DIRECT MARKET REPORT GERMAN RETAIL - Europe Real Estate

(30%) 4 . The preference for hypermarkets and superstores in the state of North
Rhine-Westphalia (50 percent) is not surprising given the densely populated
conurbations in that state. Both retailers and investors will in future place more
weight on sites within the German inner cities and residential centres. This hardly
comes as a surprise given the forecast of demographic change in Germany. The
agglomeration formats are not only limited to shopping centres, but the
expectation is also for retail parks and/or retail warehouse centres to grow.
Supply
4 Hahn Group survey 2007/2008
As stated before, the amount of square meters (GLA) per 1,000 inhabitants has
always been below the European average, i.e. tends to be in short supply in
Germany. Today Germany has 360 shopping centres for more than 11 million
square meters, which means that shopping centre space has nearly doubled over
the past 10 years. In 2006 another 20 centres got up and running and currently
another 27 malls are in the pipeline (1,150,000m 2 ). But this still means only
145m² of shopping centre space for every 1,000 inhabitants, which is lower than
the EU-24 average of 176m²/1,000 (EU-15 219m²/1,000). This is quite a contrast
with Spain (200 m²), even Portugal, France and both number one and two, the
Netherlands and Sweden (> 400m²) per 1,000 residents. Especially retail
warehouse formats are less widespread than in other countries as municipalities
are trying to protect their downtown locations.
Tight planning in more mature markets such as the UK, France and Germany has
shifted the focus back to in-town development. Only 4% of all shopping centres in
Germany built since 2002 are on green fields. In Germany one can definitely
speak about a so called “back to the city centre” trend; in the years 1995-1999
the share of inner-city shopping centres was only 30.5%, which rose to almost
50% in the last 5 years. Presently large scale schemes which are increasingly
located on central and peripherical inner-city sites for its high frequency of visitors
are regarded as attractive. Especially the ones that contain a full multifunctional
range are unbeatable; shopping, office, residential, public services, culture,
gastronomy and leisure facilities. Besides a less restrictive interpretation of
building laws and permits in inner cities, a central factor for this trend could well
be the more favourable risk assessment of real estate in city locations compared
to other locations.
On the other hand, the old high streets will always attract people in order to shop
in the more old fashion way, especially in summer time. Therefore it’s crucial to
rededicate or re-position obsolete properties in between the chique warehouses
and shopping centres.
German retail update - 28/11/2007 21