BNP Paribas Real Estate publishes market figures for 2024
Although the investment volume in the retail park division fell noticeably again by 37% to just under €2.1bn in 2024, the asset class is starting 2025 under good auspices. On the one hand, the investment volume in the retail park segment increased by 12% to €1.1 billion compared to 2023, and on the other hand, market activity picked up sustainably at the end of the year. Above all, the product shortage stood in the way of higher investment sales in the first half of 2024. In contrast, 60% of total sales were placed in the second half of the year. 41% of the annual volume alone is attributable to the very strong fourth quarter. This is the result of the Grocery Investment Market Report, which BNP Paribas Real Estate has published for the first time.
"The portfolio share in the specialist retail sector is traditionally high and constant, as supermarkets and discounters are usually traded in the portfolio. In 2024, their market share was 49%. The deal volume fell in 2024 for both individual and portfolio transactions, but significantly more transactions beyond the €50 million size were traded than in 2023," explains Christoph Scharf, Managing Director of BNP Paribas Real Estate GmbH and Head of Retail Services.
Investments in well-functioning specialist food stores in established locations offer stability and potential for value appreciation in times of uncertainty, above all driven by high purchasing power in Germany and continuously increasing sales in the food retail sector (LEH). The brightening financing environment in the second half of 2024 has led to a further increase in investor interest in this asset class. The retail park sector will then also be the only sector in the commercial investment market that is recording a slight increase in purchase price factors for the first time after the price corrections of the last two years, especially for core investments. As is usual in most years, the Core+ risk class accounted for the largest share of the investment volume in 2024.
Within the different product categories in the retail park segment, retail parks are usually traded slightly more expensively than stand-alone stores (supermarket/discounters). Furthermore, price premiums can be achieved above all for ESG-compliant buildings with an attractive tenant mix in very good locations. Overall, the purchase multipliers for Prime retail parks are currently up to 19.5 times, and up to 18.5 times for standalone full-range retailers.
More than half of portfolio volume generated in Q4, investment managers and funds very active
The importance of retail park portfolio transactions for the entire retail investment market is underlined by the fact that they accounted for almost 84% of the portfolio volume in the retail sector in 2024.
55% of the total portfolio sales in the food retail sector were placed in the fourth quarter of 2024 alone. Worth mentioning here is the Blue Mountains portfolio, which consists of 31 assets and was brought to the finish line shortly before the end of the year for over € 200 million. At the beginning of 2025, some sales are already in marketing or in preparation.
The average food retail portfolio volume in 2024 was comparatively low at €45 million, as there were fewer large portfolios than in previous years. However, the number of parcel sales has recently risen to 22.
The analysis of market players confirms the high level of activity of investment/asset managers, who are clearly the leaders with an investment volume of €741 million or 39% market share, followed by special funds with 20% at the top. On the seller side, corporates were the most active with around €400 million. Their market share is 21%, almost on a par with that of Immobilien AGs/REITS with 20%.
Low energy consumption and sustainable energy sources are rewarded with the purchase decision
BNP Paribas Real Estate has analysed the demand and consumption figures of 245 specialist stores for the current edition of the Grocery Investment Market Report. The results impressively illustrate the significantly lower energy requirements of buildings built after 2010 compared to older age groups. For example, the average primary energy of modern buildings is around 45% lower than that of buildings built before 2000. Even more impressive is the 60% gap in final energy heat.
The sample of past transactions also shows that there are currently very few buildings in the market with excellent energy performance certificates. A very tight supply is offset by a very high investor demand for modern buildings with sustainable energy sources. Accordingly, these properties tend to be rewarded with price premiums when purchased.
Transaction momentum will continue to gain momentum in 2025
"Demand in the retail park segment, especially for food-anchored products, has continued to rise successively in recent months and was reflected in a growing momentum in transaction volume at the end of the year through the sale of several larger portfolios. Currently, there are many indications that this trend will continue to solidify in the coming months. The availability of core capital has recently improved noticeably, which is a clear indication of the currently very attractive risk-return ratio in this asset class. This also applies to larger individual transactions of more than €40 million, which have hardly been carried out in the past two years. In addition, international investors in particular are showing great interest in Core+ and Value-Add products, which underlines the attractiveness of the German market. After a slight price increase for prime FMZ was already recorded in 2024, there is much to suggest that the supermarket and discounter prime segment will also see the first slight yield compression in 2025," says Christoph Scharf, summarizing the outlook.
