German real estate investment market sees price rebound

The German residential real estate market saw prices and transaction volumes surpass the previous year's levels in the first half of 2025, despite geopolitical uncertainty and a volatile financing environment. 

Lübke Kelber

While the overall transaction volume of €3.6 billion for properties with over 20 units was 24% higher than H1 2024, activity slowed significantly in Q2 due to fewer large transactions, according to the Lübke Kelber consultancy.
However, purchase price multiples showed a slight recovery, particularly in strong markets, and rising rents are contributing to notable increases in capital values. 
Institutional investors such as DWS, Industria Wohnen, and family offices focused on core properties, while private equity firms targeted value-add opportunities.
In the first half of 2025, advertised rents across Germany rose by 4.7% compared to the previous year. Lübke Kelber anticipates this rental growth will further stimulate investment demand in the sector.
This positive trend is occurring amidst a backdrop of considerable market uncertainty driven by geopolitical events and fluctuating interest rates. 
However, this very uncertainty is expected to bolster the appeal of the German residential market as a safe haven for investment due to its transparency, liquidity, and strong rental demand. 
German residential real estate, known for its transparency and liquidity, coupled with strong rental demand, offers a comparatively low-risk profile. Therefore, despite Germany's overall economic weakness, the sector is expected to attract significant national and international investment in the coming years.
Mark Holz, head of Strategy and Research at Lübke Kelber, commented: "The fewer the red flags and the more plain vanilla characterizes a property, the stronger the investment demand. Here, increasing competition in investment processes has been evident in recent months, leading to a rise in multiples." 
This transaction volume analysis focuses on residential properties with 20 or more units, where commercial use is secondary. It excludes minority stakes, pure M&A deals, and specialized housing like student or senior living.