Investor Guide
2026-10-10 11:18

What yield does a supermarket in Germany deliver?

The market benchmark is 5.00%: the net initial yield BNP Paribas Real Estate set for prime standalone supermarkets and discounters in Q3 2026, 0.1 percentage points higher than at the end of 2025. But that is the yield on the best assets by the broker's method, not cash in the investor's account. In our series' example, a store marketed at 5.0% earns about 3.9% on the total outlay after non-recoverable and acquisition costs.

Supermarkets yield more than offices, logistics and government bonds

According to BNP Paribas Real Estate, in Q3 2026 prime supermarkets and discounters (5.00%) out-yielded retail parks with a grocery anchor (4.75%), logistics (4.70%) and offices in the seven largest cities (4.56%). Ten-year German government bonds yielded 3.55% on 7 October 2026 (Deutsche Bundesbank), putting the supermarket premium at about 1.45 percentage points.
In our view, the premium reflects lot size more than risk: a single store is too small for most institutional investors, although it does depend on a single tenant (see Part 1 of the series German Prime Retail). Other brokers measure differently — CBRE puts prime food stores at 4.6% — so compare yields only from one broker and for one date.

Each step down in asset class adds yield — and risk

The market prices a store in multiples of annual rent: from 18.5 for a prime asset to 12.5 for value-add.
Exhibit 1. From prime to value-add, the gross yield rises from 5.4% to 8.0%
Asset class
Price in annual rents (BNP, 2025)
Gross initial yield (our conversion)
What usually lies behind the class
Prime (the best core assets)
18.5
5.4%
long lease with a leading chain, durable location, high-quality building
Core-plus
15.5
6.5%
one attribute missing: lease term, location or a first-tier tenant
Value-add
12.5
8.0%
re-letting, refurbishment or repositioning needed
A higher yield is payment for risk, not a discount: on rent of €500,000, the prime multiple produces a price €1.5 million higher than the core-plus multiple (Part 12). Supermarkets in smaller towns usually sell at higher yields than in the metropolises, but the trade-off is justified only if the store dominates its catchment, the lease is long and the population is not shrinking (Part 5).

The investor nets about 3.9%, not the advertised 5.0%

The seller calculates yield as annual rent divided by price. The investor deducts non-recoverable costs — in our experience 8–15% of net rent (Part 10) — and adds acquisition costs to the price. In the Part 11 example these come to 9.4%, of which 5.0% is real estate transfer tax (Grunderwerbsteuer) in Lower Saxony.
A store priced at 20 times annual rent with an advertised 5.0% yield earns 4.25% on the price after 15% non-recoverable costs and about 3.9% on the total outlay. At 18.5 times the rent, it earns about 4.2%. The remaining gap to the 5.00% benchmark stems mainly from our deliberately cautious cost assumptions (Part 11).
Taxes on profit are the next step in the calculation; they depend on the ownership structure and the investor's country of residence (Part 9). The yields above are a market estimate at a given date, not a promise of income. BNP Paribas Real Estate considers it possible that prime retail yields will rise further by the end of 2026, which means prices may fall.

Implications for investors

1. Compare offers by the yield on the total outlay, not the advertised one. A store marketed at 5.0% earns about 3.9% after non-recoverable and acquisition costs; recalculate every offer this way.
2. Match the price to the asset class. A prime asset costs 18.5 times annual rent and a core-plus asset 15.5 — on rent of €500,000, a difference of €1.5 million; the lease term, location and tenant must justify the class.
3. Take benchmarks from one broker for one date. BNP Paribas Real Estate puts the yield at 5.00% and CBRE at 4.6%, and BNP considers a further rise in yields possible by the end of 2026; mixed figures distort the comparison.
What to check:
• whether the quoted yield has been converted into a net initial yield — after non-recoverable costs and including acquisition costs;
• how the price in annual rents compares with the benchmark for the asset class;
• whether you are comparing yields from one broker and for one date;
• the remaining fixed lease term and who signed the lease: they decide whether the asset is core or core-plus.
See also: What are commercial property yields in Germany in 2026?; What is a double net lease?; How does rent indexation work in Germany?
Sources: BNP Paribas Real Estate: retail investment market Germany, Q4 2025 and Q3 2026; investment market Germany, Q3 2026; food-retail investment market, Q4 2025 (price multiples); CBRE, retail investment, Q3 2026 (as reported by konii.de, 6 October 2026); Deutsche Bundesbank, yield curve, 7 October 2026; Gordon Real Estate Group calculations, the series German Prime Retail, Parts 1, 5 and 9–12.
Photo: Jan-Philipp Thiele / Unsplash
This page is general information and not investment, legal or tax advice.