City Survey
Q1 2026
Investment market
“Gradual recovery” confirmed at the start of the year
In Germany, property worth €8.6bn was traded in the first quarter of 2026. Of this, €6.5bn was accounted for by commercial property and €2.1bn by the institutional residential segment comprising ten or more residential units. The 11% increase in transaction volume compared with the start of the previous year is largely attributable to the commercial sector, which grew by 25%, whilst the residential segment recorded a decline of 16%. The number of deals in the commercial segment reached the previous year’s level, resulting in a slight increase in the average transaction size from €20m to €25m.
Start of the year marked by moderate growth
The quarterly results for the commercial segment are in line with the expected “gradual recovery” for the current year, provided there is moderate economic growth and stable conditions in the financial and capital markets.
Transaction Volume in Germany and Office (in € bn.)
Transaction Volume in Germany by Property Type (in € bn.)
Source: Colliers
The 12% year-on-year decline in transaction volume compared with the fourth quarter of 2025, the strongest quarter in terms of turnover, is moderate by historical standards, as fluctuations of 30 to 40% are typically observed. At the same time, we are seeing the strongest start to the year since the end of the interest-rate-driven boom phase.
The result was underpinned by a total of six large-scale transactions worth €200m or more, which accounted for just under 30% of the total volume. Four of these were portfolio sales, whose market share of 28% reached its highest level since 2022. The two largest transactions were in the healthcare sector. These included the acquisition of a majority stake in the Belgian REIT Cofinimmo, with its 59 German care homes, by the Belgian REIT Aedifica, and the sale of a European portfolio comprising 17 German clinics and medical centres by the Canadian REIT Northwest Healthcare Properties to the US asset manager TPG. These market-defining deals meant that healthcare and social care properties, with a market share of 16%, ranked fourth among the property types with the highest turnover, just behind industrial and logistics properties (17%). The transfer of the Wund Stiftung’s spa portfolio to the Therme Group, which had already been announced at the end of 2025, was also approved under competition law.
Foreign capital drives major transactions
The trend towards special properties with sustainable operating models, which has been observed for some time, continues.
In this relatively non-cyclical segment, Germany remains an attractive target for strategic acquisitions, particularly for international investors, due to its low level of market maturity and the opportunities for consolidation that exist. This is supported by the generally stable conditions in the German investment market, where there is currently a noticeable upturn in market activity from abroad. Between January and March, the share of international capital stood at 43%.
With a share of 26% of the transaction volume office properties ranked first among the types of commercial use and recorded an increase of 15% compared to the same quarter of the previous year. Among other things, the purchase of an office building including a data center and printing plant in Kaarst by the state of North Rhine-Westphalia as an owner-occupier for over €300m contributed to this. This is the largest single transaction since the beginning of the year. Retail real estate also increased by 13% and came in second place with an 18% market share.
Transactions predominantly outside the top 7
Transaction activity continues to take place mainly outside the seven major investment centres. In the first quarter, these accounted for only 32% of the total volume, which corresponds to a historically low figure in a long-term comparison. The only transaction in the three-digit million range within the top 7 is the Munich city center property “Alte Akademie” from the Signa insolvency estate.
From the well-filled transaction pipeline, including properties in prime inner-city locations in the top 7, no deals have been completed so far. However, given the typically longer marketing processes in the large-volume segment, this was not surprising at the beginning of the year. Despite developments in the Middle East since the beginning of March, investment momentum remains stable overall. Individual large-volume key transactions could be postponed but are likely to provide important impetus for the investment market in the course of the year.
The recent rise in inflationary risks, particularly because of higher energy costs, is dampening the prospects of interest rate cuts in the near term.
Rather, it is likely that key interest rates will remain at elevated levels for an extended period. For the property market, this means a more challenging, though not unexpected, market environment: financing costs have risen significantly, and the planning certainty regarding risk premiums and interest rates that had been achieved in the meantime is being offset by a renewed increase in volatility. As the conflict drags on, the pressure on the property market to adapt is also mounting.
Yield movements possible over the course of the year
It is evident that current 10-year swap rates and yields on long-term German government bonds of over three per cent are increasingly being considered in ongoing price negotiations. Banks are consequently scrutinizing financing arrangements with great care. Now that prime yields have stabilized following the end of the rate-hiking cycle and have remained largely constant over the past three months, further upward movements are possible as the year progresses. Outside the core segment, repricing could therefore develop more dynamically than originally anticipated.
