The European grocery market is the largest retail sector in Europe, and it is growing steadily, estimated to reach €270bn by 2023. The sector is defined by long leases, strong tenant covenants and stable rental growth, appealing to investors looking for longer and more robust income streams.
During COVID-19 investor interest for grocery anchored real estate assets surged as the grocery sector established itself as a resilient investment option during the crisis. Despite the COVID-19 pandemic halting much of the economic activity across Europe, the grocery sector grew by 3.2% in 2020.
Grocery retail in Europe has been historically the most defensive sector against the shift in retail spending towards online. Consumers have shown reluctance in purchasing grocery goods online due to delivery costs, quality and the perishable nature of fresh produce, as well as the convenience of nearby grocery stores.
Whilst COVID-19 spurred growth in online grocery sales during 2020, progress was constrained due to limited availability of delivery slots and problems with infrastructure unable to cope with the rise in demand.
Despite the recent shift towards online grocery retail due to the pandemic, physical supermarkets continue to fulfil an irreplaceable role in food distribution. Almost 90% of all revenue continues to be generated from physical supermarkets in Europe’s mature retail markets.
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As 2020 is the start of a new decade we wanted to look forward and consider what will/may influence retail and real estate funds, in particular Greenman OPEN (GMO), as we move towards 2030.
200 participants joined our panel of experts in an open and frank discussion on what technologies are impacting the retail and real estate markets.
Panellists
Christian Schimanski, Hamburg Commercial Bank, Germany
Dr Holger Wolf, White & Case LLP, Germany
Lynda Boylan, Manna.Aero, Ireland
Dr Angelus Bernreuther, Kaufland, Germany
Emily Bohill (Moderator), Bohill Partners, London
Insights from the Day
– The outlook for bricks and mortar German grocery stores looks stable with digitalisation focusing on addressing customer needs & overall retail experience.
– Drone deliveries could provide a low cost, high speed, environmentally friendly solution to last mile logistics, potentially working together with grocery stores in the future.
– Blockchain has the ability to revolutionise the way real estate sector operates from smart contracts to management and execution of property sales and leases.
– The continuation of a lower for longer interest rate environment will result in debt remaining cheaper for longer & yield gaps remaining significant. – Greenman OPEN targets to achieve €1bn AUM by the end of 2020.
It was wonderful to celebrate the opening of our new office with so many business partners, investors, colleagues and friends who have been part of and helped Greenman over the past few years. Having outgrown our last office, the new space in Berlin set over three floors, provides us with ample room to expand into as we continue to grow.
A special thank you to his excellency, Ambassador Nicholas O’Brien for speaking at the reception and to our friends at Lough Ree Distillery for bringing their Slingshot Irish Gin to the event for us to try.
Happy Holidays
from Greenman! As we celebrate this festive season,