City Survey
Q2 2025
Investment Market
Sentiment on the investment market improves – transaction activity remains subdued
In the first half of 2025, real estate transactions totalled 15.2 billion euros, a decline of 2.0 % compared to the previous year. Commercial property accounted for 10.9 billion euros of this and the institutional residential segment with ten or more residential units for 4.3 billion euros. The residential investment market has passed its lowest point and maintained the activity level of the previous year, while the absence of major transactions and portfolio sales in the second quarter led to a 5.0 % decline in commercial transaction volume.
transaction volume
commercial real estate (-5% YoY)
Transaction Volume in Germany (in bn. €)
Transaction Volume in Germany by Property Type (H1 2025, in bn. €)
Source: Colliers
Ongoing transactions take longer to complete
Following a solid start to the year, the real estate market was able to maintain its momentum in the second quarter. However, the focus of market activity was in the mid-size segment between 20 million and 70 million euros. This size category captured 43 % of the transaction activity in the second quarter, while some ongoing processes of large-volume transactions and portfolios continue to shift into the second half of the year.
Institutional investors remain focused on reassessing their portfolio strategies and implementing measures for portfolio optimization, while international capital is taking a closer look at emerging market opportunities with renewed interest.
Geopolitical and economic uncertainty has had a dampening effect in recent months; nonetheless, value-add investments have continued to gain traction. Particularly in the office sector, a resurgence of value-add investors has been observed since 2024, as they seize market opportunities through countercyclical strategies.
Prime Yield Office (in %)
Source: Colliers
The top 7 markets continue to lack activity in the large-volume segment
The seven major investment hubs continue to show a lack of market momentum in the large-volume segment, as evidenced by the absence of major transactions in the second quarter. Compared to the long-term average of 50 %, the top 7 cities accounted for only 34 % of total commercial transaction volume at mid-year—6 pp below the first-quarter figure. A combination of shrinking deal sizes, relatively high price levels in the core markets, shifting risk appetites, and increased market fragmentation is prompting investors to favour smaller investment volumes with lower entry prices.
Over the past three months, only two transactions in the triple-digit million euro range have been recorded across the top 7 cities.
Berlin leads the ranking with 1.1 billion euros, followed by Munich with 985 million euros and Hamburg with 788 million euros. With the sale of the Steigenberger Hotel am Kanzleramt in Berlin and the Mandarin Oriental in Munich, there were two major transactions in the hotel segment.
Owner-occupiers and asset managers lead the buyer groups, international capital returns
With a share of approximately 23 % each, owner-occupiers and asset managers currently dominate the buyer side, followed by private investors and family offices, who account for just under 16 % reflecting the current market environment. Private investors and owner-occupiers are capitalizing on reduced competition and their long-term investment horizon. Asset managers are primarily investing on behalf of special mandates in the core and core-plus segments, whereas institutional real estate funds remain highly selective (10 %). Pension funds and insurance companies are showing minimal activity (2 %) due to the current interest rate environment and stable real estate allocations. International capital now accounts for a significant 47 % of transaction volume nationwide. The share in the top 7 cities has increased less markedly, reaching 32 %. Among international capital market participants, there are early signs that Germany is once again being perceived as both capable of action and attractive for investment, most notably in the residential sector, but increasingly again in the commercial real estate market as well.
Retail just ahead of office – logistics in third place
Driven by the special situation of a takeover in the retail segment, which was associated with an exceptionally high transaction volume, this sector ranks first among the top-selling types of use by mid-2025 with a market share of around 24 %. Office properties and the industrial and logistics sector follow in second place with a share of 22 % each. At mid-year, the breakdown by asset class reveals an unusual order, driven primarily by exceptional transactions rather than broad-based market momentum. Approximately 76 % of transaction volume stems from single-asset deals, while portfolio transactions, despite a few exceptions in the large-scale segment, account for only 24 %.
