Savills pinpoints three German regions for mall development

Property adviser Savills has identified three regions in Germany that offer potential for shopping centre development, based on the total retail space per person, purchasing power and the share of shopping centre space compared with sales. The three regions are: s?dlicher Oberrhein (including Freiburg), M?nster and Munich.

Stephan Jung, head of retail at Savills Germany, says high street retail is still more important than shopping centres in Germany in terms of footfall, but overall there is a relatively low amount of shopping centre space per inhabitant. ‘So one can talk of future potential for shopping centre development in Germany, in particular in the regions of s?dlicher Oberrhein, M?nster and Munich,’ he said.

Savills data shows that there is around 13 million m² of shopping centre space in Germany. The country’s shopping centre density of around 159 m² per 1,000 inhabitants is low compared to France (797 m2), Spain (281 m2), and The Netherlands (240 m2). The adviser believes the low shopping centre density in Germany is partly the result of planning restrictions but also the multiplicity of retail types, such as high street shops, competing for consumers.

The firm’s data shows that there are currently 440 shopping centres in Germany, of which 40-50 are under construction and over 200 in need of refurbishment. These unrefurbished centres, Savills argues, will provide investors with significant value and opportunities for asset management. Prime yields currently stand at 5.1% with secondary centres at 6.25%. Unrefurbished centres are trading at around 7.75% depending on the financial injection that is needed.

Another driver for shopping centre development, Savills argues, is the planned expansion of retailers. Food retailer Rewe, food discounter Aldi, and fashion discounters C&A and H&M have a presence in almost every shopping centre that will open over the coming two years. Other fashion chains which are currently expanding are Inditex, H&M, Primark, Hollister, Bestseller, Calzedonia and Scotch & Soda.