BERLIN-German retail warehouses are becoming a promising asset class, and stable consumption and solid retail sales mean the segment is attracting more international investors, according to BNP Paribas Real Estate.
“Between 2005 and 2007 private and institutional investors’ demand was already concentrating on the sector, boosting prices to new heights,” said the firm’s Andrew Cruickshank in a new report. “Prices had to be scaled down after the retreat of international investors, but interest in these properties is distinctly growing.”
German retail is characterized by a large presence of discounters; they already hold 40% market share in food, and the phenomenon is spreading to other sectors so that margins are among the slimmest in Europe. “Consumers surging to discounters forces German retail to restructure,” said Cruickshank. Hardware stores will be affected soon."
As the discount spirit spreads to sectors beyond basic consumer goods, it will become increasingly difficult to meet demand in small inner-city venues. Retail will have to move to peripheral and large-scale shopping centers,” he said.
Supply and opportunities for new developments of high-class retail are scarce so that retailers are now negotiating long-term contracts. Cruickshank said , “All these developments support our conviction that investors should have a good look at the sector. We expect best performance from prime shopping centres and modern retail spaces.”
Allan Saunderson is a managing editor of Property Investor Europe and a contributor to GlobeSt.com.
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