Prime yields remain stable across the board – despite interest rate cuts and risk premiums
Prime yields in Germany’s top 7 investment markets were stable across the board in mid-2025 despite the changing interest rate environment.
In the office segment, yields are currently between 4.50 % in Munich and 5.00 % in Dusseldorf and Cologne. Frankfurt am Main continues to remain at 4.95 %, Berlin at 4.90 %, while Hamburg and Stuttgart each stabilized at 4.80 %. Despite the European Central Bank’s eighth key interest rate cut, monetary policy impulses have yet to translate directly into real estate financing. Many investors and lenders remain cautious in the light of economic uncertainty, geopolitical tensions, and regulatory requirements. While long-term benchmark rates such as SWAP rates and yields on 10-year German government bonds have recently ticked up, the EURIBOR has continued its downward trend in the short-term range. Overall, this results in a sideways movement in prime yields with no signs of short-term compression, but also no renewed upward pressure.
gross initial yield office
Real estate market stabilizes – buyer interest increasing but conditions remain challenging
Following a dynamic start to the year partly driven by transaction carryovers from the previous year, market activity eased somewhat over the remainder of the first half. The overall environment remains challenging due to interest rate volatility, geopolitical uncertainties, and restrained lending practices. Nevertheless, there are signs that buyer interest particularly among institutional investors is gradually but steadily returning. Notably, current uncertainties in the United States may increasingly shift the focus of international investors toward Europe and Germany.
Germany continues to be regarded as a safe haven for investments. Following the significant price corrections of recent years, attractive entry opportunities are now re-emerging.
For the second half of the year, which traditionally sees higher market activity, an increase in transactions is expected. Market-stimulating factors such as improved financing conditions or greater regulatory stability could provide additional momentum. Despite these positive signals, we continue to anticipate a full-year commercial transaction volume of below 30 billion euros, likely trending toward 25 billion euros.
Key figures German investment market
| As of Q2 | Germany | Berlin | Dusseldorf | Frankfurt | Hamburg | Cologne | Munich | Stuttgart |
|---|---|---|---|---|---|---|---|---|
| Commercial transaction volume in € million 2025 | 10,914 | 1,140 | 330 | 139 | 788 | 300 | 985 | 60 |
| Commercial transaction volume in € million 2024 | 11,477 | 1,809 | 550 | 551 | 490 | 487 | 1,549 | 162 |
| Change compared to previous year | -5% | -37% | -40% | -75% | 61% | -38% | -36% | -63% |
| Largest group of investors | Corporate/ Owner- occupiers 23% | Private investors / family offices 47% | Private investors / family offices 32% | Project developer 37% | Public sector 48% | Listed property companies 21% | Private investors / family offices 43% | Banks 60% |
| Largest group of sellers | Corporate/ Owner- occupiers 21% | Listed property companies 38% | Project developer 37% | Asset managers (asset / fund managers) 42% | Listed property companies 51% | Listed property companies 44% | Project developer 24% | Asset managers (asset / fund managers) 61% |
| Main property type | Retail 21% | Office 62% | Retail 32% | Office 74% | Healthcare/ social real estate 49% | Office 49% | Office 26% | Mixed-use 67% |
| Prime yield office | 4.90% | 5.00% | 4.95% | 4.80% | 5.00% | 4.50% | 4.80% | |
| Prime yield retail | 5.00% | 5.00% | 4.85% | 4.50% | 5.00% | 4.25% | 4.80% | |
| Prime yield logistics | 4.75% |
Source: Colliers, Data as of Q2 2025
Yields remain stable for German industrial and logistics properties
In the first half of 2025, transaction volume on the German industrial and logistics investment market amounted to around 2.4 billion euros. Compared to the same period last year, this represents a decline of 24 %. The below-average result is primarily attributable to the continued low share of domestic and international core capital with interest in large-scale single-asset and portfolio transactions. Despite this comparatively subdued performance, the industrial and logistics segment remains one of the most sought-after real estate asset classes. It achieved a market share of 22 %, on a par with office properties, putting it in second place, just behind retail (24 %). Moreover, the rising number of single-asset transactions (106 in the first half of 2025 compared to 89 in the first half of 2024) indicates that market activity is still present.
transaction volume I&L
Activity in the investment market for core products remains moderate. Large-scale core transactions exceeding 100 million euros do exist but continue to be the exception. They are almost exclusively pursued as off-market deals or limited tenders.