Prime Yield Office (in %)
Source: Colliers
Outlook: Market recovery remains dependent on the course of the crisis
The start of the year is encouraging, and the discussions at MIPIM have also shown growing investor interest, especially on the part of international investors. Against this backdrop, an increase in transaction volume of 10 to 15% to around €30bn over the course of the year is realistic. However, if the geopolitical situation continues to deteriorate, delays in large-volume transactions and additional price adjustments could slow the market ramp-up and momentum in the current cycle.
Key figures german investment market (as of Q1)
| Germany | Berlin | Dusseldorf | Frankfurt | Hamburg | Cologne | Munich | Stuttgart | |
|---|---|---|---|---|---|---|---|---|
| Transaction volume commercial Q1 2026 (in €m) | 6,523 | 572 | 280 | 232 | 244 | 150 | 618 | 13 |
| Transaction volume commercial Q1 2025 (in €m) | 5,220 | 853 | 80 | 92 | 469 | 117 | 460 | 40 |
| Change yoy | +25% | -33% | +250% | +152% | -48% | +28% | +34% | -68% |
| Largest investor group | Asset / Fund Managers 23% | Asset / Fund Managers 32% | Asset / Fund Managers 45% | Corporates / Owner-occupiers 52% | Asset / Fund Managers 63% | Private Investors / Family Offices 26% | Private Investors / Family Offices 38% | Private Investors / Family Offices 88% |
| Largest seller group | Project Developer 17% | Asset / Fund Managers 52% | Private Investors / Family Offices 47% | Asset / Fund Managers 68% | Project Developer 53% | Asset / Fund Managers 4 % | Project Developer 33% | Private Investors / Family Offices 88% |
| Most active property tape | Office 26% | Office 44% | Office 41% | Office 86% | Office 71% | Office 72% | Mixed-use 35% | Office 64% |
| Prime office yield | 4.90% | 5.00% | 4.95% | 4.60 % | 4.75% | 4.30% | 4.80% | |
| Prime retail yield | 5.00% | 5.00% | 4.85% | 4.50% | 5.00% | 4.25% | 4.80% | |
| Prime logistics yield | 4.75% | |||||||
| Prime hotel yield | 4.70% |
Source: Colliers
Industrial and logistics segment is showing a robust market environment with delayed deals
The German industrial and logistics property market began 2026 with a transaction volume of €1.1bn. This figure was 3% lower than the previous years. Individual transactions accounted for 74% of the market, driving market activity. In the overall commercial sector, the industrial and logistics sector achieved a market share of 17%, ranking third behind offices (26%) and retail (18%).
Transaction activity has recently been shaped by two central factors.
On the one hand, further geopolitical uncertainties are causing increased volatility in the capital markets and changed financing conditions. On the other hand, the industrial and logistics type of use has stabilized after a phase of above-average momentum and is now largely in sync with the established types of real estate use such as offices and retail. Against this backdrop, exclusive phases in transactions have been noticeably extended. Currently, several transactions with a volume of over € 50m each have been in exclusivity for several months. However, the corresponding negotiations are progressing slowly, and several major transactions are also being prepared for the next few months, so that a solid annual result for 2026 can be expected overall.
Transaction Volume Industrial & Logistics (in € bn.)
Source: Colliers
Major deals worth over 100 million euros are being delayed
In the first three months of 2026, transaction activity was mainly concentrated on small and medium-sized ticket sizes. For example, 59% of the investment volume was accounted for by trades of less than €50m. Only two transactions were an exception and were in the size category above €100m. These included the individual sale of the Mercedes-Benz logistics centre in Bischweier to a US investor and the acquisition of a Logicor portfolio of five logistics properties by EQT Exeter Group.
These deals ensured that international investors clearly dominated with a share of 66%. Their share was around 19 percentage points higher than in the same period last year (47%) and also well above the five-year average of 51%.
In the first quarter, as expected, transaction activity was concentrated in the core-plus segment, which accounted for 35% of the total, which was in line with the five-year average of 34%. A limited new construction pipeline, the increasing focus of occupiers on shorter lease terms and continued restrictive acquisition criteria on the buyer side meant that the transaction volume in the core segment remained subdued overall.
