City Survey
Q3 2025
Investment market
Investment market gradually emerging from transformation phase towards recovery
In the first three quarters of 2025, real estate transactions in Germany totaled €23.7bn, of which €17.2bn were attributable to commercial properties and €6.5bn to the institutional residential segment (assets with ten or more units). The slight 2% decline in total transaction volume compared to the same period last year was primarily driven by the residential sector, where volumes fell 7% yoy, while the commercial sector matched its nine-month result from 2024.
In Q3, the commercial real estate market recorded its strongest three-month performance of the year, with a total transaction volume of just under €6.3bn. The number of transactions between January and September increased by 5% yoy, which, given the stable overall volume, suggests that there has been no significant shift toward larger deal sizes. As in the previous year, 90% of all transactions occurred in the sub-€50m segment. The volume share of this segment, however, rose by six percentage points to 48%, indicating continued investor focus on smaller lot sizes.
The investment market remains in a transformation phase in which institutional investors facing a range of complex and rapidly evolving geopolitical and economic dynamics. The persistent uncertainty is still evident in the absence of large-scale transactions.
However, confidence in real estate investments is gradually returning, as reflected in the latest results of the Property Climate Index, which show improvements across nearly all asset classes. The continued movement toward the 100-point threshold, representing positive market sentiment, reinforces the view that the foundation for a gradual recovery in market activity is now being established.
Transaction Volume in Germany and Office (in € bn.)
Transaction Volume in Germany and Office (in € bn.)
Source: Colliers
Commercial sector seeing pivotal transactions and strategic market placements
Further evidence of a gradual market recovery can be seen in several notable benchmark transactions observed recently. Since the beginning of the year, more than half of the 25 deals valued at €100m or more, accounting for 42% of total transaction volume, were completed in Q3.
The largest transaction Iin Q3 was the Helix portfolio, comprising twelve logistics properties from the German Logistics Fund, which was sold by Nuveen and Palmira to U.S. investment firm Starwood Capital for approximately €350m. Another notable single-asset transaction, completed after an extended sales process, was the Gropius Passagen shopping center in Berlin, which changed hands for around a quarter of a billion euros, acquired by UK-based investor Hayfin Capital. These major deals helped logistics assets maintain their position as the second most sought-after asset class, accounting for 23% of total transaction volume, while retail properties ranked third with a 22% share.
Office properties regained their leading position, accounting for 24% of total transaction volume. With the sales of Berlin’s Edison-Höfe and Hamburg’s Atlantic Haus, at least a few mid–three-digit million-euro transactions were recorded in the top 7 markets. However, in the absence of major landmark deals, the combined market volume of the seven major investment hubs remained below average, representing only 38% of total transactions nationwide.
Investors are increasingly realizing that the current market phase offers highly attractive conditions in terms of availability and pricing in the core segment, arguably more favorable than at any time in recent years. The growing interest in prime trophy assets, such as the Opernturm in Frankfurt, reflects this shift in sentiment.
Notably, foreign investors are the ones most actively recognizing these opportunities, viewing the German market environment far more positively than many domestic investors.
Foreign capital accounts for 44% of the transaction volume, and in the category above €100m, the figure is as high as around two-thirds. There is also support for a return of core investments from the financing side. Although financing options and conditions remain limited overall, selective competition between banks can be observed in the financing of crisis-proof products.
Prime Yield Office (in %)
Source: Colliers
Operator-led properties are increasingly in demand as investments
A notable trend is the elevated share of healthcare and hotel assets, each accounting for 8% of total transaction volume, well above their long-term averages. In the care sector, ongoing consolidation among operators, driven by rising cost pressures, continues to fuel mergers and acquisitions. Meanwhile, in the hotel segment, Germany’s strong market fundamentals, including record overnight stays and rising occupancy rates, are a key factor behind the growing number of transactions. Two major deals exceeding €100m were recorded. The acquisition of 22 facilities from the insolvent Argentum care group and the Keystone hotel portfolio. Despite these portfolio transactions, portfolio deals as a whole remain subdued, accounting for just 24% of total investment volume.
Asset managers re-engage more actively in the transaction market
Asset and fund managers have become increasingly active again on behalf of institutional real estate investors, capturing a 24% market share and thereby surpassing corporates and owner-occupiers (18%) as well as private investors (16%) to become the most prominent buyer group. On the seller side, the market is dominated by project developers (19%), followed by corporates and owner-occupiers (18%) and asset and fund managers (17%).
