DIRECT MARKET REPORT GERMAN RETAIL - Europe Real Estate

Retail business segment development
In the retail sector for smaller units (Einzelhandel) we have seen a slight decrease
in revenues in July 07. Year-on-year wise the overall sale figure declined, the
stock of products unsold increased somewhat. However, it seems that retailers do
have a strong confidence towards the future, which hasn’t been translated so far
in a higher ordering quote. Concessions have indeed been made for sales prices
but are already vanishing in a rapid pace. One can expect the improvement on the
labor market will shore up private consumption in a first step and then the retail
industry in a second step.
The current structural change has considerable significance when assessing the
further development of the German real estate market for retail. The development
of the various retail sub-segments is showing a growing importance of specialist
mail order (internet!), retail parks and food discounters. Size and comfort really
starts to matter.
Exhibit 15 Shift in retail market shares (type of business in % turnover)
Source: BAG, EHI, ifo Institute, HDE
Retail warehouses and discounters are currently undergoing the growth/maturity
phase, whilst hyper- and supermarkets have already passed that stage and are
now in their saturation phase. This negative momentum can be delayed by
modernizing, resizing or re- positioning the retail concept and lay-out. The
demand for the factory outlet concept by investors is even smaller than demand
by retail players.
German retail update - 28/11/2007 16