A significant amount of capital is currently being raised in the market, and investors are keen to carry out transactions.
The current war in Iran and the resulting rise in energy costs, and consequently an increased risk of inflation, make short-term interest rate cuts less likely. The resulting changes in financing conditions are having an overall dampening effect on transaction activity. No significant purchase price discounts are currently expected for ongoing exclusive deals. However, the duration and intensity of the political unrest in Iran will remain decisive for the further development of these transactions.
Outlook: Revival of specialist property depends on regulations
The gross prime yield for core logistics properties remained stable at 4.75% in the first quarter of 2026. Developments surrounding geopolitical conflicts will influence future market movements. Against this backdrop, an adjustment in yield levels is expected in the course of the year.
Geopolitical conflicts not only undermine the resilience of international supply chains, but also bring issues relating to Europe’s defence capabilities more sharply into focus.
For the logistics real estate market, this means, on the one hand, a noticeable expansion and differentiation of demand profiles, as more new user groups with specific safety, production and environmental requirements are entering the market. German industry is faced with the challenge of anticipating new demand impulses from the defence industry in the short term. This results in increased demands in logistics areas, for example regarding distance areas, hazardous substances and WGK concepts as well as property-specific safety infrastructure. At the same time, investors are confronted with limited predictability of third-party usability and still unclear regulatory frameworks. This further complicates the risk and return assessment of corresponding logistics properties. On the other hand, Asian users are becoming increasingly important in the German rental market. They come from both the e-commerce sector and the manufacturing industry and are looking for space throughout Germany.
Demand is set to rise later this year, as new EU customs regulations for online orders under €150 from third countries come into force on 1 November. As a result, the need for temporary storage space will increase significantly. These developments in the letting market are also being observed by investors.
Accordingly, an increasing number of transactions in specialist property segments, such as research and development properties and cross-dock facilities, is expected over the remainder of the year.
From today’s perspective, these sub-segments offer attractive long-term rental growth potential. At the same time, investors continue to face challenges, particularly due to the creditworthiness requirements of Asian tenants and the limited suitability of certain defence properties for alternative uses.
Prime Yield Industrial & Logistics (in %)
Source: Colliers
A pipeline of grocery properties and broader investor interest are driving the market recovery
In the first quarter of 2026, retail properties were traded for €1.2bn in Germany. This corresponds to an increase of 13% compared to the first quarter of the previous year. In comparison with all commercial properties, retail properties currently occupy second place among the types of use with the highest turnover with a market share of 18%, behind the office segment (26%) and just ahead of industrial and logistics real estate with 17%.
The number of deals increased by 55% yoy, underlining the noticeable revival of market activity. As a result, the average ticket size fell from €25m to €18m yoy.
Transaction Volume Retail (in € bn.)
Transaction Volume by Type of Building (in %)
Source: Colliers
Foreign investors are showing increased interest in food-anchored retail warehouse portfolios
There is a growing sense of momentum in the crisis-resilient retail sector for small-scale, food-anchored retail properties.
Although the portfolio share stood at a comparatively low 21% in the first quarter of 2026, a well-stocked pipeline of attractive local retail portfolios is currently meeting with growing buyer interest. Whilst domestic institutional investors have shaped market activity here for years, there are currently numerous international investors active on the buyer side, who are either operating in Germany for the first time or returning after a prolonged absence.
The largest transaction completed in the first quarter provides an indication of this. The bidders included numerous foreign investors who joined forces with well-known asset managers to form bidding consortia. The contract for the 37 grocery stores sold by TREI Real Estate was ultimately awarded to CEV Handelsimmobilien, a subsidiary of Edeka’s head office.
Specialist stores and retail parks remained by far the retail format with the highest turnover in the first three months of the year. They accounted for 58% of both the transaction volume and recorded sales in the retail sector. Three-quarters and two-thirds of these properties, respectively, have a food retailer as their anchor tenant.
Due to rising demand, gross initial yields for retail parks have already fallen slightly to 5.60% at the high end, whilst retail warehouses are yielding 5.40%.
Growing interest in commercial properties and shopping centres with development potential
The rise in demand for city-centre commercial properties and shopping centres, which has been evident since the second half of 2025, is continuing, despite the lack of large-scale sales arising from insolvencies in Germany’s seven largest investment centres since the start of the year.
