-after locations in Germany were the big five - Munich, Stuttgart, Cologne, Frankfurt and Hamburg. He added: ‘But there is huge demand and very low supply in these regions because land is very expensive and limited there so we have to go a little bit further.'
He added: ‘For the last three to five years, other parts of the country like the Leipzig region and especially Berlin have become very strong. These regions are still growing so the key is to be centrally located somewhere close to the leading German highways, north, south, east or west.’
Asked about rental growth, he said, ‘Rental growth is the logical result of the lack of available space. We are quite positive this will continue in the next two to three years. In the big five German cities, rents are already quite high, but we’re seeing significant increases at the moment in surrounding areas and there are many examples of rental increases over the past six months as well. In those areas where land is available and warehouses can be developed at short notice, it’s a landlord’s market. That is not the case everywhere, but it’s certainly true of many key regions across the country.’
