The German commercial investment market has now overcome the slump in transactions triggered by the interest rate turnaround. After a period of sideways movement in 2023 and 2024, there are now signs of a slight recovery. These are the key conclusions of the latest ‘Instant Insight’ report on the German market by Cushman & Wakefield.
Simon Jeschioro, Head of Capital Markets Germany & Investment Advisory at Cushman & Wakefield, comments: ‘The combination of stabilised interest rates, attractive risk premiums and institutional capital readiness forms the foundation for a sustainable, albeit moderate, recovery path for the real estate investment market in Germany.’ Following a commercial transaction volume of €22.4 billion in the previous year and €16.1 billion in the first three quarters of 2025, Simon Jeschioro forecasts growth of up to €24 billion for 2025 as a whole. ‘This is a clear signal of the beginning of an upturn, which is likely to strengthen further in 2026 with €25 to €30 billion,’ says Jeschioro.
The expert therefore sees a trend reversal in the current real estate cycle. Both domestic investors, who accounted for 53% of the total in the first three quarters of 2025, and foreign investors (47%) are using this as an opportunity to once again take advantage of investment opportunities.
Positive fundamentals prevail
Demand for modern and centrally located office space remains high, as do prime rents. Due to the increasing scarcity of such space, value-add strategies could become more of a focus for investors. Demand for warehouse and logistics space is also likely to increase, partly as a result of rising government spending, for example on defence equipment. The financial package agreed for defence and infrastructure is likely to act as a significant catalyst here.Confidence among institutional investors rises – fundraising increases
The activities of large investment managers to raise capital for European commercial real estate have gained significant momentum so far this year. Including August 2025, a total of €20.0 billion has been raised for funds targeting investments in Europe, which is already more than in the whole of 2024 (€18.6 billion). Fundraising could thus increase by up to two-thirds year-on-year to €30.0 billion for the year as a whole, marking a clear reversal of the declines seen in 2023 and 2024 and the first year-on-year increase since 2021.Alexander Waldmann, Team Leader Research & Insight Germany at Cushman & Wakefield, comments: ‘In view of the recovery of the investment market, the significant increase in capital raising is particularly positive and a clear sign of renewed long-term confidence in the real estate market on a broader basis. The increase in fundraising reflects investors' continued demand for stable returns from high-quality properties.’
Special funds with a focus on logistics and residential – return expectations recalibrated
Cushman & Wakefield Research has identified 16 German special funds with a planned volume of up to €5.95 billion between Q4 2024 and Q3 2025 that explicitly want to invest in the German property market. The capital is to be invested primarily in logistics (€2.55 billion) and residential (€1.9 billion), supplemented by smaller portions in healthcare and retail. In addition, not all of the special funds from the recent past are likely to be fully invested yet, so a moderate upturn in transaction activity is to be expected. The planned distribution yields of 4-6% are significantly above the risk-free interest rate and reflect the respective real estate risk.Simon Jeschioro: "Overall, the new market cycle is emerging in an environment in which real estate investments are regaining their appeal – albeit with greater selectivity and regional differentiation. The positive outlook is also reflected in the growing confidence of institutional investors. Special funds in particular are once again focusing more on the residential and logistics asset classes." Distribution yields of up to 6 per cent would underline the profitability of the planned investments, according to Simon Jeschioro's concluding assessment.
