Thanks to a strong Q1 and a number of strategic portfolio acquisitions at mid year, the retail investment market registered solid performance with a transaction volume of €6.5bn, the second highest result recorded in the past 10 years. The two highest volume deals in Q1, the retail share of the TLG portfolio acquired by Aroundtown and a portfolio comprising 80 Real assets that was sold to the SCP Group by Metro AG, exceeded the €500m mark. These were joined in Q2 by two additional portfolios of similar size: RFR Holding’s sale of a Kaufhof portfolio to an opportunity fund managed by US investor Apollo and TLG’s disposal of 120 food anchored retail assets. Retail warehouses and retail parks with a focus on local amenities continue to expand their dominant market position. These retail concepts saw an increase in market share to 53% from previous 50% between April and June, with the number of registered deals up to an impressive 67% compared to a previous 52%. The negotiation process around buildings featuring an office retail mix as well as shopping centers has become even more difficult under the current conditions and is, in general, noticeably slowing down transaction activity. Risk adjusted price reductions in the high street and shopping center segment can be expected as the year progresses as a result, while yields for retail warehouses are trending stable. The structural environment in the retail sector remains challenging and has been intensified by the pandemic. The expiration of the rent moratorium will aggravate the situation for many retailers. However, the economic stimulus package and reduction in VAT will offer support.
Germany: Retail Investment H1 2020