By Marianne Schulze

Both large retailers, and real estate investors and project developers are turning their focus towards the retail market in Turkey. Here, private consumption is growing by ten percent annually. There is a significant accumulated demand particularly with modern retail space.

Retail real estate is currently on the upswing. Particularly in Germany, 2006 was the year of retail real estate. Roughly 18 billion Euros were invested in this segment – that is almost three times the transaction volume in 2005 (6.5 billion Euros) – and thus more than in office real estate. Around 88 percent of the investments came from foreign investors. Sellers were primarily German retail companies who put large-volume portfolios on the market. One reason for the strong international interest is that, in this segment, higher returns can be reached than in other areas. According to reports from PricewaterhouseCoopers, they are 4.5 to 5.5 percent in the large cities and between six and 8.5 percent in mid-sized to small cities. In addition, retail real estate in Germany is considered undervalued.

Investors were not just attracted to Germany. Overall, worldwide investments in retail real estate increased in 2006 compared to the previous year by 38 percent, from 368 billion Euros to 507 billion Euros. Of that, nearly half (227 billion Euros) were in Europe. However, the boom in this year’s first quarter flattened out significantly. From January to the end of March, roughly 3.1 billion Euros went to European retail real estate – 47 percent less than the previous year. However, the majority – 1.7 billion Euros – went to Germany.