German residential investment in 2025 reaches €7.8b

The German residential investment market ended the fourth quarter of 2025 with a transaction volume of €2.9 bn, making it the strongest quarter of the year. 

Düsseldorf - Lübke Kelber

However, this figure was still a quarter lower than the same period in the previous year. The total transaction volume for 2025 reached €7.8 bn, marking a 9% decrease compared to 2024, according to Lübke Kelber Research.
Investors increasingly gravitated towards lower-risk "core" and "core+" properties, particularly in the fourth quarter. Around 54% of the total transaction volume was concentrated in Germany's 14 leading "A-markets," with B and C cities accounting for an additional 33%.
Transactions exceeding €100 mln were rare throughout the year. The majority of deals (37%) fell within the €10-€25 mln range, followed by the €25-€50 mln segment (33%). The largest fourth-quarter transaction was Hines' forward purchase of the Marienhöfe district in Berlin for its European Core Fund.
The market saw a mix of active buyers and sellers in Q4. Family offices remained prominent, especially for deals between €10-€30 mln. Institutional investors and investment managers also showed increased activity, with examples including Tishman Speyer, Catella, Aachener Grund, and HIH Invest. On the corporate side, Vonovia acquired 750 residential units, while Peach Property divested 2,000 units.
The average price per square meter in Q4 exceeded €4,000, not solely due to price increases but also reflecting the focus on higher-priced core assets in cities like Munich and Berlin. Lübke Kelber noted a broader market price increase driven by rising rents and increasing purchase factors (declining initial yields). Existing residential rents across 135 analysed markets rose by a median of 4.8%, with Fürth seeing an 8.6% increase. Leipzig was the fastest-growing A-market at 7.3%, while Berlin saw the lowest A-market growth at 2.5%.
Purchase factors increased in strong economic centres and "swarm cities" but remained under pressure in structurally weaker locations.
Despite four ECB interest rate hikes in 2025, residential property financing costs remained largely stable. The yield on 10-year German government bonds, however, increased from 2.37% to 2.85% over the year, influenced by global debt trends, inflation, and economic growth. While the interest rate environment didn't improve, it became more predictable for investors compared to previous years, with a stable trend anticipated for 2026.
Due to the persistent supply-demand imbalance, rents are expected to continue rising across the board. However, in some expensive metropolises, rent increases may be more pronounced in attractive and more affordable second and third-tier cities.
The German residential property market remains fundamentally appealing to investors. The uncertain global geopolitical climate is also expected to bolster investment demand, as capital seeks safe havens like German residential property. Consequently, Lübke Kelber forecasts a significant increase in the total transaction volume for German residential property to over €10 bn in the coming year.