The German retail property investment market saw a noticeable consolidation in the second quarter of 2024. The transaction volume reached approximately EUR 850 million, representing a decline of around 40 percent compared to the first quarter (EUR 1.44 billion). By mid-year, the total volume stood at EUR 2.29 billion, 21 percent below the previous year's level. The number of deals halved in the second quarter from 83 to 41 transactions, indicating larger individual deals.
Sarah Hoffmann, Head of Retail Investment at JLL Germany, identifies increasing market dynamics, particularly with an anticipated price reality. She explains that both retail park portfolios and individual properties, as well as shopping centres, are being offered across various segments. Demand remains robust, but the wider selection leads to a more selective investment approach. Investors are primarily active when suitable products are available. Recent sales processes highlight this potential, especially for core products as well as higher-yielding value-add to core-plus assets, provided the required yield meets buyer expectations.
The top five transactions in the first half of the year accounted for almost a third of the total volume (EUR 725 million), representing a lower concentration on large deals compared to the previous year, when the five largest deals contributed 57 percent of the volume. In the first half-year, three transactions over EUR 100 million were registered, totalling just over EUR 560 million, significantly less than EUR 1.5 billion in the same period last year. Retail park products continued to dominate with 60 percent of the total volume, of which 33 percent was in food retail, 19 percent in retail parks, and 8 percent in non-food retail parks. Shopping centres were responsible for 16 percent of the volume, high street properties for 14 percent, and department stores for 10 percent.
In the high street property segment, family offices and private investors, increasingly international players, and a growing number of institutional investors are observed for sustainable prime locations. The majority of investments, 53 percent, flowed into core properties and 38 percent into core-plus properties, while opportunistic (5 percent) and value-add (4 percent) investments played a minor role. Asset and fund managers represented the largest buyer group with 43 percent, followed by property companies (17 percent) and private investors (15 percent). On the seller side, asset and fund managers led (25 percent) ahead of property companies (21 percent). German investors dominated both on the buyer side (72 percent) and the seller side (67 percent), expanding their holdings by a net EUR 111 million.
Prime yields remained stable compared to the previous quarter. A slight increase of ten basis points to 6.0 percent was only observed for individual retail parks. Shopping centres remained at 5.9 percent, retail parks at 4.6 percent. For high street products, Munich led the ranking with 3.2 percent, followed by Hamburg and Berlin with 3.4 percent each. Ms Hoffmann expects a stabilisation of prime yields. She notes that institutional liquidity is available in the market for qualified, sustainable core products.
For the second half of the year, Ms Hoffmann predicts a significant recovery after the subdued second quarter. Despite economic and geopolitical risks, many market participants show a high willingness to invest in suitable products. Current marketing processes confirm this through a high number of non-disclosure agreements and double-digit bidding situations, which underlines the existing liquidity for the retail sector.
