A price multiple (Kaufpreisfaktor) of 20 means a 5.0% gross initial yield but only a 3.9–4.2% net initial yield (Nettoanfangsrendite), the measure on which institutional investors compare properties. The multiple is the purchase price divided by the annual net rent; the net yield also takes non-recoverable costs and acquisition costs into account and is therefore 16–22% lower. On our assumptions, to earn 5.0% net you must buy at no more than 15.5–16.8 times the annual rent.
Non-recoverable and acquisition costs take 16–22% off the gross yield
Exhibit 1. A multiple of 20 means a 5.0% gross and a 3.9–4.2% net yield
Source: Gordon Real Estate Group calculation. Net yield = (rent − non-recoverable costs) / (price + acquisition costs). Acquisition costs: €945,000 on €10 million, or 9.4% of the price, as in the example in Part 11 of the series German Prime Retail (Lower Saxony, including broker commission). Non-recoverable costs: 8–15% of the rent, in our experience.
The gross yield is simply the inverse of the multiple: it says nothing about either non-recoverable costs or real estate transfer tax. Non-recoverable costs depend on the lease: 8–15% of the rent for a new store with a modern lease, more for older stores and weak leases (see Part 10 of the series German Prime Retail). Acquisition costs range from 4.5% to 11% of the price, depending on the federal state and on who pays the broker.
The target yield sets a ceiling on the multiple
Exhibit 2. To earn 5.0% net, buy at no more than 15.5–16.8 times the annual rent
Source: Gordon Real Estate Group calculation on the same assumptions: multiple = (1 − cost share) / (target yield × 1.0945).
Each point of the multiple is worth one year's rent. At a rent of €500,000, the difference between 15.5 and 18.5 is €1.5 million of purchase price (see Part 12 of the series German Prime Retail).
A broker's yield and an investor's yield are different numbers
On Exhibit 1, the multiple of 18.5 that BNP Paribas Real Estate gives for prime supermarkets and discounters translates into a net initial yield of 4.2–4.5%. BNP itself puts that yield for prime supermarkets at 5.00% (Q3 2026). According to the broker, in 2025 prime supermarkets and discounters sold for up to 18.5 times the annual rent, core-plus properties for 15.5 times and value-add properties for 12.5 times. For retail parks the figures were 19.5, 16.0 and 13.0. At the end of 2025 the broker considered it likely that multiples would stay at the same level in 2026.
The gap comes above all from our deliberately cautious cost assumptions (Part 11), and also from the broker's own method and its publication of multiples and yields for different dates. The practical conclusion: compare a multiple with a multiple, and a net yield with a net yield from the same source at the same date. If a seller quotes a yield without showing how the costs were calculated, assume that it is a gross yield, not the one the investor will receive.
Implications for investors
1. Convert the seller's price into a net yield before negotiating. On Exhibit 1, a multiple of 20 gives not 5.0% but 3.9–4.2% net: the difference goes on non-recoverable costs and acquisition costs.
2. Set a price ceiling from your target yield. To earn 5.0% net, Exhibit 2 caps the price at 15.5–16.8 times the annual rent, and each extra point of the multiple costs another year's rent.
3. Compare benchmarks from one source and one date. BNP publishes multiples and yields for different dates and by its own method, so compare a multiple with a multiple and a net yield with a net yield.
What to check:
• Ask which rent the multiple is based on — the current net rent under the lease or the rent expected after indexation.
• Check whether the calculation includes real estate transfer tax, the notary, the land register and broker commission.
• Ask the seller for the non-recoverable costs assumed, and check them against the lease.
• Take the market benchmark with its source and date — one broker, one quarter.
See also: Commercial property yields in Germany in 2026; Grunderwerbsteuer (real estate transfer tax); Purchase-price multiple (Kaufpreisfaktor); Net initial yield (Nettoanfangsrendite).
Sources: BNP Paribas Real Estate, Grocery-Investmentmarkt Deutschland, Q4 2025 (purchase-price multiples), Retail-Investmentmarkt Deutschland, Q3 2026 (net initial yield); German Prime Retail series, Parts 10, 11 and 12; Gordon Real Estate Group calculations. Data as at October 2026.
Photo: Didier Weemaels / Unsplash
This page is general information and not investment, legal or tax advice.