Defence properties: Europe's new strategic real estate frontier

A new white paper by Periskop Logistics, authored by Kilian Mahler and Thomas Beyerle, highlights Defence Properties as an emerging and crucial sector in the logistics real estate market.

Prof. Dr. Thomas Beyerle - copyright HBC Biberach
Kilian Makler - copyright Periskop Logistics

These properties, tied to security, defence, and technology, are gaining prominence due to increasing geopolitical tensions, rising defence budgets, and Europe's reindustrialisation efforts.

The paper argues that Defence Properties represent an independent investment segment offering stable cash flows, sovereign credit quality, and long-term leases, largely insulated from typical real estate market fluctuations. They combine the advantages of infrastructure investments with attractive risk-return profiles. The period until 2030 is identified as a strategic window for developers, asset managers, and investors to engage with Europe's defence transformation, provided they manage origination, ESG compliance, and governance effectively.

 The demand for suitable sites for security, logistics, and technology-related uses is growing, fueled by governments, municipalities, and companies prioritising security and operational capability. This opens opportunities for land portfolio holders, property owners, and logistics companies with adaptable sites.

The concept of Defence Properties now extends beyond traditional military sites to include a broad range of industrial, logistics, and technological infrastructures, such as production, training, maintenance, storage facilities for defence and security industries, civil and disaster protection installations, cyber-defence centres, and data-security infrastructures. For investors, these assets offer diversification, long-term leases, and stable demand driven by security needs.

Programs like Germany's €100 billion special fund, along with increased defence budgets across Europe, are accelerating this transformation. Private capital, through public-private partnerships, sale-and-leaseback structures, and specialised funds, is essential to meet the growing demand for production and storage capacities.

The importance of intangible defence infrastructure, such as cybersecurity and digital resilience, is also expanding the investment scope.

Navigating this sector requires a thorough understanding of legal frameworks, particularly in Germany, concerning spatial planning, building regulations, and classified information law, necessitating close coordination with authorities.

Prof. Dr Thomas Beyerle, Biberach University of Applied Sciences, commented: “Defence real estate will develop into a distinct and stable asset class. Driven by increasing security expenditures, solid public-sector tenants, and low economic cyclicality, these assets offer predictable long-term cash flows within a highly regulated and specialised market environment.”

Kilian Mahler, managing partner Periskop Logistics, added: “Investing in defence properties combines stability and profitability. As a countercyclical sector characterised by creditworthy tenants and long-term leases, it offers reliable returns. The anticipated additional demand of approximately 6 million m2 over the next five years presents a unique opportunity to invest in energy-efficient new developments – before demand peaks around 2030 and new construction activity declines significantly.”