Covid 19 accelerated trends in the retail sector according to Inga Schwarz, head of research, BNP Paribas Real Estate Consult GmbH
“Retail, for sure, is one of the transformation segments,” she said and across the board, not just in Germany. “We can make a clear distinction between high street and retail warehousing/discount supermarkets,” she told Real Asset Insights Richard Betts.
Strong occupancy and turnovers have stimulated strong interest among investors for retail warehousing and grocery-anchored or daily-needs retail and yields in that segment have been coming down.
“High street is a little different, you need to be a bit more adventurous from the investor side,” Schwarz said. She said that it has been observable that when lockdown measures eased and people were able to go back into shops there was a return to the high street.
She said that there is undoubtedly vacancy but there are now many pop-up stores and retailers trying out new things. “We’ve seen more take-up in 2021 than the year before, we have seen more shop openings and there are more and more retailers taking the opportunity to get bigger space.”
The way that CBDs are developed will be questioned
And she added: “There is going to be a question of how we develop our inner cities, our CBDs, how we attract people,” she said adding that it could be through mixed use.
The problem for the logistics sector is different and is a question of where the supply can come from to satisfy the surge in demand. “Where can we actually develop new product because that’s an issue because logistics is competing with the other asset classes.”
Cities and municipalities say we have to be careful how we develop logistics space. “There’s going to be more discussion maybe on brownfield development and vertical logistics products.”
But in Germany residential assets are the topic of the day. Although last year’s investment volume was distorted by the Vonovia’s €22 billion take over of Deutsche Wohnen, the German residential market is very constant, Schwartz said. Strong rental growth and limited vacancy have helped make the residential markets one of the favourites among international investors.
Click on the video to watch the full interview or listen to the podcast below.