2025 A Strong Signal for the German Retail Investment Market

Despite a volatile market environment, the German investment market stabilised noticeably last year. The end of year transaction volume figure totaled €33.9 billion, with the market making significant recovery in the second half of the year, a period which largely contributed to the total transaction volume. Investment activity in H2 amounted to €18.6 billion, with transactions in the fourth quarter amounting to €9.4 billion, marking it as the strongest quarter of the year.

The retail real estate sector has had a significant increase in transaction volume and was named the strongest commercial asset class for the first time in over ten years. The asset class closed the year with a transaction volume of €6.5 billion, marking the stength and stability of the retail real estate sector. The commercial sector demonstrated a 17% increase in transactions compared to the previous year, totalling over 1,390 deals in 2025.

Looking at the number of transactions in 2025 there was a decline of the average asset size of transactions. This is largely due to investors favouring large-volume individual assets rather than portfolios. There were just 51 deals recorded in 2025 with transaction volumes over €100 million, which is a decrease from 74 deals in 2024.

Asset types like grocery-anchored retail parks and standalone supermarkets are becoming increasingly more attractive to investors as they provide:

• Stable cash flows

• Crisis-resilient usage concepts

• Long-term secure tenant structures

According to a recent study by the Hahn Group, over 90% of investors surveyed consider ESG criteria to be relevant to their investment decisions, and almost half are willing to pay a premium for sustainable properties. We at GFORM respond to this demand by actively implementing Green Leases, clean energy and mobility concepts as well as smart metering at the locations we manage, to future-proof and add value to the asset by reducing costs and overconsumption in the long term.

In 2025 demand has significantly increased for supermarkets and grocery-anchored properties in particular, with GFORM's asset class, managing mainly retail parks and supermarkets, making up 56% of the total retail investment volume, excluding the three highest volume transactions in the department store segment.* Retail park and supermarket/discounter yields in Germany remained attractive, ranging between 4.65% and 4.90%, with indivdual specialist retail stores (non-food) reaching 5.90%, underpinned by steady demand.

The gradual recovery of the market was driven by its increasing ability to adapt to ongoing uncertainties, combined with easing inflationary pressures. The European Central Bank's cautious and predictable approach to interest rate policy further supported market stability. While the first half of the year remained characterised by investor restraint, a more stable financing environment, improved price discovery and a rise in international demand led to a marked increase in activity from autumn onwards.

Leading real estate agencies expect a market volume of €35 – 40 billion for 2026, which is an expected increase of approximately 5 – 15%. A strong outlook and demand for resilient, food-anchored retail formats will continue to be the focus and we expect the recovery and positive sentiment of the market to continue into 2026 and look forward to the retail real estate sector reaching new heights.

*The largest retail transactions in 2025 were the sales of Oberpollinger in Munich, a Designer Outlet Centre and Gropius Passagen in Berlin.