Based on the recent sale of the Nex Park in Groß-Gerau (Frankfurt/Rhine-Main region) for around 73 million euros, we can see that existing properties in very good locations are also interesting for core investors. The market currently offers mainly products in the core-plus range.
Transaction Volume Industrial & Logistics (in bn. €)
Source: Colliers, 2025 Prognosis
Continued focus on single assets in the core-plus segment
In the first half of 2025, only seven portfolio transactions were recorded (compared to 12 in the first half of 2024). This corresponds to just 12 % of total transaction volume marking the lowest level in the past five years. Approximately 88 % of market activity was driven by single-asset transactions. Despite the relatively subdued market environment and ongoing price corrections, the five-year average for single-asset deals was missed by only 4 %.
Despite a weak first half of the year, interest in German industrial and logistics real estate remains high. Confidence in the German market has returned, especially on the part of foreign investors, due to political stability and economic changes.
While many institutional investors are still in the process of adjusting their portfolio strategies to the new market conditions, others are seizing the opportunity to acquire assets at still-attractive prices. International investors particularly from Western Europe, the Middle East, and East Asia have been notably active. In the core-plus segment, the investor sweet spot has settled between 30 and 50 million euros, while the majority of the few core transactions have traded around the 50 million euros mark. Large-scale single-asset transactions remain rare, with only one deal in Möckmühl exceeding the 100 million euros threshold.
In Möckmühl, ECE Projektmanagement GmbH & Co. KG sold its almost 60,000 sqm logistics property to Axa Investment Managers in the first quarter. Other market-defining single transactions were the purchase of the Dietz logistics property in Raunheim by a special fund of Hines for almost 75 million euros. The few portfolio sales were mainly registered in the first quarter.
Prime yields stable despite volatile financing environment
The gross prime yield for core logistics properties with more than 3,000 sqm was stable in mid-2025.
As financing conditions continue to shift, driven by geopolitical and trade policy tensions alongside further interest rate cuts, the expected revival in leasing market demand has yet to materialize. While there are early signs of shifting trade relationships, suggesting new positive impulses from Asian occupiers, persistent economic challenges are still causing some hesitation in leasing decisions and a slowdown in rental growth. As a result, transactions are taking longer to complete due to more intensive due diligence processes. In the current market environment, investors are also placing greater emphasis on longer lease terms. Overall, we are seeing a well-stocked pipeline of portfolio and large-scale single-asset transactions lined up for the second half of the year. Among the core and core-plus transactions already completed, price discounts have been minimal and are not expected for ongoing deals either. Fast-acting investors will likely have an advantage and benefit from current pricing, leading us to anticipate growing competition through year-end, with yields remaining stable for the time being.
gross initial yield I&L
Prime Yield Industrial & Logistics (in %)
Source: Colliers
Retail real estate remains in the focus of investors, major deals still in short supply
In the first half of 2025, retail properties worth 2.6 billion euros were traded which almost confirms the volume of the same period last year. Compared to other established commercial asset classes, the retail segment recorded a comparable transaction volume at mid-year and currently stands slightly ahead of the office and logistics segments.
retail transaction volume
As in previous years, the food-anchored retail park segment was the focal point of investment activity in the retail real estate sector.
In the first six months, this segment accounted for 73 % of the number of trades and 36 % of the transaction volume. This was also due to the acquisition of four portfolio transactions with 45 local supply properties, which the Canadian asset manager Slate acquired from various sellers for a total of 420 million euros at the beginning of the year.
