Germany’s multifamily real estate investment sector has continued its cautious rebound, with transaction activity gaining momentum in recent months. Between January and September, the market recorded €5.3 billion in transactions across properties with over 50 units, covering around 33,300 units in total. This marks a 16% increase compared to the same period last year.
The third quarter alone contributed €2.5 billion to this total—the highest quarterly figure since late 2022. Overall, 94 transactions have been finalized so far, representing a 7% year-on-year increase. However, the share of international investors dropped to 17%, ten percentage points lower than the previous year.
Spending on property developments reached €1.6 billion in the first three quarters, up from €1.3 billion the previous year. The figures come from a report by CBRE, a global commercial real estate services firm.
According to CBRE’s Sebastian Schütte, investor interest is gradually returning, although transaction activity has not yet matched the pace seen in the years before the downturn. In the third quarter, six transactions exceeded €100 million each—indicating renewed appetite from investors, particularly family offices and other private equity-backed buyers. Public housing companies were not among the large-scale buyers this time.
Private investors contributed €768 million in net investments this year, often aiming to restore equity ratios in response to recent devaluations and refinancing needs. These investors now include not only portfolio holders but also listed housing firms and real estate funds.
The market for core and core plus properties remains tight. Supply in these segments has significantly diminished, resulting in a 20% decline in investment volume over the year. Meanwhile, activity in value-add and opportunistic segments grew by 15%. As a result, core and core plus assets made up just 50% of total investments, down from 73% a year earlier.
Vendors are shifting their strategy. Rather than selling prime, low-risk properties, they are offloading assets that require capital expenditure, present ESG challenges, or involve under-rent conditions. In such cases, price reductions are increasingly accepted, CBRE’s Jirka Stachen noted.
Premium segment prices appear to be stabilizing. In some cases, top-tier assets have seen slight value increases. Prime yields held steady in the third quarter, averaging 3.4% across Germany’s top seven cities—0.25 percentage points higher than a year ago. Conversely, yields have risen slightly for average-quality properties in secondary locations.
Berlin accounted for nearly one-third of total investment, with €1.8 billion in transactions—31% higher than the previous year. Munich followed with €415 million, and Düsseldorf with €138 million. Other major cities, including Cologne, Hamburg, and Frankfurt am Main, recorded volumes below €100 million.
CBRE anticipates that the total investment volume for the year could reach €8 billion, driven by a healthy pipeline of existing property transactions. While conditions remain mixed, momentum is expected to carry into the upcoming year, with improved circumstances potentially supporting new housing developments.
Yields on prime assets are likely to remain stable, with some room for modest compression in the coming year as investor sentiment gradually improves.
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By Ravi Kumar