Scarcity of stock will be one of the biggest hurdles facing retail investors in Germany next year, according to Stephan Austrup, head of Retail for Germany at TIAA Henderson Real Estate.

Scarcity of stock will be one of the biggest hurdles facing retail investors in Germany next year, according to Stephan Austrup, head of Retail for Germany at TIAA Henderson Real Estate.

Germany is and will continue to be a safe haven, he said. ‘We have very low yields in Germany and low interest rates. I don’t expect that to change within the next two years. There’s a lot of capital and debt is available at good terms. We assume that rents will stay stable as well. What is a bigger challenge is finding the right product in these markets.'

Austrup made the comments at PropertyEU's Retail Outlook Investment Briefing held recently at the Mapic retail fair in Cannes. The product range coming to the market is not large, he added. 'Everybody is looking at core assets although we can now see some secondary assets coming to the market.’

The weak economy is holding back rental growth, but there is some upward movement in good locations, he continued. ‘At the same time, we see a polarisation between secondary and prime locations and retailers are becoming very selective. They have been during the crisis and they are still are.’

Austrup sees good opportunities in Germany’s retail warehouse sector, but added that TH Real Estate is also targeting shopping centre investments. ‘The spread between alternative investments and retail real estate prices are still in line. Of course, you have to be very selective and you need to understand the market. Boots on the ground is mandatory.’

Redevelopment is definitely an opportunity in Germany, Austrup said. ‘We are looking at shopping centres and big schemes and how to create value. Many need an expansion, and that is challenging as the legislation is quite restrictive. But I think we will see more much more redevelopment in the core markets.’

Austrup said he saw a good range of product for retail parks, but noted that availability was more of an issue for shopping centre investments. ‘We will look at indirect investments but would also like to develop our existing portfolio and try to get the right returns with redevelopment.’