A new study by ACCOM and bulwiengesa has found that retail real estate in Germany’s secondary cities offers investors substantially better returns than the country’s top seven geographical areas.
The investment manager and analyst say that Germany’s leading seven cities have undergone a yield shift of –140 basis points since 2008, producing a current average net yield of 3.6 percent. The most expensive retail location, Munich, offers an average yield below 2 percent at present.
In contrast, regions outside the main cities have experienced a –90 basis points shift since the global financial crisis and now boast an average net return of 5.8 percent.
Consumer spending in German local shops, supermarkets and shopping centers grew to nearly €5,800 per capita ($7,082) in 2016.
But the growth in purchasing power for more than 60 of Germany’s secondary locations, or champion regions as they are sometimes referred to, was higher than the average growth in the top seven cities. The largest growth was registered in Heilbronn (+43 percent) and Schweinfurt (+24 percent) according to the study.
This rise in purchasing power has led to cities such as Passau, Schweinfurt, Kempten and Regensburg witnessing retail sales per capita that are more than 40 percent higher than the average retail sales per capita in the top seven cities.