Over the past three months, market activity has focused on properties requiring significant refurbishment, with values ranging from €10m to €30m.
In particular, well-capitalised private investors, family offices and property developers can thus capitalize on potential for capital appreciation whilst keeping risk to a manageable level. Price negotiations in this segment remain tough. Returns are under pressure, particularly in the shopping centre sector.
Prime Yield High Street (in %)
Source: Colliers
By far the largest single transaction is the majority sale of the Leipzig shopping center Höfe am Brühl. Around 90% of the shares were transferred to the Czech investor Investika. Apart from the TREI portfolio, this is the only transaction of the quarter in the three-digit million-euro range. Further transactions of this magnitude are currently being negotiated. However, the processes take time.
Whilst highstreet properties accounted for around a third of all transactions, they represented only 15% of the total transaction volume. In contrast, shopping centres accounted for around 27% of the total volume, with a share of only 11% of the number of transactions.
Outlook: Moderate market recovery continues
The retail investment market continues to be viewed positively for the time being, despite the tense geopolitical situation.
Rising inflationary pressures and declining consumer spending is affecting food retail significantly less than many other retail sectors, as was already evident following the outbreak of the Ukraine crisis. This is likely to further bolster demand for stable local retail portfolios, particularly as these are among the preferred investment targets of highly selective banks due to their resilience. Sales of commercial properties and shopping centres in need of refurbishment have long been dominated by investors with strong equity capital due to the scarcity and high cost of debt financing. For the full year 2026, a transaction volume of €6 to €7bn is realistic, assuming the current recovery trend continues at a moderate pace.
Europe is gaining momentum, while Germany remains selective – operator structures as key value drivers in the hotel investment market
In the European context, the hotel investment market is showing signs of significant momentum at the start of 2026. The ongoing recovery in international capital flows into Europe, coupled with rising investor activity, has led to a marked increase in transaction volumes in the first quarter.
In Germany, on the other hand, the momentum remains subdued. With a transaction volume of around €234m, the result in the first quarter was below the long-term average. The decisive factor here is not so much a lack of investment opportunities as a continuing purchase price expectation delta, albeit decreasing, as well as the increased complexity of the assets, especially in the analysis and evaluation of the underlying operator and operating concepts.
Transaction Volume Hotel (in € bn.)
Transaction Volume by Type of Hotel (in %)
Source: Colliers
Operational structures are becoming the focus of the assessment
Operator transformation is currently the key value driver in the market. Investors are no longer focusing solely on buildings, but on scalable, resilient operating models.
The current market movements illustrate a structural change in the valuation of hotel properties. Operators, concepts and contract structures are increasingly shaping the investment decision more than the property itself. Investors are increasingly focusing on the operating revenue logic, on the operator’s creditworthiness and scalability, the contract type and the transparency of CapEx planning. In addition, topics such as cost development, indexation mechanisms and exit flexibility are becoming increasingly important.
Consolidation and new partnership models
At the same time, consolidation within the operator sector continues. Platforms with scalable brands and operators with strong cost and technological expertise are further expanding their market position. Structured partnerships and platform and joint venture models are coming to the fore and are increasingly shaping the market structure.
International investors take a nuanced view of Germany
International capital is once again focusing more closely on the German hotel market, albeit under changed conditions. Germany continues to be perceived as a stable market; at the same time, however, regulatory requirements, labor-intensive structures and more moderate rate levels are leading to a more nuanced assessment of risk.
Investor activity increases – market recovery expected in the course of the year
Nevertheless, there are clear signs of a revival in investor activity.
A growing number of international investors are conducting in-depth analyses of German hotels, employing a variety of strategies and risk profiles. At the same time, an increasing number of Southern European owner-operator structures are exploring market entry or are already implementing it.
For 2026, there are signs of a gradual revival in transaction activity. While Europe is already benefiting from high liquidity and increasing investor activity, ongoing geopolitical uncertainties and volatile developments in other global markets are leading to increased reallocation of international capital. Europe is thus moving more into the focus of international investors as a comparatively stable investment location.
It was already evident in the first quarter that transactions are being structured and executed in an increasingly sophisticated and nuanced manner, particularly in the case of assets facing operational challenges or undergoing restructuring. This suggests that the current phase of price discovery is likely to result in a growing number of concrete deals in the coming quarters.
