According to international real estate advisor Savills retail property investment in Germany rose by a third in Q1 2015 to reach €3.2 billion from €2.5 billion year-on-year. With demand remaining high, especially from international parties, the firm predicts that 2015 volumes should out perform the €8.9 billion recorded in 2014.

Savills reports that the shopping centre investment market was the most active in Q1 2015, with investment totaling circa €1.4 billion, an increase of 52% year-on-year. Approximately 80% of the total volume was due to the take-over of Corio by Klépierre in which five German shopping centers with a combine total of €1.1 billion passed into the ownership of the French listed real estate company. 

The firm finds that high street retail assets accounted for the second highest share in investment turnover at €740 million, a 150% increase on the €290 million invested in 2014. Retail parks followed in third place, doubling the transaction volume year-on-year to over €320 million.

Jörg Krechky, director and head of retail investment at Savills Germany, comments: “Retail parks have become increasingly popular with investors recently, gaining ground on shopping centres. Shopping centres tend to have lower prices, the management is less complex and due to their local catchment retail parks are not as exposed to the threat of e-commerce competition as shopping centres are. We therefore predict that we will see an even more investment activity in retail parks as the year continues.” 

Savills states that the increase in transaction volume is in part due to the fact that investors have expanded their search profiles from prime grade A to secondary products.

Andreas Wende, head of investment at Savills Germany, adds: “Over the past few years the majority of investors focused on core products, thus on mainstream shopping centres and prime high street buildings, but recently we have seen a switch to core plus and value-add assets. This has provided new momentum in the retail investment market and total volumes have increased thanks to the higher amount of supply in these asset classes.”

As a result of the Corio take-over, listed real estate companies and REITs represented the largest group of buyers in Q1 2015 according to Savills, accounting for approximately €1.3 billion. Special funds and other asset managers invested €360 million and €350 million respectively.

Matthias Pink, head of research at Savills Germany, says: “Whilst domestic investment continues to dominate, we are seeing increasing investment from foreign investors. In particular we are seeing strong demand from Asia, the UK and the US, the later of who invested over €500 million last year.”