In the shopping centre segment, it can be observed that owners are increasingly placing products on the market for reasons of portfolio optimization and of refinancing pressure.
At the same time, growing interest from foreign investors is being observed; however, high price expectations on the part of sellers are currently resulting in limited transaction activity. The sale of the Luisencenter in Darmstadt remains an exception and represents a frontrunner within the segment. As price expectations between buyers and sellers gradually align, transaction activity is expected to increase over the next 12 to 18 months primarily for well-performing shopping centres in inner-city locations of attractive major cities. Outside of these prime locations, particularly in small and medium-sized towns, shopping centres are likely to be acquired only by local developers, mainly for repositioning or repurposing. The financing of such structurally challenged assets remains an additional limiting factor.
In the first half of the year, shopping centres accounted for approximately 13 % of total transaction volume, although they represented only around 6 % of the total number of deals. A similar pattern can be observed in the high street segment, which reached a 12 % share of transaction volume during the first six months.
Transaction Volume Retail (in bn. €)
Transaction Volume by Type of Building (H1 2025; in %)
Source: Colliers
Investors with focus on retail parks
In particular, corporates and owner-occupiers as well as asset managers took advantage of buying opportunities in the first half of the year and were particularly active with a transaction volume of around 1.2 billion euros and 866 million euros respectively. Both groups of buyers were thus involved in around three-quarters of all transactions, with a major focus of their investment activity being in the retail park segment.
In the retail park segment, the focus of active buyer groups is primarily on the value-add segment.
Due to the limited availability of assets with significant value-add potential, investors are increasingly shifting their focus to core-plus properties. In the core segment, there is currently less capital available, which is contributing to the stabilization of prime yields.
Both retail parks (5.70 %) and retail warehouses (5.40 %) showed stable gross prime yield over the course of the year. A food anchor remains a central selling point and guarantor of values. Based on these peak values, the yield requirements rise significantly with increasing property size and decreasing food content. In the case of shopping centres, a slight increase in the prime yield to 6.70 % is expected.
gross initial yield on food stores
Increasing momentum in the shopping centres could further boost transaction activity in the second half of the year
The investment market for retail real estate is currently showing multiple facets. In the first half of the year, retail parks and retail centers particularly those anchored by grocery tenants remained highly popular among investors. In contrast, department stores and shopping centers continued to attract limited attention. As a result, the market was characterized by a large number of small to mid-sized transactions, while the number of large-scale sales remained low. However, a revival in the shopping centre segment is expected over the remainder of the year, with this trend likely to continue into the following year. Accordingly, a respectable transaction volume is anticipated for the second half, with full-year results expected to be in line with the previous year.
Prime Yield High Street (in %)
Source: Colliers
Portfolios contribute significantly to a good half-year result in 2025 in the residential investment market
The institutional residential investment segment accounted for a transaction volume of around 4.3 billion euros in the first half of 2025. This is 8 % more than in the same period last year, in which 4.0 billion euros were recorded. At 1.9 billion euros in the second quarter, the result was nevertheless almost 24 % below that of the first quarter. The weaker performance in Q2 is primarily due to a lower number of transactions, with 69 deals recorded compared to 80 in the previous quarter.
transaction volume institutional residential segment
Overall sentiment in the residential investment market remains positive, as evidence by nine large deals, each exceeding 100 million euros.
The largest deal was a residential portfolio in northern and western Germany, sold by the ZBI Group to Net Zero Properties for approximately half a billion euros. These transactions were key contributors to the strong half-year result, with large-scale deals alone accounting for 50 % of the total transaction volume and amounting to €2.2 billion. At the same time, every second transaction fell within the 10 to 50 million euros range, pushing the average deal size up to 28.9 million euros. By comparison, smaller deals under 10 million euros still dominated in the previous year, with an average deal size of 24.4 million euros. The largest transaction in the first six months of 2025 was the sale of 8,000 residential units by Union Investment to In-West Partners for around 750 million euros.