Complexity calls for integrated transaction advisory services
In this market environment, access to national and international market participants, as well as close links with investors, operators and financial institutions, is a key factor for success.
The focus is on the financial and operational assessment of the assets, in particular the evaluation of risks, the analysis of operator and contractual structures, and the assessment of the viability of the underlying concepts. Particularly in the case of more complex transactions, consistent and robust preparation is crucial for the subsequent course of the process.
Challenging environment and selectivity slow down the residential investment market at the beginning of the year
Transactions with a volume of €2.1bn were registered on the German residential investment market in the first quarter of 2026. This represents a decline of 16% compared to the same period last year and 12% compared to the average quarterly volume in 2025. As a result, investors are acting cautiously and selectively at the beginning of 2026, as they did in 2025. In addition, the market continues to lack large-volume portfolio transactions.
Demand for residential property remains high across all segments and has even risen recently. However, this trend is not currently reflected in transaction volumes.
At the beginning of the year, numerous new capital commitments were made, and investors announced their intention to invest more in residential real estate. This is likely to be increasingly reflected in concrete transactions in the further course of the year. Momentum continues to be subdued at the beginning of this year, as it was in 2025. The increased macroeconomic risks over the course of the quarter reinforced the wait-and-see attitude of many investors. However, the product pipeline is well filled, and numerous transactions are in preparation, so that investment activities are expected to pick up over the year.
Positive trend in single asset transactions, with larger average investment volumes
The results for the first quarter of 2026 are characterized by a very low proportion of portfolio transactions. At 23% of the total volume, this figure has more than halved compared with the previous year. Furthermore, portfolio sizes are declining.
The single-property transaction segment performed significantly better. At €1.6bn, the transaction volume here was 20% higher than the previous year’s figure. The average purchase price per transaction (excluding portfolios) rose to €18m, which was 9% above the average for the whole of 2025.
Furthermore, the total number of transactions increased. In the first three months of the year, 97 sales were recorded, compared with 72 in the same period as the previous year. This makes the first quarter of 2026 the second-best quarterly result in terms of transaction volume since the start of 2025. Overall, the market is very active, though still lacking large-scale deals.
Investment activity is increasingly concentrated in the top 7 cities
Investment activity in the first quarter was significantly more concentrated on the top 7 locations than in recent times.
In total, these markets accounted for around €1.2bn, or 60% of the transaction volume, an increase of 83% compared to the same period last year. Outside the top 7 cities, the transaction volume amounted to €834m, around €1bn lower than in the same period last year.
Berlin (around €622m) was particularly in demand, followed by Hamburg (€343m) and Düsseldorf (€166m). The largest single deal was the sale of the “Neulichterfelde” district development by the Groth Group for around €300m in Berlin. In addition, three further transactions with a volume of over €150m each were registered in Hamburg, Berlin and Düsseldorf.
Market activity in forward deals and projects has risen significantly
At the start of the year, the residential investment market continued to be underpinned by core portfolio properties of recent construction. A positive development is that, for the first time in a while, there was a noticeable uptick in activity regarding forward deals and new projects. These property types accounted for around 44% of the transaction volume, compared with around 30% for the whole of 2025. The more predictable financing environment at the start of the year and the narrower price gap between buyers and sellers have noticeably boosted activity in forward deals and projects.
Seller-side dominated by project developers
On the buyer side, asset managers were the most active with 28% (previous year 25%) and housing companies with 28% (previous year 14%), while the sellers were dominated by project developers and property developers with 44% (previous year 25%).
After sales in the size segment of €15m to €50m led the residential investment market in 2025, sales more than €100m accounted for the highest share at the beginning of 2026 despite the lack of portfolio deals. The share in this segment was 38% or €790m (previous year 33%). Transactions between €15m and €50m represent the second-largest group at €616m (30%) (previous year 37%).
Rental growth continues, but is becoming increasingly varied – yields remain stable
Last year’s strong rental growth continued at the beginning of 2026, with the dynamics between the markets being differentiated.
Compared to the same period last year, asking rents rose by around 3% on average, as did prime rents in the existing segment in the top 7 cities. At the beginning of 2026, the average rents for new lettings for existing apartments in the A cities were 16.85 €/sqm, while prime rents were 24.40 €/sqm. Some cities showed a particularly dynamic rent development. Hamburg, Cologne and Düsseldorf recorded increases in the range of 6 to 7%, while Berlin registered a decline of 3%.
