A total of €41.8bn was transacted in the German commercial real estate market in the first half of 2020. This figure increased by 21% compared to H1 2019 but was driven by the incredibly strong first quarter, before the dramatic upheavals of Covid-19 hit the market. Still, this very good volume highlights the confidence that investors place in the German real estate market, underlining its safe-haven status.

Greenman OPEN’s asset class was one of the most resilient asset classes within the CRE market, accounting for €4bn of the transaction volume, increasing market share by 53%. The Greenman OPEN fund raised c.€70m in H1 2020, with their strongest ever fundraising quarter in Q2. The pandemic has accelerated the division in the retail asset class with food anchored, necessity focused retail real estate dramatically outperforming traditional shopping centres. We have seen a significant increase in investor appetite for food anchored retail parks that focus on local amenities. Large quantities of capital were raised in the first half of the year to be deployed in German food dominated retail parks from fund managers such as Deutsche Investment and Canadian manager Slate’s new food retail-focused fund.

There are already positive signs that the market is picking up for the remainder of the year. There was €5.4bn transacted in the CRE market in June alone and we have observed for some weeks now that more sales processes have started or resumed. Whilst it is too early to comment on how pricing for our asset class will develop, from communication with JLL and CBRE, two of the largest real estate advisors in Germany, we believe that yields should remain relatively stable for GMO’s asset class. Subject to a second wave of infection, the outlook is optimistic for German retail real estate.