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International Residential Investors in Focus

Trends and Opportunities in the German Residential Investment Market


Through intensive market analysis and industry discussions, several clear trends have emerged in the German residential investment market. Here is an overview of the key insights:


Achieving GHG Reduction: Leveraging Innovation for Sustainable Real Estate
Trends and Opportunities in the German Residential Investment Market (Source: AI Ideogram, Prompt: Gunnar Gombert)

Residential Properties Remain the Top Choice for Investors

Investors continue to favor residential real estate. Sales programs have largely been completed, and the focus is now clearly on acquiring residential properties. This applies both to core investments in prime products and to value-add strategies aimed at energy optimization and sustainable value enhancement.


Two Markets Dominate the Scene

The residential investment market is divided into two main segments: on one hand, core investments in prime properties promise long-term value stability. On the other hand, value-add strategies are gaining importance, particularly in connection with "transition-to-green" measures for energy optimization.


Challenges in Residential Construction Persist

The hurdles for new residential construction remain high. High construction costs, regulatory uncertainties, and financing barriers are slowing down construction activity. This is leading to a continued decline in newly built housing, which will exacerbate the supply situation in the long term.


Rental Price Development: Growth with Slower Dynamics

A widespread increase in rental prices is expected, albeit with reduced momentum compared to previous years. The strained supply situation may still exert pressure on rental prices, particularly in major metropolitan areas.


Core Investments in the Top 7: Limited Supply, Increasing Competition

The low level of new construction activity means that core-segment offerings are becoming rarer. As a result, competition for prime properties in Germany’s seven largest cities is intensifying. Consequently, prime yields are expected to decline slightly again.


Foreign Capital Remains Active

International investors continue to show strong interest in the German residential real estate market. Both equity and debt capital from abroad are available to invest in the market.


Forward Deals Regaining Popularity

Forward deals are once again in demand, even if the remaining construction period exceeds 12 months. This reflects increased confidence in market development and a willingness to enter projects early.


CO2 Reduction in Existing Buildings as a Key Challenge

The pressure to reduce CO2 emissions in existing properties is increasing. Various energy-efficient refurbishment measures are being intensively discussed but still need to prove themselves in practice. The focus will be on implementing economically viable and sustainably effective solutions.


Conclusion: The residential investment market remains attractive even in a challenging environment. Investors are relying on proven strategies, while new opportunities are arising through energy-efficient refurbishment and forward deals. Given the ongoing supply shortage, residential real estate remains a sought-after asset class—with rising rents but also increasing requirements for sustainability and efficiency.


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