ZAGA Capital Partners: German residential resilience

In an exclusive briefing ahead of EXPO REAL 2026, ZAGA Capital Partner’s co-founding partner, Antonio Galea, shared his views on the company’s market expansion, strategic positioning in German residential real estate, and future growth vectors.

Antonio Galea

ZAGA focuses on locations characterised by demographic tailwinds, healthy employment, and a lack of new supply, leveraging its proprietary network to secure off-market transactions.

Although recent geopolitical volatility has triggered renewed market dislocation and rising financing costs, Galea views this disruption as a strategic buying opportunity.

To mitigate macroeconomic risk, the firm maintains a conservative debt strategy, partnering with German mortgage banks and locking in 100% fixed-rate debt.

ZAGA has scaled its portfolio to over 21,000 units, with recent acquisitions including a ca. 1,000-unit portfolio in June and a ca. 5,600-unit transaction in September, with assets situated in strong Northern German locations. The region benefits from robust employment growth fuelled by expanding defence, marine, and infrastructure sectors.

Market Optimism and ESG

Despite broader macroeconomic volatility, ZAGA maintains an optimistic outlook for the German residential market, driven by structural undersupply and lifelong renter demographics where average tenancy spans 10 years.

According to Galea, existing assets are valued at roughly €1,500/m2, offering a massive discount compared to new construction costs (including land) of €4,000-5,000/m2.

Unlike office, retail or logistics spaces facing technological disruption, pointed out Galea, residential real estate is viewed as more insulated from AI shifts, acting as a defensive, infrastructure-like asset class.

As anticipated macroeconomic improvements are expected to potentially drive down financing costs over the medium to long term, Galea believes that this drop will be a powerful catalyst for the broader real estate sector, especially residential.

Pipeline and Future Outlook

ZAGA currently underwrites a proprietary pipeline of approximately €3 bn, generated largely through direct, off-market deal sourcing rather than broker dependencies. As the firm heads to EXPO REAL 2026, Galea emphasised that it operates free from legacy distressed assets, positioning it to capitalise on a "higher-for-longer" interest rate environment.

Looking ahead, ZAGA plans to leverage its thematic investing expertise into adjacent high-growth sectors, exploring residential developments as well as green-powered land and development opportunities for data centres and digital infrastructure in Northern Germany and potentially the Nordics (such as Norway and Iceland).

Branislav Pekić