Germany German real estate market still attractive

The key findings are that Europe needs less bureaucracy and more investment, the German commercial real estate market remains attractive, Germany, Nordics and Benelux are the most popular real estate markets and that there is cautious optimism regarding transaction volume tariffs, protectionism, and trade conflicts.

The last few weeks have shown that the global economy is in a phase of massive upheaval that, of course, Europe cannot escape. It is important to display European unity now and to focus on the strengths of our common internal market. The results of the latest Trendbarometer show that in order to strengthen European competitiveness, it is essential to address the existing structural challenges, which are very similar to those in Germany.
Sascha Klaus, chair of the management board of Berlin Hyp

The German real estate market scores highly in an international comparison, thanks to a political system that remains stable. The strength and value of our functioning state under the rule of law should not be underestimated. Additional security is also provided by the less pronounced volatility of prices and the continued high demand for housing in this country.

The opening question “What needs to happen for Europe to become economically competitive again?” immediately shows that national and European issues can no longer be clearly separated. Respondent percentages of 86 pct and 58 pct, respectively, were clearly in favour of “Reduced regulation and bureaucracy” and “Improvements in infrastructure” – both of which are factors that are also perceived as obstacles for the German economy. “Greater independence in the energy sector” is desired by 43 pct, while 40 pct would like to see “Higher investment in research and development”. “Stronger expansion of common markets” is seen as necessary by 19 pct, but a “Common industrial policy” by only 10 pct. The follow-up question “How do you currently assess the attractiveness of the German commercial real estate market as compared to the rest of Europe?” reveals a slight shift in the respondents’ view of the German market, particularly compared to last autumn’s Trendbarometer survey. While 25 pct rated the attractiveness of the German market as “The same” at that time, there is now a significant increase of 19 percentage points for that response, to 44 pct. The assessment of “Less attractive” has also declined, from 35 pct to 30 pct. 22 pct in the current survey rate the German market as “A little more attractive”. The question “Which European real estate markets do you consider particularly attractive at the moment?” ties in with this directly and expands the focus to our European neighbours. Here, Germany is rated as the leader at 48 pct, closely followed by the Nordics at 40 pct. The Benelux countries still manage to come in at 29 pct, with Spain in fourth place at 25 pct. Italy is last here at 9 pct. This very positive assessment of the German commercial real estate market is also reflected in the responses to the question “How will transaction volume develop on the commercial real estate market (all asset classes including residential portfolios) in Germany in 2025 compared to 2024?”. At 36 pct, the top answer was “Plus 1 pct-9 pct”. Meanwhile, 30 pct selected “+/- 0 pct” and 21 pct “Minus 1 pct-9 pct”. Before an actual transaction takes place, there are numerous aspects to take into account. The question “What do you think investors are paying most attention to at present?” was meant to identify the criteria that are crucial at the moment. At 47 pct, the top answer was “Energy efficiency of a property”, followed by “Net initial yield or purchase price” (40 pct). The percentages for the other possible responses were similar – for example “Potential for rent increases” (28 pct), “Possible alternative use of a property” (25 pct), “Micro-location of a property” (24 pct), “Long-term leases” (24 pct) and “High degree of tenant creditworthiness” (22 pct). “Access to funding and other forms of support” was last here at 8 pct.