Investors still sitting on the fence in the retail real estate investment market

  • Investment volume of €2.3 billion in the first half of 2023, 37 percent lower year on year
  • Share of international investors climbs to 49 percent
  • High Street properties capture a share of 56 percent
  • Prime yields in the various sub-asset classes rise between 0.3 and 1.35 percentage points in the last twelve months

The German retail real estate investment market registered a transaction volume of €2.3 billion in the first half of 2023. Compared with the year-earlier period, this marks a significant decline of 37 percent, which is nevertheless the lowest percentage decline of all asset classes monitored in Germany. In addition to the transaction volume, minority stakes of more than half a billion euros were registered, primarily attributable to the participating investment of Deutsche Euro shop in six shopping centers in the first quarter and the Signa investment in eight department stores in the second quarter of the year. This is a conclusion drawn in a current analysis prepared by the global commercial real estate services company CBRE.

Jan Schönherr, Head of Retail Investment

Similar to the other asset classes, the retail real estate investment market was dominated by reticence. Investors are waiting for evidence transactions. In the first half of 2023, we therefore recorded the lowest result for a half year since the financial crisis in 2009.

Jan Schönherr, Head of Retail Investment

“We have noticed from our discussions that retail has caught the attention of international investors again. Investors from the US and the UK are showing renewed interest in retail properties in Europe and in Germany. However, this remains virtually unreflected in the figures.” The share of international investors climbed by 12 percentage points to 49 percent in a year-on-year comparison.

Dr. Jan Linsin, Head of Research

It’s especially large-scale transactions that we are not seeing at the moment.

Dr. Jan Linsin, Head of Research

“Not only is financing in this category particularly challenging but also value-add investors are particularly active here, and their price expectations are often different from those of occupiers – the more so as there are no signs of fire sales so far. On the other hand, transactions in the volume range of between €10 million and €40 million are having greater success.”

More high street than retail warehouses

In the first half of 2023, high street properties captured the largest share of 56 percent in the retail real estate investment market. In the previous years of 2022 and 2021, their share was less than 20 percent. Retail warehouses and retail parks, including supermarkets and DIY stores, took a market share of 33 percent, compared with formerly almost 50 percent and even 60 percent respectively. Only six percent was accounted for by shopping centers in the first six months, following on from a share of 29 percent for the 2022 full year. “We are currently seeing a focus on city center properties primarily in the Top 7 and in very good B cities,” Schönherr explains. “Interest in grocery-anchored properties and properties with repositioning potential is still keen.”

Real estate yields with another upward correction.

“Yields also increased in the second quarter across all sub-asset classes – by 0.1 to 0.25 percentage points – and are likely to rise again over the course of the year,” says Anne Gimpel, Team Leader Valuation Advisory Services at CBRE Germany. Pure retail warehouses recorded the most significant growth with their net initial yield rising by 1.35 percentage points in terms of the year. Food markets also posted a significant growth of 1.1 percentage points to 4.6 percent. High street properties and retail parks also saw a similar development, both recording increases of 1.05 percentage points to an average 4.24 percent and 4.75 percent respectively. Shopping centers in A locations saw prime yields of 5.1 percent (up 0.3 percentage points) and B locations 6.5 percent (up 0.6 percentage points).

Outlook for the remainder of the year

“This year’s transaction volume will fall short of the 2022 level,” Schönherr says, convinced. In the second half of the year, a very good product pipeline across all sub-asset classes and investment levels can be assumed, with investors being offered attractive investment opportunities as well as interesting entry opportunities for foreign investors in the German retail market. 



Jan SchönherrAnne Gimpel
Head of Retail InvestmentTeam Leader Valuation Advisory Services
+49 (0)30 726145-153+49 (0)30 726145-158
Dr. Jan Linsin 
Head of Research Germany 
+49 (0)69 17 00 77 404 

About CBRE

CBRE Group, Inc. (NYSE: CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2022 revenue). The company has more than 115,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services.

CBRE Germany has been represented by its head office in Frankfurt am Main since 1973; there are further branch offices in Berlin, Düsseldorf, Essen, Hamburg, Cologne, Munich and Stuttgart.