Yields on residential investments remain stable at the start of 2026. For newer existing properties, prime yields in Germany’s top 7 cities remain at 3.85%, and at 4.50% in other locations. At present, we expect yield levels to remain stable for 2026, as residential property offers the highest resilience to crises and underlying demand is very high. However, developments surrounding geopolitical conflicts are currently being closely monitored, as they influence further market movements. Due to the gloomy and tense macroeconomic environment, however, slight increases in yields are also possible in the residential segment over the course of the year.
The continued fundamentally positive sentiment on the investor side is likely to support market activity and have a positive effect.
Forward deals have recently come back into focus and are resulting in concrete transactions. The sustained growth in rents and the renewed rise in demand for newer core portfolio properties is having an overall positive impact on the residential investment market.
Despite an unexpectedly weaker start to the year, demand for residential investment remains high in 2026. Investors see opportunities for a slight recovery this year and are positioning themselves despite the gloomy macroeconomic environment; however, they will continue to act selectively and set clear requirements regarding property quality, location and cash flow. The supply side is likely to remain well positioned, whilst sufficient investment products are available. Due to the renewed rise in financing costs, large portfolio holders will put portfolios up for sale to reduce refinancing risks and lower debt ratios. As a result, an improvement in supply is to be expected. Competition for properties will intensify, and at present, a transaction volume in 2026 of €9m to €10m, in line with the past two years, still appears realistic. However, should the geopolitical situation continue to deteriorate, or tensions persist for a prolonged period, delays in transactions and price adjustments could dampen the market and consequently delay the start of a new cycle.
Capital selectively returns to office and commercial buildings outside the top 7
In Germany, apart from the top 7, office and commercial buildings were traded for €1.9bn in 2025 as a whole. This represents a decrease of 14% compared to the previous year’s figure. The number of transactions decreased by 15%.
Transaction Volume Office/Mixed-Use outside Top 7 (in € bn.)
Transaction Volume by Region (in € m.)
Source: Colliers
Early-cycle recovery is driven by the most liquid markets
The early recovery in the commercial property investment market is proving selective and measured. Investors are returning to office and commercial properties, though outside the top seven cities this is only happening where the location, use and cash flow are convincing in the long term.
Market momentum is primarily constrained by the absence of large-volume transactions. Just under three-quarters of the transaction volume and around 94% of all deals fell into the under €50m category. Only eight transactions exceeded this threshold. The average size of all sales in 2025 was €15m, just under half the figure seen in the top seven markets. The largest transaction was a portfolio of properties at Freiburg’s main railway station, which was sold by Hannover Leasing to a family office in southern Germany for €88m.
This transaction serves as a prime example of what investors prioritize in the current market environment when looking beyond the major national investment hubs. Situated within a macro-location that is economically and demographically well-positioned, this market-defining property occupies a central location. The micro-location opens a broad spectrum of demand, which minimizes vacancy risks in the event of re-letting. At the same time, several long-term leases ensure stable income. A realistic purchase price approach, considering the property’s market conformity, enables the buyer to achieve an attractive, risk-adjusted business case.
North Rhine-Westphalia again regional focus
With €763m or 40% market share, nationally important B cities accounted for the largest investment sum outside the top 7. Dortmund ranks first with just under €150m, followed by Freiburg (€115m) and Darmstadt (€102m). Over a quarter of the transaction volume went to North Rhine-Westphalia. In addition to the Ruhr area cities of Dortmund and Essen, Bonn, which has established itself as a particularly cash-flow-stable market due to a high proportion of public and state-related users, was also among the investors’ favorites.
The market recovery is driven by central locations in B and C cities
The new cycle offers attractive entry opportunities, particularly for well-capitalized investors who do not rely on debt financing when purchasing properties outside the core markets. We expect continued strong buying interest in the coming months, particularly from private investors and family offices operating regionally. Although the top 7 cities remain firmly in the spotlight, particularly for large-scale investments which form the basis of a significant market recovery, prime locations in B and C cities will also benefit from rising demand. However, volume growth will remain moderate in 2026 as well.
Prime Office Yield (in %)
Source: Colliers