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PGIM Real Estate acquires data centre land in Germany

Written by Fri 3 May 2024

Real estate investment management company, PGIM, has acquired property near Munich, Germany to develop a data centre. This investment was made through the company’s European Value Partners (EVP) II Fund for an unspecified amount.

The Munich data centre site is located between the city centre and Munich Airport and is equipped with 30MW of available power. Details of the purchase, the buildout, and the eventual end-user for the site were not included in the documentation.

“The rapidly increasing demand for data centres, combined with the low supply and limited development opportunities in urban areas, represents a very attractive investment opportunity for long-term investors,” said Nabil Mabed, senior portfolio manager at European Value Partners.

Mabed added the short-term development potential in Frankfurt is limited and the data centre market in Germany is increasingly focusing on Berlin and Munich.

According to data from Statista, the German data centre market is expected to show an annual growth rate (CAGR) of 6.24%, reaching a market size of £16 billion ($20.08 billion) by 2028. This strong growth projection is based on Germany’s economic prominence and new market entrants showing interest in hyperscale construction.

Investing in data centres has become a focus for PGIM. Global Head of Data Centre Investment for PGIM, Morgan Laughlin, said the data centre investment opportunity is the most exciting thing he has encountered within his career.

“It combines this unique situation, having demand without a clear limit. It is a global business. It is not something which is specific to emerged markets or emerging markets. Lastly, the supply side is quite constrained, and I think it is actually getting more constrained over time relative to the demand,” said Laughlin.

In line with this investment strategy, PGIM entered into a £478 million ($600 million) joint venture with data centre leader Equinix. Under this partnership, the companies plan to build the first x-Scale data centre in the United States. The planned facility will be located in Silicon Valley, California, and will provide 28MW capacity once fully operational.

The PGIM global data centre investment strategy involves investing in gateway markets, focusing on a build-fill-sell strategy across the hyperscale data centre value chain. The company currently has over £717 million ($900 million) invested through joint ventures in the data centre industry.

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Written by Fri 3 May 2024

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