The various crises that have overturned the real estate investment market environment in recent times have forced institutional investors to re-examine their real estate portfolios.

That being said, there is no reason to fear that institutional investors might pull out of the asset class altogether. Instead, they are shifting their attention to alternative types of use. In Germany, demand is particularly strong for data centres. One of the main reasons to explain this shift in focus is the attractive rate of return. For the time being, it substantially exceeds those on offer from other established real estate sectors. The net cash-on-cash returns approximate 6 percent to 8 percent annually — and can be even higher.

Keen demand

Data centres also have another advantage. Unlike the classic real estate types of office and retail, they actually benefit from the digital transformation.

Steadily growing data volumes generate a proportionate in