Germany's Real Estate Investment Market: Gradual Recovery Continues into 2026

Germany's commercial real estate investment market opened 2026 on a positive note, posting a transaction volume of approximately €8.6 billion in the first quarter — a modest increase on the prior-year period. While still well below the five-year quarterly average of €12.0 billion, the result reflects a market that is steadily rebuilding momentum after a prolonged downturn.

That said, the mood shifted noticeably towards the end of the quarter. Escalating geopolitical tensions in the Middle East left many market participants more cautious about initiating new deal processes, even as most transactions already in progress continued to close.

Key Figures at a Glance

- Transaction volume Q1 2026: €8.6 billion (↑ vs. prior year)

- Deals ≥ €100 million: 16 transactions totalling ~€3.6 billion (↑ vs. prior year)

- Portfolio share: 29% (↓ vs. prior year)

- Share of foreign investors:** 41% (↓ vs. prior year)

- 5-year average: €12.0 billion per quarter

- 10-year average: €14.9 billion per quarter

Single-Asset Deals Drive the Market

The transaction structure was dominated by individual asset deals, which totalled around €6.2 billion — up 28% year-on-year. Ten large single-asset transactions stood out across asset classes, led by offices, with residential, logistics and retail also featuring prominently.

Portfolio transactions remained comparatively subdued at around €2.5 billion, though several significant portfolio deals were completed, including two in the healthcare segment and one each in logistics, leisure, retail and office.

Large-ticket activity above €100 million increased in both volume and number compared to Q1 2025, but remains well below the levels seen in earlier market cycles. Of the 16 deals in this size category, five were portfolio sales and eleven were single-asset transactions; fourteen were commercial assets and two were residential.

Asset Class Breakdown

Office — €2.1 billion | Leading asset class

Office was the most sought-after asset class in Q1, with transaction volume of around €2.1 billion well above the prior-year figure. Five deals exceeded the €100 million mark — compared to just two in Q1 2025 and one in Q4 2025. Value-add transactions gained significantly in importance, registering nearly three times the volume of the prior-year quarter. Prime net initial yields across the Top 7 cities average 4.73%. For the full year, increased supply from portfolio restructurings at open-ended funds and additional bank disposals is expected to provide further market stimulus.

Residential — €1.7 billion | Second-strongest asset class

Residential delivered a solid €1.7 billion across 46 registered deals, continuing the positive trend from 2024. Core-Plus was the dominant investment strategy, followed by Value-Add. Forward deals accounted for around 43% of volume. Foreign investors represented just under a quarter of transaction activity — less than in full-year 2025. High financing costs and a persistent bid-ask spread remain the main drag on portfolio transactions. Prime yields in the Top 7 cities held steady at an average of 3.40%. A full-year volume of €8–10 billion appears realistic.

Logistics & Industrial — €1.4 billion | Stable demand

The industrial and logistics sector posted around €1.4 billion in Q1, up 16% year-on-year, confirming a stable demand base — though momentum eased in March due to geopolitical headwinds. Logistics assets continued to attract the bulk of investment, while Light Industrial gained ground. Core and Core-Plus assets together accounted for 60% of the volume. The prime yield for logistics held at 4.40%. The sales pipeline is well-stocked, and appetite for deals above €100 million is growing.

Healthcare — ~€1.1 billion | Biggest year-on-year surge

Healthcare was the standout performer, with transaction volume up 65% year-on-year to nearly €1.1 billion. The sector was dominated by two large pan-European portfolio deals: Aedifica's majority acquisition of Cofinimmo and the sale of Northwest Healthcare Properties REIT's European platform to TPG Real Estate. Care homes accounted for 67% of healthcare volume (€717 million, +79% year-on-year), followed by outpatient healthcare facilities (€247 million, +174%) and nursing/rehabilitation clinics (€50 million, +114%). Prime yields for care homes remain at 5.40%.

Retail — €1.1 billion | Volume declining

Retail investment reached €1.1 billion in Q1, down 13% versus the prior-year quarter. Transactions above €100 million were rare. Food-anchored retail assets served as a stabilising force, with specialist and food retailers accounting for 56% of transaction activity. Shopping centres — increasingly targeted for mixed-use repositioning — ranked second with a 22% share. Several larger transactions are currently in the pipeline, which should provide a lift later in the year.

Hotel — €318 million | Recovering yields

The hotel investment market posted €318 million in Q1, down 12% year-on-year, primarily due to the absence of large-ticket transactions. Asset and fund managers were the dominant buyers. Notably, hotel prime yields compressed for the first time since 2019, reaching 5.10%. Value-add strategies with repositioning potential continue to attract the most investor interest, though the geopolitical environment is prompting a partial return to more defensive, long-term investments.

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Prime Yields: Stability Across Most Asset Classes

Prime net initial yields remained largely unchanged from year-end 2025:

- Office (Prime, Top 7 average): 4.73%

- Residential (Top 7 average): 3.40%

- Logistics: 4.40%

- Care homes: 5.40%

- Hotel (Prime): 5.10% — first compression since 2019

- Retail (High Street): stable, minor shifts at B-locations year-on-year

With the yield curve steepening — driven by rising long-term interest rates following Germany's expected fiscal loosening — further compression in real estate yields is likely to remain limited. The 10-year Bund yield stood at 2.87% at the start of 2026, around 40 basis points above the prior-year level.

Cities: Diverging Performance

Across Germany's seven major markets, aggregate results indicated moderate stabilization, but performance varied considerably by city. Berlin recorded a decline in transaction volume, while Düsseldorf saw activity more than triple versus Q1 2025, approaching its long-term average. Frankfurt also showed a notable pickup. Munich, Hamburg, Cologne and Stuttgart provided a mixed picture consistent with the cautious market environment.

Outlook: €35–40 Billion Expected for Full-Year 2026

CBRE anticipates a continued gradual recovery of the German investment market. With a well-stocked deal pipeline — including several landmark transactions that could catalyze broader market activity if completed — a full-year transaction volume of €35–40 billion appears achievable.

Real estate may also benefit from a flight-to-safety dynamic as uncertainty around equities and bonds increases. While prime yields are expected to remain broadly stable, total returns will be driven primarily by rising rents — particularly in markets and asset classes with limited supply and strong demand: prime office in core locations, residential, and big-box logistics. Beyond prime product, buyers can expect to see higher acquisition yields.

Germany's economy is expected to shake off its cyclical weakness in 2026 and more clearly in 2027, as the anticipated fiscal stimulus takes effect. In this environment, the focus of real estate investors will increasingly shift to income generation. Proactive asset management — translating market, location and asset-level opportunities into performance — will be the key differentiator for sustained success.

*Source: CBRE Research, Germany Investment Market Q1 2026 (April 2026)*

*All figures: CBRE Research, Q1 2026. Transaction volume includes residential properties with 50+ units. This post is for informational purposes only.*