Who Invests in Germany's Prime Retail — and Why?
Experts typically distinguish four main investor groups that collectively deploy billions of euros every year into Germany’s food retail property market.
Institutional Investors
Historically, interest from banks, multinational insurance groups, investment funds, pension funds and single-asset-class specialist funds from the US, Canada, the UK, Japan, China, Singapore, South Korea and Germany in German food retail assets was relatively modest.
The reason was simple:
these global financial institutions manage vast capital pools, which are far easier to allocate in commercial real estate segments where single assets trade between €50 million and nearly €1 billion.
For years, the largest transaction ever recorded in Germany was the sale of The Squaire, a mixed-use complex at Frankfurt Airport, purchased by a consortium led by South Korea’s AGC from Blackstone Group for a staggering €940 million.
To put this into perspective:
that amount could theoretically buy 200 discounters, 120 supermarkets, or 50 large food retail centres.
Executing such a vast number of small and mid-size transactions within limited time frames would be operationally impossible even for the strongest institutional players. This is precisely why institutions traditionally preferred capital-intensive assets:
lower transaction effort, higher single-ticket allocation.
However, the exceptional resilience of German food retail assets during the global financial crisis (2008–2010) and especially throughout the COVID-19 pandemic (2020–2023) has significantly boosted institutional appetite for this asset class.
Recent examples
A representative illustration is the acquisition — between August 2023 and April 2024 — of 15 Netto Marken-Discount food discounters by the German investment manager GPEP. The company oversees a portfolio of €2+ billion across 450 locations in Germany and is led by former Goldman Sachs and Blackstone Group executives. The assets were acquired for GPEP’s specialised fund “Food Retail Germany II.”
- Target investors: savings banks, pension schemes, insurance companies
- Fund size: €300 million
- Minimum ticket: €5 million
The rising institutional appetite for German food retail even led to a remarkable anecdote connected directly to our own company.
At the end of 2014, competitors unexpectedly outbid a long-standing client of Gordon Real Estate Group for a new supermarket of a major chain. The property was being developed on the last vacant plot of an extremely popular retail park in one of Bavaria’s wealthiest district capitals — a park comprising food retail, cosmetics/perfumery and household goods concepts totalling just under 18,000 sqm.
When we asked the seller — a Top-10 German developer at the time — who the successful buyer was, the sales director hesitated before answering:
“Credit Suisse. They already own all the other assets on that site.”
The puzzle immediately resolved itself:
Swiss banks open accounts for clients from around the world, charge them negative interest rates, and then reinvest that capital into food retail assets next door — in Germany.
This episode made a profound impression not only on us, but also on our clients — wealthy entrepreneurs from across Europe and overseas — prompting many of them to actively deploy capital into income-producing (primarily food retail) assets in Germany. Thanks to this “setback,” we subsequently closed numerous top-tier transactions.
Not a single one of our clients’ assets has closed to this day.
Not a single tenant has defaulted or reduced rent — even during the pandemic.
Food Retail Groups
Germany’s leading food retail chains pursue fundamentally different strategies when it comes to owning versus leasing their supermarket real estate:
- ALDI Süd and Lidl (Schwarz Group) are effectively the country’s largest food retail real estate owners. More than 65% of their discounters stand on land they own.
- EDEKA Gruppe operates with an ownership ratio of roughly 30%, with 70% of stores leased from third-party investors.
- REWE Group overwhelmingly prefers leasing, acquiring land with their own supermarkets only in exceptional, highly strategic locations.
- Credit Suisse AG was Switzerland’s second-largest bank by market cap in 2015. In 2023 it was acquired by UBS Group AG. The retail park mentioned above was bought by Credit Suisse in 2008 and sold in 2015 via its open-ended commercial real estate fund CS Euroreal for €60 million to Hahn AG, a Cologne-based investment manager with €8 billion in AUM. Source: Hahn AG.
Developer Groups
The owners of the financially powerful development groups traditionally retain a portion of the assets they build — constructed at cost — in the country’s best locations. Their tenants are members of the Top-4 or other Top-20 food retailers.
Objective: securing long-term, stable rental income for themselves and their families, independent of fluctuations in their core development business.
During market downturns, when even high-quality assets are harder to sell at fair value due to a temporary retreat of some investors, developers often hold stabilised assets (as selling at distressed prices is not an option). They simply continue collecting strong monthly rent from the food retail chains and bring the assets back to market once conditions improve.
Private Investors
Typically these are international owners of industrial businesses, successful IT ventures or retail companies. Unlike institutions — which rely heavily on debt — high-net-worth individuals tend to deploy discretionary equity. Their investment horizon is generally significantly longer, making them a stable, long-term capital source for the German economy.
Motivations: preservation — and modest, steady growth — of capital within a highly reliable jurisdiction, in an exceptionally resilient asset class (food retail), backed by some of Europe’s strongest and most shock-resistant tenants.
A British business partner of Gordon Real Estate Group — formerly a senior Deutsche Bank executive in continental Europe and now CEO of an asset management company representing 169 Ultra-High-Net-Worth families in London — articulated the rationale with remarkable precision (quoted anonymously):
**“Some owners of major companies — regardless of origin or the countries in which they operate — share one common problem: their family members are unable to responsibly manage either the family business or the family wealth.
Investing in premium food retail real estate in a country like Germany is, in effect, an investment not only into land and supermarket buildings in the best locations, but into the businesses of Europe’s most successful food retailers.
This strategy almost certainly preserves the principal, drastically reduces the risk of heirs losing fortunes through reckless spending, and guarantees a dignified, secure standard of living for the family for decades — provided that Western Europe in general, and Germany in particular, avoid catastrophic-level force-majeure events in the mid- and long-term.”**
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