Germany's real estate market sees gradual recovery in Q1

Germany's real estate investment market is showing signs of a gradual recovery at the start of 2026, with transaction volumes up almost 20% year-on-year to €8.6 bn in Q1.

Investment transaction volumes Germany - CBRE

This growth, however, followed a traditionally slower start to the year and a robust end to 2025.

A significant 61% of the investment volume went into safe-haven assets, with value-add and opportunistic investments accounting for 18% and 13%, respectively.

Office reclaimed the top spot, attracting €2.1 bn (24% of the total) and seeing over 60% growth compared to Q1 2025. Notable deals included the Federal State of North Rhine-Westphalia's acquisition in Kaarst and OPES-Immobilien Group's purchase of Alte Akademie in Munich.

Residential came in second with €1.7 bn (19%), though this was lower than the previous year.

Industrial and Logistics held strong at €1.4 bn, a 16% increase year-on-year, indicating stable demand.

Healthcare properties saw substantial growth, reaching €1.1 bn, largely due to Aedifica's acquisition of Cofinimmo.

Retail and Hotel investments, however, declined.

Germany's seven largest cities collectively saw a 20% increase in investment volume, reaching €3 bn. While most showed positive growth, Berlin experienced a decline. Düsseldorf and Frankfurt demonstrated strong recoveries.

Domestic investors were particularly active, driving nearly 60% of the market with €5.1 bn in transactions, a 26% increase year-on-year. Foreign investment also grew by 12% to €3.5 bn, though its overall exposure remained below average, with signs of improvement.

Net initial yields remained largely stable compared to late 2025, with investors prioritising stable income, long lease terms, and defensive asset classes.

Single-asset deals dominated, accounting for €6.2 bn (28% growth year-on-year), including ten large-scale transactions. Portfolio acquisitions were weaker at €2.5 bn, despite a few significant deals. Large transactions (over €100 mln) increased in volume and number compared to Q1 2025, but didn't reach previous years' levels. Smaller transactions (below €10 mln) saw significant growth, sometimes exceeding long-term averages. The average deal volume decreased by 10% to €22 mln. Overall, nearly 100 more transactions were registered compared to the previous year.

Marcus Lemli, head of Investment at CBRE Germany, commented: “We assume that the market will pick up momentum on the back of a greater supply of property. Open-ended real estate funds will continue and even step up their efforts to streamline their portfolios. At the same time, banks will also be putting properties on the market as German banks’ NLP ratio in real estate lending is at its highest in a European comparison.”