Sirius

Sirius continues to operate primarily in Germany but also in the UK – two of the top five economies in the world – where it owns and manages a well-diversified portfolio of mature business park assets, as well as those where there is an opportunity to add value through asset management.

The integration of BizSpace, a leading provider of regional flexible workspace across the UK acquired by the Company in 2021, continued apace this year, driving meaningful operational and financial synergies underpinned by the Company’s internal operating platform.

In Germany, the primary focus is to build a “critical mass” around its “big seven” cities of: Berlin, Hamburg, Düsseldorf, Cologne, Frankfurt, Stuttgart and Munich. The Company has a secondary focus on a selection of key border towns where we can reap the benefits of markets on both sides of the border and the periphery of the “big seven” cities.

The Company provides 1.8 million sqm of manufacturing, storage and office space across Germany. The Company’s tenant base is diverse ranging from multinational corporations and government agencies to SMEs within the German Mittelstand and individual tenants.

In the UK, BizSpace is a leading provider of regional flexible workspace, offering office, studio and workshop units to a wide range of businesses in convenient regional locations. The Company provides 4.2 million sq ft across 70 sites.

BizSpace is equipped with a high-quality portfolio in a supply constrained market that offers significant organic growth potential in rental pricing. BizSpace’s UK tenant base is similarly diverse to that which the Company serves in Germany, ranging from multinational businesses to manufacturing-focused SMEs and individual tenants

The German market

Germany remains comfortably the largest economy in the European Union and the fourth largest in the world after USA, China and Japan. It has maintained its reputation as an industrial powerhouse with a strong export-focused economy characterised by low unemployment.

At the time of writing, the European Commission predicted 0.2% GDP growth in Germany in 2023 and a further 1.3% in 2024, with inflation falling throughout 2023 to a predicted 2.5% in 2024.(1) Germany responded strongly to events in Ukraine and as of January 2023 had eliminated its reliance on Russian energy.(2)

The German Bundesbank expects a gradual economic recovery in the second half of 2023, underpinned by growth in export demand and commodity price pressures diminishing, as well as real wages growing as inflation falls.(3)

Commercial real estate investment volumes in Germany in 2022 were €54.1 billion according to BNP Paribas compared to the two-year high investment figure recorded in 2021 of €64.1 billion. Whilst this represents a 16% drop year over year, 2021 was the second highest year on record, and the current year is in line with the ten year average. Moreover, this represents the eighth consecutive year with investment volumes above €50 billion, showcasing ongoing investment resilience.

Once again, the majority of sales volume was registered in and around Germany’s seven major cities (Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne, Munich and Stuttgart), totalling €28.2 billion.

Berlin led the way with €8.5 billion invested, the fourth highest total on record. Frankfurt followed with €5.1 billion recorded, closely followed by Hamburg at €4.9 billion.

Munich followed in fourth place with just under €4.3 billion, with Düsseldorf on €2.9 billion, Stuttgart on €1.4 billion and Cologne on €1.1 billion.

Looking at the various real estate sectors, investment in offices declined to approximately €22.3 billion of investments, representing a drop in the share of overall investment by 7% to 41% year on year. Taking up some of this share was logistics and light industrial assets, which increased by 3.3% to €10.1 billion, accounting for almost 19% of overall investment and building on a previous all-time high set in 2021 – representing two consecutive record years of investment in the asset class.

Foreign investors were responsible for around 44.5% of total investment levels, growing by almost 6% year on year.(4)

Taking a closer look at Germany’s so called “Unternehmensimmobilien” – a distinct asset class of German multi-use and multi-let commercial properties, which is home to the heart of the Germany economy and covers the bulk of Sirius’s properties – we can see that the asset class outperformed other asset classes in terms of investment in the first half of 2022.

Compared with H1 2021, transaction volume in the asset class increased by 6.9% to €1.6 billion, underpinned by increased investor interest in business parks and light manufacturing assets in particular.

The Unternehmensimmobilien has been resilient as an asset class during past major economic events, including the pandemic, and this has continued throughout market disruptions caused by events in Ukraine.

This is due to multiple factors such as the flexibility and diversity inbuilt within multi-tenanted business parks, the tendency for companies engaged in production and manufacturing to respond to economic contractions by reducing output rather than space, and the depth of the Mittelstand market.(5)

 

The UK market

The UK market The OECD forecasts a return to growth for the UK economy in 2024, following a contraction of 0.4% in 2023, as well as forecasting inflation to decline to 2.7% in 2024.(6) The latest data on inward investment in the UK, from 2021, showed an increase of £83.1 billion to just over £2 trillion.(7)

Commercial real estate investment in the UK in 2022 was £56 billion, representing a 5% increase on the ten year average.(8)

Looking back over 2022, supply of spaces increased by 14%, but remained 27% below the five year annual average, which, combined with strong demand, saw average rents rise by 10%. This was an increase from 2021 which saw annual growth of 9%.

