Key Takeaways
- • German municipalities face a projected 430,000 increase in pupils by 2035 and estimated investment requirements for schools of around 68 billion euros, according to the press conference coverage of the sector.
- • Yields on German school properties currently sit between roughly 3.8% and 5.9%, depending on location, property quality and user structure, attracting institutional interest.
- • Nordic countries, where 25-30% of employees work in the public sector, treat social and educational real estate as an established institutional asset class, according to CapMan's Robert Feldt.
- • CELLS converted the former Deutsche Börse headquarters in Frankfurt am Main into a school campus of over 40,000 square meters, leased to the city for 30 years, and built in roughly two and a half years.
- • Panelists Robert Feldt (CapMan), Tanja Volksheimer (NEXT Generation Invest) and Jan Trenn (CELLS) argue that long-term public-sector leases and indexed rents make educational property a distinct investment class.
Summary
Germany's educational infrastructure faces mounting pressure. The number of pupils is forecast to rise by 430,000 by 2035, while municipal investment requirements for schools are estimated at around 68 billion euros. Many municipalities lack the financial resources, staff and capacity to deliver new construction and renovation alone, which is drawing investors, project developers and local authorities toward private capital. The role of private capital and the emergence of educational real estate as an independent asset class were discussed by Robert Feldt, Investment Director at CapMan; Tanja Volksheimer, Managing Director and CIO of NEXT Generation Invest; and Jan Trenn, CEO of CELLS, at an online press conference organised by RUECKERCONSULT.
The panelists pointed to the Nordic countries as a reference point. There, educational and social real estate has been an established asset class for years, supported by high state investment in education, long-term leases and strong public-sector credit. According to Feldt, social infrastructure in the Nordics is treated as an integral part of institutional portfolios rather than a niche, and in some years it ranked among the second- or third-largest segments of the real estate investment market by volume. Feldt described these properties as remaining tradable and attractive even in crisis periods because state tenants provide long-term, reliable cash flows.
For German institutional investors, Volksheimer argued the sector combines social relevance with stable returns. Long-term leases, often with public or publicly funded users, and indexed rents produce predictable cash flows. Depending on location, property quality and user structure, yields on school properties are currently between about 3.8% and 5.9%. Volksheimer said the German market remains at an early stage compared with the Nordics and that educational infrastructure now extends beyond schools to academies, further-education centres, libraries and mixed-use campuses. She also noted that public-private cooperation has become more professional and more equal than a decade or two ago.
CELLS's conversion of the former Deutsche Börse headquarters in Frankfurt am Main illustrates the approach. The building, most recently used by Commerzbank, was converted into a school campus of more than 40,000 square meters, leased to the city of Frankfurt for 30 years. Trenn said the project was completed in roughly two and a half years, compared with a decade or more typical for greenfield sites under development-plan procedures. At full build-out, the campus will host 3,200 students and 290 teachers. Trenn also cited ecological benefits from preserving existing structures, including avoided grey energy and demolition, and expects continued population growth in metropolitan areas to sustain demand for educational infrastructure.
The panelists pointed to the Nordic countries as a reference point. There, educational and social real estate has been an established asset class for years, supported by high state investment in education, long-term leases and strong public-sector credit. According to Feldt, social infrastructure in the Nordics is treated as an integral part of institutional portfolios rather than a niche, and in some years it ranked among the second- or third-largest segments of the real estate investment market by volume. Feldt described these properties as remaining tradable and attractive even in crisis periods because state tenants provide long-term, reliable cash flows.
For German institutional investors, Volksheimer argued the sector combines social relevance with stable returns. Long-term leases, often with public or publicly funded users, and indexed rents produce predictable cash flows. Depending on location, property quality and user structure, yields on school properties are currently between about 3.8% and 5.9%. Volksheimer said the German market remains at an early stage compared with the Nordics and that educational infrastructure now extends beyond schools to academies, further-education centres, libraries and mixed-use campuses. She also noted that public-private cooperation has become more professional and more equal than a decade or two ago.
CELLS's conversion of the former Deutsche Börse headquarters in Frankfurt am Main illustrates the approach. The building, most recently used by Commerzbank, was converted into a school campus of more than 40,000 square meters, leased to the city of Frankfurt for 30 years. Trenn said the project was completed in roughly two and a half years, compared with a decade or more typical for greenfield sites under development-plan procedures. At full build-out, the campus will host 3,200 students and 290 teachers. Trenn also cited ecological benefits from preserving existing structures, including avoided grey energy and demolition, and expects continued population growth in metropolitan areas to sustain demand for educational infrastructure.
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