The German property market, long frozen in the aftermath of economic pressures and pandemic disruptions, is beginning to show signs of recovery. In the first nine months of this year, there were 40 property deals exceeding €100 million — up significantly from 31 deals in the same period last year, according to Cushman & Wakefield data cited by Bloomberg.
Recovery Drivers and Trends
The uptick in activity indicates renewed investor interest, particularly in logistics and residential properties. While the number and total value of deals are still below the levels seen during the boom of low-interest rates, the current trend suggests growing confidence in the market. Investors are, however, cautious about office spaces, which continue to face challenges due to uncertainty around long-term demand for workspace in a post-pandemic world.
Notably, large office transactions have seen a sharp decline in value, dropping to approximately €1 billion in 2023 compared to €12 billion in 2022. This shift reflects persistent hesitation among investors to commit to office properties, as remote and hybrid work reshape corporate real estate strategies.
International Investors Drive Market Momentum
One of the key dynamics fueling the recovery is the increased activity of foreign buyers. With price levels significantly lower than during the era of low interest rates, international investors are capitalizing on attractive opportunities in the German market. According to Helge Zachrant, head of research at Cushman & Wakefield in Germany, foreign buyers, who previously struggled to compete with German institutional investors, now find themselves in a favorable position.
“Price levels have fallen significantly compared to the low-interest-rate period, creating attractive investment opportunities for international players,” said Zachrant.
The trend of foreign dominance in large real estate transactions is expected to persist, with overseas investors focusing on acquisitions that offer long-term value amid Germany’s gradual market recovery.
German Property Sector Outlook
While the overall volume of deals remains modest compared to the pre-pandemic property boom, the rising interest in resilient asset classes such as logistics and residential properties signals a cautious yet positive shift in market sentiment. Industry experts suggest that as the German economy stabilizes, the property market will likely continue its gradual journey toward recovery, albeit with a renewed focus on diversified and sustainable investment strategies.
This rebound marks a critical juncture for Germany’s real estate sector, as it adapts to new economic realities and investor priorities.
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