Unlike the trend that is currently dominating the overall investment market, the retail investment sector clearly felt the impact of the pandemic in Q3. Transaction volume (TAV) fell 26% within one quarter to just under €2bn. This development can primarily be attributed to a drop in the number of high-volume transactions in the 9- figure range combined with a lower number of new deals being initiated in Q2. The largest single-asset deal was Quantum's sale of the Karstadt department store on Hamburg's Mönckebergstraße to Signa for roughly €250m. In the transaction, the Austrian listed property company again showed its strategic interest in develop-ment-ready assets in prime downtown locations. TLG acquired another supermarket portfolio for around €100m. Overall demand for retail assets with a food focus remains high with yield developments stable. High footfall retail warehouses are currently being sold at stable gross yields of 5% and under. The market environment, which was already proving challenging prior to the lockdown, along with falling prime rents for high street assets give reason to expect yields to rise for office-retail mix assets in prime locations and shopping centers, although low transaction numbers make concrete predictions difficult. That fact that footfall is again picking up is a positive indication that the situation is improving. Despite a likely subdued Q4, TAV for 2020 should come in at over €10bn, putting annual results just over those posted in 2019. The minimum transaction volume of €1.5bn needed falls at the lower end of typical quarterly results.
Germany: Retail Investment Q1-3 2020