Asset management in Germany: Navigating shifts and seizing strategic opportunity

In 2025, asset management in Germany is at a critical juncture. Widening disparities across asset types, a renewed emphasis on disciplined portfolio management and a growing focus on active value creation through refurbishments and repurposing define the new reality. 

Aydin Karaduman, CEO of IC Immobilien Group

As international investors adjust their real asset strategy in a global context, understanding the nuanced evolution of German commercial real estate is essential. From office turbulence to hotel recovery and the logistics boom, the new cycle is no longer about passive stewardship. It is about managing assets proactively across different types to adapt, reposition and create long-term value.

Office real estate: A market of two realities

Germany’s office sector shows a widening gap between prime and secondary assets. On one side, ESG-compliant and certified core assets in prime inner-city locations continue to attract major tenants – at higher rates. These deals, often spearheaded by large corporate tenants are indicative of a flight to quality and centrality. In contrast, secondary and peripheral offices face structural challenges. Reduced space requirements, new work dynamics and a lack of major corporate expansions have made it harder for older and non-ESG-compliant buildings to attract tenants or retain value.

With speculative development largely paused, the market shows renewed interest in ‘manage-to-core’ strategies: refurbishing structurally sound but outdated properties to meet today’s market needs. Asset managers are playing a more active role, shaping value rather than simply protecting it. At the same time, conversion strategies, especially office-to-residential or serviced apartments, are gaining traction. These approaches are supported by anticipated regulatory reforms, including Germany’s planned ‘Bauturbo’ (building booster) initiative, which aims to streamline planning processes, simplify change-of-use approvals, and support adaptive reuse projects.

Investment climate: Between recovery and repositioning

While some international investors remain cautious, expecting yields of six to seven percent even for core offices, others are beginning to re-enter the market, particularly in the €50-100m mid-market range. The safe haven status traditionally associated with Germany has been challenged in recent years by red tape, complex regulation and subdued economic growth. This perception may start to shift with Germany’s incoming government, which seems to support de-regulation a bit more.

Europe’s biggest economy continues to offer key advantages for long-term capital. These include legal and contractual certainty, a mature and professional tenant base, strong infrastructure and a well-diversified economy anchored by its economic backbone, Germany’s hidden champion SMEs or ‘Mittelstand’. For many institutional investors, these factors remain a compelling reason to stay engaged in or return to the market.

However, the ability to align investment strategy with operational implementation is increasingly critical. Local expertise across development, leasing and management is essential to navigate regulatory complexity, respond to evolving tenant needs and unlock value. In contrast, global platforms that rely on centralised structures often lack the speed and localised insight required to manage assets effectively in today's fragmented markets.

Hotels: A sector in strong recovery

Hotels are one of the most notable comeback stories in German commercial real estate. Once heavily discounted after the pandemic and interest rate hikes, they are now outperforming pre-crisis benchmarks in occupancy and revenue per available room (RevPAR). Several larger transactions are currently being prepared, signalling renewed confidence among institutional buyers.

Still, the recovery comes with challenges. Operator strategies and quality, as well as location resilience, are under closer scrutiny than before. Strategic execution is critical and asset managers must tailor approaches to the specific characteristics of each property.

Logistics: From yield darling to operational complexity

Germany’s logistics sector, long a darling for yield-seeking investors, is entering a phase of strategic segmentation. While newly built, ESG-optimized assets remain attractive, many older warehouses which saw temporary uplift during the e-commerce boom now require revitalisation.

Asset managers must distinguish between two divergent mandates: maximizing cash flow through long-term lease stability or upgrading legacy assets for futureproofing. This demands specialised expertise, as revitalising logistics is not a copy-paste job from office or retail.

For asset managers, this means anticipating the infrastructure needs of tomorrow’s tenants: energy-efficient facilities, robust digital connectivity and, increasingly, assets tailored to sectors like life sciences and data centres. These specialised assets require not only development foresight but ongoing management expertise - from climate control to ESG compliance - that transcends traditional capabilities.

The three key aspects: Integration, innovation and insight

Asset management in Germany is no longer about holding the fort, it’s about redesigning it to meet new realities. The combination of macroeconomic shifts, regulatory changes and evolving tenant expectations is transforming every asset class.

Success in this demanding environment depends on the ability to integrate market knowledge, operational expertise and strategic vision. Local presence, interdisciplinary collaboration and strong execution across the full asset lifecycle are becoming ever more decisive.

Aydin Karaduman is CEO of IC Immobilien Group