A Hedonic Rental Price Index for Retail Properties in Germany: Methodology and First Results

Therefore, a hedonic rental price index for retail properties in Germany is estimated using a database of rental offers for retail properties. This hedonic price analysis explains the asking rents with a combination of characteristics such as location, size, quality, and timing of the offer. This quality adjusted (hedonic) rental price development is estimated for Germany as a whole, for different regional categories and 30 selected major cities. This analysis shows that rents for retail properties were rising dynamically prior to the outbreak of the Covid19 pandemic, especially in the seven largest cities. After a substantial decline in the total number of offers for retail rent, which is weaker in the seven largest cities and an increase in the period they were offered on the market, there are currently signs of a turning point for rental price development for retail properties. After continuing to rise in 2020, in 2021 quality-adjusted retail rents in Germany have stagnated and in the top seven locations even declined, which however we need to put this into perspective of substantial rent increases for retail properties in previous years in the top seven locations.