Zaga Capital Partners expands German residential portfolio

London-based real estate investment firm Zaga Capital Partners is expanding its German residential portfolio through its company Net Zero Properties (NZP).

Antonio Galea

NZP has agreed to acquire 1,010 residential units (approximately 57,800 m2) across seven locations in Northern Germany.

Currently, the average rent for these properties is €7.9 per m2 per month. Zaga believes there's a potential to increase rents by about 24% through focused asset management and tenant improvements as units turn over.

This acquisition will strengthen NZP's presence in Northern Germany, increasing its density in areas where it already operates. This larger scale is expected to lead to better operational efficiency, stronger local execution, and lower costs per unit, all managed by ZAR Real Estate.

The deal is expected to be finalised in the third quarter of 2026. Once completed, NZP's total portfolio in Germany will exceed 15,400 residential units, generating over €77 mln in annual net rental income.

This transaction follows Zaga's successful fundraising in March 2026, where it secured around €500 mln for its Zaga German Real Asset Opportunities II Fund. It highlights Zaga's ongoing investment activity and its ability to find attractive off-market opportunities in the German residential market.

Furthermore, this portfolio offers a significant opportunity for energy upgrades. NZP plans to improve the energy performance of these properties through its "manage-to-green" program, which includes installing heat pumps, photovoltaic systems, and AI-powered heating optimisation. The goal is to improve all assets to an EPC rating of A–C within 24 months, providing both environmental and financial benefits.

Antonio Galea, founding partner of Zaga Capital Partners, said: “This acquisition is a strong example of what we set out to deliver when we announced our first close in March - disciplined, off-market deployment into high-quality residential assets at an attractive entry point. Northern Germany is a market where we have significant experience, and increasing our operational presence there is expected to support our ability to deliver sustainable, long-term value for investors.”