Investment focus shifts to locations outside the top 7 cities and on portfolios
While the focus of investments was still on A-cities last year, market activity is increasingly shifting to metropolitan regions and other major cities.
Only 19 % or 818 million euros were accounted for by the A-cities. Within the top 7 cities, Berlin (322 million euros), Dusseldorf (149 million euros) and Munich (142 million euros) were the preferred investment destinations. In addition, portfolio transactions played a key role in revitalizing the residential market. Portfolio transactions accounted for 55 % of investment volume (previous year’s period: 43 %). In the second quarter alone, portfolio sales in the residential segment accounted for €1.2 billion, approximately 62 % of investment volume, providing a significant boost to the overall German investment market.
Stable yields and high investor interest
On the investor side, interest continues to be primarily focused on existing properties, but demand for forward deals, portfolios and student housing is also increasing.
The ECB’s interest rate cuts have had a positive impact on the market, inflation has eased toward the 2-% target, and overall investor sentiment is largely optimistic. Investors view the new federal government’s “housing construction turbo” positively, particularly its focus on simplified and significantly faster planning and permitting processes, support for serial construction, and the introduction of simplified building types. In contrast, the extension of the rent cap is viewed more critically.
Demand for residential real estate remains high. The positive market sentiment is reflected by increased activity since the beginning of the year. Behind the scenes, we are observing particularly strong momentum, evident in a growing number of pitches, valuations, and investor inquiries. Investors are especially focused on large-scale existing portfolios, but also on value-add properties and core-plus assets. Institutional investors and private equity funds are among the most active buyers. At the same time, we are seeing an increase in sales from open-ended funds and project developers. In the first six months of 2025, yields have continued to stabilize for both existing and newly built residential properties. Yields on existing properties in the top 7 cities are stable at 3.85 %, and at 4.50 % in other locations outside the top 7.
return in the top 7, 4.50 % in other locations
Rental growth continues, albeit with slightly reduced momentum in some cases
The strong rental growth of recent years has continued into 2025. Compared to the same period last year, asking rents in the existing housing segment in Germany’s A-cities rose by around 4 %, while rents in the new-build segment increased by 6 %. In the existing segment, this marks a slight deceleration in growth rates after a prolonged period of sharp increases. Average rents for newly let existing apartments in the A-cities now stand at €16.45 per sqm, while new-build apartments average €21.80 per sqm. Several cities experienced particularly dynamic rental growth over the past 12 months: Hamburg and Frankfurt each recorded increases of 7 %, while Dusseldorf rose by 6 %. Munich continues to lead in rental price levels, with €25.00 per sqm, followed by Hamburg at €22.40 and Frankfurt at €21.40.
Demand for rental apartments increased again in the first half of 2025 compared to the same period last year. However, it is no longer as high as it was in 2023 and 2024, when migration in particular drove demand.
Even though rental prices have recently shown slightly slower momentum in some cases, we continue to expect sustained rental growth – especially in the top 7 cities. This is due to the ongoing low level of new construction activity, which is likely to remain subdued for the time being despite the government’s “housing construction turbo” initiative.
Due to the expected further demographic growth, especially in the large cities, demand will remain high in the future – in the overall context, rents can therefore be expected to continue to rise.
High market activity expected in the second half of the year
The positive sentiment on the investor side is likely to keep market activity high. Portfolios, forward deals and value-add portfolios continue to remain focused.
The 500 billion euro special fund for infrastructure and residential construction may temporarily dampen investment due to rising capital market interest rates and more expensive real estate financing. However, in the long term, it would have a stabilizing effect on the residential property market. International developments could also have a noticeable impact. U.S. trade policy, for example, could worsen sentiment by imposing new tariffs that drive up construction material costs, slow economic growth, and reignite inflation.
Against this backdrop, market sentiment remains positive overall despite uncertainties, as it is driven by continuous rental growth and strong demand for existing properties. We expect the year to continue to develop positively and consider a transaction volume of up to 12 billion euros possible.