Geopolitical tensions and their impact on the financial and capital markets are continuing to slow down transaction activity in the retail investment market. According to Colliers, retail property worth 2.4 billion euros was traded in Germany in the first nine months of the year. The year-on-year decline has widened from 25 per cent to 35 per cent since the middle of the year. Transaction volume in the third quarter stood at around €500 million, with just under 30 deals completed. This means that the market segment saw a further noticeable decline in activity, even compared with the quiet previous quarter. However, due to the general reluctance to invest, which was also evident across the wider market, retail property continues to hold third place among the property types with the highest turnover, with a 16 per cent market share, behind the office sector (26 per cent) and the logistics sector (24 per cent).
Significant interest rate premiums are delaying sales processes that have already begun
Nicole Römer, Head of Retail Germany at Colliers, explains: “There is fundamentally a demand for retail property. The challenge at present lies less with buyers than with pricing. Particularly when it comes to large-scale and core-oriented properties, investors and sellers need more time to adapt to the changed market conditions.”
There have been virtually no major transactions over the past three months. The HavelPark Dallgow retail park, which was sold by Madison Real Estate to a private investor via 4Friends, was one of the quarter’s largest transactions, worth around 100 million euros. Small-scale transactions continue to dominate market activity. In recent months, transactions below the 50-million-euro mark accounted for around 55 per cent of turnover and 92 per cent of all deals.
Price discounts and conversions are limiting transaction volumes
“The retail investment market continues to undergo a profound transformation. In the current quarter, several former shopping centres and department store sites were sold under considerable pressure to adapt and will no longer be used exclusively for retail purposes in future. This is creating new development opportunities for town centres, but at the same time is reducing the investable retail portfolio,” observes Römer.
The transactions mentioned include the Carsch-Haus in Düsseldorf, which was transferred to the developer Midstad, and two Galeria Kaufhof properties in Hanover and Bonn, which were sold to the Albanian Balfin Group. Properties such as the former Tietz department store at Munich Central Station are not included in the statistics at all; following refurbishment and conversion to a different use, they are permanently removed from the investable stock of retail properties.
Specialist retail segment remains the backbone of transaction activity
Specialist retail outlets and retail parks maintained their position as by far the retail format with the highest turnover in the first nine months of the year. The dominance of this segment underlines investors’ continued preference for stable cash flows, high resilience to crises and food-anchored tenant mix concepts. Particularly in the current market environment, specialist retail outlets benefit from their high predictability and long-term profitability. They accounted for 53 per cent of the transaction volume and 62 per cent of all recorded sales in the retail sector. Just under two-thirds of these properties have a food retailer as their anchor tenant. City-centre commercial buildings, which also include department stores, follow in second place with a 25 per cent share of the volume, whilst shopping centres rank third with 22 per cent.
The portfolio share remains at a low level of 23 per cent. Of the numerous large-scale local retail portfolios that have been brought to market since spring 2026, several are at an advanced stage of sale negotiations. According to Römer, there is demand for these, particularly from German investment managers acting on behalf of foreign investors. “This could lead to a market upturn as early as the final quarter of the year, although some deals will drag on into next year. The sale of hybrid malls and shopping centres with potential for value appreciation could also boost transaction activity, provided the entry prices are favourable.”
Rising prime yields across all property types reflect higher interest rates
A key factor in achieving more successful transactions is likely to be whether buyers and sellers can agree on asking prices, given the increasing price sensitivity. Yields have risen across all property types over the past three months. Measured against current bond yield levels, food-anchored retail parks, with a gross initial yield of 5.7 per cent, and local convenience retail parks, with a gross initial yield of 5.55 per cent, are significantly more attractive in terms of their risk premium than other established property types. Shopping centres in central city-centre locations in Germany’s major shopping hubs currently offer yields of 6.6 per cent.
Outlook: Last year’s result of 5 billion euros will not be matched
Römer: “Transaction volumes are expected to remain below the previous year’s level in 2026. At the same time, the market is by no means at a standstill. Numerous sales, transformation and repositioning processes are currently laying the foundations for the next phase of the market. As pricing progresses and the number of successfully completed projects grows, market activity is likely to pick up gradually.”
