Frankfurt: A parcel of land outside Munich that PGIM bought as raw development potential two years ago has just changed hands again, this time fully permitted and ready to build, and the margin behind that transformation says as much about Europe's data centre land scarcity as the deal itself. PGIM, the world's second-largest real estate investment manager with €201bn in gross assets under management, has sold a 30 megavolt ampere data centre development site in Unterschleissheim, Greater Munich, to a European infrastructure investor. The site was originally acquired in 2024 through PGIM's closed-ended value-add fund, European Value Partners II.
What changed in the intervening two years is the entire investment thesis behind the site. The development now carries a building permit targeting a power usage effectiveness ratio of 1.2, alongside regulatory approval under Germany's Federal Immission Control Act, meaning the buyer inherits a shovel-ready asset rather than a speculative land position. "The sale of this Munich site crystallises the value created through securing planning consent and grid connection. This deal also underscores our expertise in identifying the right properties in metropolitan areas and transforming them into data-centre-ready developments, adding value for our investors, regional businesses, and end-users," said Nabil Mabed, Head of Value Add Europe, Real Estate at PGIM.
For investors and developers competing for data centre land across Europe, the real story here is the value creation model rather than the transaction itself. Rather than developing the facility to completion, PGIM chose to exit once planning consent and grid connection risk had been cleared, capturing the sharpest part of the value curve while leaving construction and operational risk to a specialist infrastructure buyer better positioned to run it. "The European data centre market continues to present attractive investment opportunities, characterised by strong demand driven by AI adoption and constrained supply due to scarcity of suitable land and power," Mabed added. That entitlement-led strategy, buy land, secure power and permits, sell to an operator, is likely to become an increasingly common playbook as grid capacity, not capital, becomes the binding constraint on new European data centre supply.
Munich's specific advantages help explain why this site commanded a premium once de-risked. The city hosts seven of Germany's 40 DAX-listed companies, several leading universities, and one of the country's seven connectivity hubs, the DE-CIX internet exchange, alongside long-haul fibre routes linking Munich to eastern and southern Europe. That combination of corporate demand, connectivity infrastructure and constrained land supply is precisely the profile institutional capital is chasing across Europe's secondary data centre markets.
PGIM is the global asset management arm of Prudential Financial, with €1.38tn in total assets under management and more than 1,500 investment professionals across 40 offices in 20 countries. Its real estate business ranks as the world's second-largest real estate investment manager, with professionals based in more than 30 cities worldwide.
People mentioned
- Nabil Mabed, Head of Value Add Europe, Real Estate, PGIM (pictured)
Companies mentioned
- PGIM, global asset manager and seller of the Munich data centre development site
- Prudential Financial, parent company of PGIM
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