Despite a slowdown in investment in Q4 of 2022, annual investment activity in industrial property for the year as a whole amounted to £13.8 billion, making 2022 the second largest year for industrial real estate investment in the UK on record after 2021.(9)

Looking ahead to 2023, CBRE expects pricing to stabilise in 2023 across asset classes. In particular, the logistics and light industrial market will experience continued strong demand driven by increased requirements for supply chain flexibility combined with vacancies in these spaces at all-time lows. In addition, demand for edge of town locations is forecast to increase.(10)

 

Notes

(1) https://economy-finance.ec.europa.eu/economic-surveillance-eueconomies/germany/economic-forecast-germany_en  

(2) https://www.bbc.co.uk/news/business-64312400

(3) https://www.bundesbank.de/resource/blob/901990/90afad2737f68 9d42ac53510149cc0de/mL/2022-12-prognose-data.pdf

(4) https://www.realestate.bnpparibas.de/en/market-reports/investment-market/germany-at-a-glance

(5) https://initiative.bulwiengesa.de/unternehmensimmobilien/sites/default/files/2022-11/IUI_Marktbericht17.pdf

(6) https://www.oecd.org/economy/united-kingdom-economicsnapshot/

(7)https://www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/bulletins/foreigndirectinvestmentinvolvingukcompanies/2021

(8) https://www.costar.com/article/568037063/uk-commercialproperty-investment-topped-%C2%A356-billion-in-2022-butvolumes-plummeted-as-year-unfolded

 (9) https://www.colliers.com/en-gb/research/industrial-logistics-ukmarket-pulse-report-2023

(10) https://www.cbre.co.uk/insights/books/uk-real-estate-marketoutlook-2023/logistics

 

In this section

Important

Please select the country of your residency:

By clicking the "Submit" button you certify that you are resident in the selected country.

Important

Please enter the telephone country code of the selected country:

By clicking the "Submit" button you certify that you are resident in the selected country.

Disclaimer - Important

TERMS OF ACCESS TO INFORMATION ABOUT A PROPOSED OFFERING (THE "TRANSACTION") BY SIRIUS REAL ESTATE LIMITED (THE "COMPANY")


Please read this notice carefully - it applies to all persons who view this site and, depending on where you are located, may affect your rights or responsibilities. The Company reserves the right to amend or update this notice at any time and you should, therefore, read it in full each time you visit the site. In addition, the contents of this part of the website may be amended at any time, in whole or in part, at the sole discretion of the Company.

The materials you seek to access are made available in good faith and for information purposes only and are subject to the terms and conditions set out below. Any person seeking to access this webpage represents and warrants to the Company that they are doing so for information purposes only and they agree to be bound by the terms and condition set out below. If you do not agree to the terms and conditions please exit this site by clicking "I disagree" box below.

Viewing the materials you seek to access may not be lawful in certain jurisdictions. In other jurisdictions, only certain categories of person may be allowed to view such materials. Any person who wishes to view these materials must first satisfy themselves that they are not subject to any local requirements that prohibit or restrict them from doing so. Any failure to comply with any such restrictions may constitute a violation of the securities laws or regulations of such jurisdiction.

The information contained in this part of the website does not constitute an offer of securities for sale or subscription or any solicitation for any offer to buy or subscribe for any securities in the United States, Australia, New Zealand Canada, and Japan and South Africa or any other jurisdiction if to do so would constitute a violation of the relevant laws of, or require registration thereunder in, such jurisdiction (each a "Restricted Jurisdiction"). If you are located or resident in the United States or any other Restricted Jurisdiction, please exit this webpage by clicking on the "I disagree" box below.

The information to which this gatepost gives access is intended exclusively for persons who are not residents of the United States and who are not physically located in the United States. The information contained in this part of the website does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered, sold, resold, transferred, delivered or distributed, directly or indirectly, in any form, in or into, the United States, except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements under the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. No public offering or sale of securities in the United States will be made.

You should not download, mail, forward, distribute, send or show the information or documents contained on this part of the website to any person. The information contained in this part of the website, including any material you may access, is not to be provided by you to any other person, in electronic form or otherwise, and is not to be accessed, published, copied, forwarded or otherwise disseminated in or into the United States.

Any securities referred to in the materials that follow will not be registered under the securities laws of any Restricted Jurisdiction and may be offered or sold, directly or indirectly, within such jurisdictions only pursuant to an applicable exemption from and in compliance with any applicable securities laws.

Members of the public are not eligible to take part in the placing. These materials are only addressed to and directed at: (i) persons in Member States of the European Economic Area (the "EEA") who are qualified investors within the meaning of article 2(e) of Regulation (EU) 2017/1129 and (ii) persons in the United Kingdom who are qualified investors within the meaning of article 2(e) of Regulation EU) 2017/1129 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 who are: (a) persons who have professional experience in matters relating to investments falling within the definition of “investment professionals” in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (b) are persons falling within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations, etc”) of the Order; and (c) other persons to whom this communication may lawfully be communicated (all such persons in (a), (b) and (c) above together being referred to as "relevant persons"). The securities described in the materials are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, Qualified Investors in any Member State of the EEA and relevant persons in the United Kingdom. Any person in any Member State of the EEA who is not a Qualified Investor and any person in the United Kingdom who is not a relevant person should not act or rely on the materials or any of their contents.

If you are not permitted to view materials on this webpage or are in any doubt as to whether you are permitted to view these materials, please exit this webpage by clicking on the “I disagree” box below.

By proceeding, you agree to comply with the terms set out above and confirm that you are a resident of the country you identified earlier who is accessing this website from within that country, and you additionally represent, warrant and agree that:
  1. You are not accessing this website from within the United States or any other Restricted Jurisdiction;
  2. You will not print, download, or otherwise seek to copy, mail, forward, distribute or send any of the materials on this webpage to any other person at any time; and
  3. You intend to access this webpage for information purposes only and that you have read and understood the disclaimer set out above and are permitted to proceed to electronic versions of the materials.

 

No Access

We regret that, due to applicable legal restrictions, we are unable to provide you with access to the requested content. We apologise for any inconvenience this may cause.