Intelligent Investment
Germany Real Estate Market Outlook 2026
Germany’s real estate markets continue their gradual recovery
February 2, 2026 30 Minute Read
Executive Summary
- Germany’ economy is set for a gradual recovery over the course of 2026, with support coming principally from government spending and exports accelerating again. In an environment of moderate inflation, we are not expecting further rate cuts from the ECB.
- The gradual improvement on the investment markets will hold steady, underpinned by income-oriented strategies and greater willingness on the part of banks and alternative lenders to grant loans. Transaction dynamics hinge on whether buyer and seller price expectations continue to converge.
- Residential will remain the dominant asset class in 2026, all the more as institutional capital will be increasingly allocated to this sector. The structural imbalance between supply and demand will send rents up further despite brisker construction activity. Modern Living/PBSA is increasingly becoming an investors’ darling.
- The demand for industrial and logistics real estate will continue to trend up in tandem with the gradual economic recovery. In this context, public investment in infrastructure and defense will directly benefit the sector. Less construction activity, coupled with largely lower vacancy rates prevailing in established markets, suggest a moderate increase in rents.
- Hybrid working models, revaluations and investors adopting a much more selective approach have fundamentally changed the expectations placed on office. Flight to quality is determining the market like never before. Companies are often downsizing while instead investing more intensively in quality, contemporary office space, and the attractiveness of a location. Rents in central locations with limited supply are continuing to rise.
- As far as retail real estate is concerned, properties with systemic relevance, economic resilience and stable cash flows feature on the investor radar. Trophy properties are also sought after. Mixed-use is the key to success in existing stock with upside potential.
- The hotel market’s stable fundamentals, combined with growing investor interest, indicate a sustained uptrend in the transaction volume.
- Data centers remain on their organic growth trajectory, especially on the back of a boost to demand from AI-driven requirements. Supply, constrained by capital- and time-intensive construction measures, along with the low vacancy rate in existing stock are positively impacting operators' rental expectations.
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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
