Foreign retailers flock to Germany, panel hears

Retail is currently the most attractive sector in Germany, boasting highly stable returns thanks to strong consumer demand and consistent occupancy rates, according to Henderson Global Investors’ director of property research Stefan Wundrak.

Speaking at PropertyEU’s German Investment Briefing in London on Tuesday, Wundrak said: ‘Retail is the most sought-after sector and it’s easy to see why. Consumer sentiment has not been disturbed too much by the eurozone crisis, employment rates are as low as they have been since the early 1990s; there’s been wage growth for the first time in 20 years.’ He added: ‘Consumers have a reason to be cheerful.’

The relatively buoyant conditions in German retail, he said, have kept occupancy rates high whereas in other European markets they have slumped dramatically, and new entrants are flocking to the country from elsewhere in Europe and the rest of the world.

But Wundrak stressed that while voids are low and consumer demand has remained strong, sales growth must be viewed in the context of the German market which traditionally has a conservative, low-spend shopping culture.

He said: ‘Retailers seem to think that 1% growth is good enough because they’re all piling into Germany, they are very keen to open stores. There’s been lots of store expansion and a lot of new retailers in the market.' Examples of retailers that are planning new store openings in Germany include lingerie chains Hunkemoller (Netherlands) and Baci Lingerie (US) as well as US stationery supplier Staples.

‘The new entrants are a certain breed; they’re not the luxury end or the discount, it’s more middle-upper/middle range aspirational retailers.’

From an acquisitive perspective, Union Investment’s co-head of institutional property Karim Esch said that investors need to be more broad-minded in what they are willing to take on, partly due to a lack of options.

He said: ‘We’re interested in high street and neighbourhood centres as well as dominant local shopping centres. We’re interested in anything that’s reasonably priced. Would we love to buy more high street and shopping centres? Yes. But there’s not that much available at a reasonable price so we’re also going into 'B' locations for shopping’.