German property investment market shows signs of recovery

According to Cushman & Wakefield's latest "Instant Insight" report, the German commercial property investment market is moving past the transaction downturn caused by rising interest rates. 

Berlin - Cushman and Wakefield

After stagnating in 2023 and 2024, the market is now showing early signs of a slight recovery, indicating a trend reversal in the current real estate cycle.
Both German (53% of transactions in Q1-Q3 2025) and international investors (47%) are increasingly seizing investment opportunities.
There is still strong demand for modern, centrally located office spaces, which are also commanding high prime rents. As these types of properties become scarcer, investors might increasingly focus on "value-add" strategies. Demand for warehouse and logistics space is also expected to grow, partly due to increased government spending, such as on defence equipment, with significant financial packages for defence and infrastructure acting as a key driver.
Furthermore, major investment managers are actively raising capital for European commercial real estate. By August 2025, €20.0 bn had already been raised for European funds, surpassing the total for all of 2024 (€18.6 bn). This suggests that total fundraising for the year could reach €30.0 bn, a two-thirds increase year-on-year, marking the first increase since 2021 and a clear turnaround from the declines seen in 2023 and 2024.
Simon Jeschioro, head of  Capital Markets Germany & Investment Advisory at Cushman & Wakefield, commented: ‘The combination of stabilised interest rates, attractive risk premiums and institutional capital readiness forms the foundation for a sustainable, albeit moderate, recovery path for the real estate investment market in Germany. 
Following a commercial transaction volume of €22.4 bn in the previous year and €16.1 bn in the first three quarters of 2025, Simon Jeschioro forecasts growth of up to €24 bn for 2025 as a whole. “This is a clear signal of the beginning of an upturn, which is likely to strengthen further in 2026 with €25 to €30 bn,” added Jeschioro. 
Alexander Waldmann, team leader Research & Insight Germany at Cushman & Wakefield, commented: “In view of the recovery of the investment market, the significant increase in capital raising is particularly positive and a clear sign of renewed long-term confidence in the real estate market on a broader basis. The increase in fundraising reflects investors' continued demand for stable returns from high-quality properties.”
Cushman & Wakefield Research has identified 16 German special funds, intending to invest up to €5.95 bn specifically in the German property market between Q4 2024 and Q3 2025. The majority of this capital is earmarked for logistics (€2.55 bn) and residential (€1.9 bn) properties, with smaller allocations to healthcare and retail.
Given that some previously established special funds are likely not yet fully invested, a moderate increase in transaction activity is anticipated. The projected distribution yields for these investments, ranging from 4-6%, are considerably higher than the risk-free interest rate, reflecting the inherent real estate risk.