The transaction volume for retail property during the year to date has fallen by 46% year on year to €8.8bn, representing an even stronger decline than that registered by office property (-15%) and commercial property overall (-18%).
Demand for German retail property from national and international investors remains high. However, these investors primarily focus on core properties as they do in the other sectors of the commercial real estate market. Unlike in these other sectors, however, demand for retail space is (largely) saturated and new-build activity is consequently scarce. This is particularly true of shopping centres, which have shown a decline in new-build volume for several years. Both the office and logistics markets allow a portion of risk-averse capital to flow into developments. The proportion of forward deals in these sectors has increased significantly in recent times. In view of the lack of development activity, the same trend cannot be observed in the retail property market.
Source : Savills