Intelligent Investment
Germany Real Estate Market Outlook 2025
07 February 2025 25 Minute Read
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In an environment of economic and structural challenges in Germany’s election year of 2025, the outlook for the country’s economy remains subdued. Germany’s new government will be called upon to form a coalition capable of swift action in taking groundbreaking and courageous decisions to enable the transformation into a new, sustainable and competitive “Made in Germany” business model against the backdrop of heightened geopolitical risks.
The start of 2025 saw investment market Germany embarking on a new market cycle. Compared with the two years before, the real estate climate and investor sentiment present a generally more upbeat picture on the back of inflation and interest expectations returning to normal levels. Investor preferences and investment strategies will be reshuffled based on existing portfolio allocations, risk-return profiles specific to the various sectors, and structural trends in the occupier markets.
The gradual recovery on the user markets that set in back in 2024 is holding steady. The use of and the demand for office space at individual employee and company level are being redefined in line with societal and technological trends. Along with consolidation in terms of office space, this is manifesting in an improvement of the general quality of office space, true to the motto of “quality over quantity”.
At the last count, retail was reporting a slight increase in sales thanks to stronger buying power and greater footfall. Consequently, Europe’s leading retailers are still opting for brick-and-mortar stores and recognize their value for long-term growth strategies, which also applies to Germany as Europe’s largest retail market measured by sales.
Take-up in 2025 in the logistics sector will be determined by the economic situation. Changes in political direction following Germany’s parliamentary elections could also provide impetus for further market momentum. Although many companies have put off their decisions on logistics space, they have not shelved their logistics plans.
There is a dearth of (affordable) housing in the residential market, above all in the urban centers. Given the chronic lack of housing, rents will continue to rise. As a result, the residential asset class, including all its sub-segments, is high on the list of domestic as well as of international investors.
Furthermore, operator real estate, such as hotels, healthcare, laboratory and community welfare properties, along with data centers and mobility hubs, are increasingly attracting investor attention thanks to the resilient fundamentals specific to the respective asset class.
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Research contacts
Dr. Jan Linsin
Managing Director | Head of Research Germany
Jirka Stachen
Senior Director | Head of Research Consulting Continental Europe
