The German retail real estate investment market delivered a transaction volume of €1.3 bn in the first quarter of 2023, reflecting a decline of almost 36% compared with the year-earlier period.
However, retail property was the most traded real estate asset class after residential property, even ahead of office real estate. Thai Harng Central’s entry into the German market through taking a stake in KaDeWe in Berlin had a major impact on the investment volume and on all other metrics in the first quarter.
This transaction contributed to lifting the share of international investors in market activity by 37 percentage points to 68% and that of the Top 7 markets by 38 percentage points to 64%.
The share of portfolios shed 17 percentage points to 11%. This is a conclusion drawn in a current analysis prepared by the global commercial real estate services company CBRE.
Jan Schönherr, head of retail investment at CBRE Germany, said: 'The current reticence on the investment market is not a consequence of weakening local retail as the sales of retailers and consumer sentiment are generally upbeat.
'As with other real estate classes, we are rather more seeing investors taking a wait-and-see stance on the retail real estate investment market, which is explained by difficulties in agreeing on pricing and uncertainty as to how the interest rates will develop.'
According to CBRE, with the higher cost of borrowing, there is a preponderance of equity-rich players on the market who are also tending to focus more on smaller transaction volumes in the range of between €10 mln and €30 mln.
'Many owners are currently engaged in managing their existing properties as no one can afford to leave money lying around.
'At the same time, the tasks are becoming increasingly complex: Defining, recording and improving ESG criteria is what it’s all about, and meetings with increasingly professional tenants have to be organised. Numerous new builds in recent years are coming out of the guarantee phase and require greater monitoring,' said Anne Gimpel, Team Leader Retail Valuation at CBRE Germany.
The strongest segment on the retail real estate investment market proved to be high street properties with €844 mln, boosted mainly by the participation in KaDeWe, and reflecting an increase of 41% compared with the first quarter of 2022.
Retail warehouses and retail parks accounted for €442 mln (year-on-year decline of 62%), of which €131 mln went on supermarkets.
The first quarter of 2022 saw €134 mln invested in shopping centres, as opposed to the first quarter of 2023 when this asset class did not have a relevant share in the transaction activity.
Photo Jörg Zägel under license