Transaction volumes in the German residential property investment market  (transactions for at least 50 apartments) totalled €4.8bn for the first three quarters of 2024, according to Savills. While volumes were broadly in line with last year, the number of transactions rose by 42%. Savills views this as evidence of the onset of a revitalisation of the market, albeit with a more fragmented market than in the past.

Savills expects a strong Q4 and for overall investment volumes for the full year to be broadly in line with last year's total (€7.7bn).
Marco Högl, Director and Head of Residential Capital Markets, Savills Germany, says: “Demand in the residential investment market has picked up significantly again and there are a high number of bidders in many sales processes. Besides private investors, institutional buyers are also active. Many investors are assuming that prices have bottomed out and that, thanks to further rental growth, residential property will once again enjoy long-term capital growth.”
Matti Schenk, Associate Director, Research, Savills Germany, says “Quoting rents have been rising once again since the beginning of the year, albeit at a somewhat slower rate. In addition, index rents in some cities have been adjusted sharply upwards. In view of the strong demand for housing and sustained decline in building permits for apartment buildings, there are currently no indications of rental activity coming to a standstill. The increasingly entrenched supply shortage and rising rents will also result in capital growth.”

Acquisitions of development projects accounted for around a quarter of the transaction volume in the first three quarters of the year. A further 18% of investment was attributable to purchases of existing properties completed since 2014, which are excluded from the rental cap. Hence the new-build segment was responsible for 43% of the transaction volume. This compares with a five-year average of 24%. Meanwhile, at least 15% of the transaction volume during the year to date has been attributable to the acquisition of holdings for the purpose of energy-efficient refurbishment.

Karsten Nemecek, Managing Director of Corporate Finance – Valuation for Savills Germany, says: “More risk-averse institutional investors and family offices remain strongly focused on the new-build segment. At the same time, we are also witnessing a significant increase in value-add capital in the market seeking to acquire older stock for subsequent refurbishment and resale. However, such modernisation strategies only make economic sense in certain cases and require extensive knowledge of regional market conditions and available subsidy programmes.”

Find out more:
Market in Minutes: Residential Market Germany