Prime yields remain stable, further yield increases expected in the non-core segment
The gradually changing yield and interest rate environment has had no impact on prime property yields over the past three months. In Germany’s top 7 investment markets, prime office yields remain between 4.50% in Munich and 5.00% in Düsseldorf and Cologne. Instances of yields falling below the 5% mark are typically associated with equity-strong private investors. Selective financing conditions and elevated borrowing costs are expected to further constrain the financing of non-core assets, leading to additional price corrections. Moreover, high construction and CapEx-costs continue to weigh on investment strategies in the existing building stock.
Outlook: Transaction volume expected to match previous year’s level without year-end rally
The real estate market is showing signs of stabilization, with transaction activity consolidating at last year’s level. As a result, a year-end forecast of approximately €25bn in transaction volume for the commercial real estate segment appears realistic.
Even a stronger Q4 is likely to have only limited impact, as some transactions from the replenished deal pipeline in the top 7 markets may still close before year-end. However, given the prolonged negotiation processes, it remains difficult to predict the likelihood, timing, or pricing of upcoming completions with confidence.
Moderate economic forecasts are unlikely to stimulate long-term investment decisions at this stage. While gradual progress toward market recovery is expected through 2026, there are no clear signs yet of a pronounced cyclical upswing.
Key figures german investment market (as of Q3)
| Germany | Berlin | Dusseldorf | Frankfurt | Hamburg | Cologne | Munich | Stuttgart | |
|---|---|---|---|---|---|---|---|---|
| Transaction volume commercial 2025 (in €m) | 17,162 | 2,097 | 470 | 331 | 1,431 | 699 | 1,435 | 144 |
| Transaction volume commercial 2024 (in €m) | 17,085 | 2,389 | 670 | 1,059 | 794 | 820 | 2,052 | 369 |
| Change yoy | +0% | -12% | -30% | -69% | +80% | -15% | -31% | -61% |
| Largest investor group | Asset / Fund Managers 24% | Asset / Fund Managers 47% | Private investors / Family offices 29% | Asset / Fund Managers 45% | Public sector 27% | Private investors / Family offices 52% | Private investors / Family offices 39% | Open-ended real estate / Special funds 27% |
| Largest seller group | Project developer 19% | Asset / Fund Managers 32% | Project developer 40% | Listed property companies 29% | Listed property companies 41% | Project developer 55% | Private investors / Family offices 24% | Asset / Fund Managers 28% |
| Most active property typ | Office 24% | Office 51% | Office 34% | Office 83% | Office 39% | Office 75% | Office 29% | Mixed-use 65% |
| Prime office yield | 4.90% | 5.00% | 4.95% | 4.60% | 5.00% | 4.50% | 4.80% | |
| Prime retail yield | 5.00% | 5.00% | 4.85% | 4.50% | 5.00% | 4.25% | 4.80% | |
| Prime logistic yield | 4.75% | |||||||
| Prime hotel yield | 4.70-5.50% |
Source: Colliers
Increasing portfolio activity drives solid performance in the industrial and logistics sector
The industrial and logistics real estate market achieved a transaction volume of €4.0bn over the past nine months, representing an 11% decline yoy. Compared with the ten-year average, the decrease amounts to 16%. This below-average result is largely due to delays in investment processes, often caused by extended exclusivity periods resulting from more intensive due diligence phases. On a positive note, despite these delays, a number of transactions were successfully completed between June and September, making Q3 the strongest of the year with a total volume of around €1.6bn. Within the overall investment market, the industrial and logistics segment continued to demonstrate solid performance, accounting for a 23% market share and ranking as the second most active asset class after offices, underscoring sustained investor interest in the sector.
The overall investment market remains in an ongoing transformation phase. Global geopolitical and economic developments continue to pose challenges for investors across all segment types, including weakened demand and rising vacancy. At the same time, there is a noticeable increase in market momentum and strong investor interest in German industrial and logistics real estate.
Both portfolio transactions and large-scale core deals exceeding €100m are once again being brought to market and successfully placed with buyers. In terms of asset types, there is a growing focus on specialized industrial properties, assets designed for specific uses such as cross-dock facilities, temperature-controlled warehouses, and industrial outdoor storage (IOS). These are becoming increasingly attractive to investors seeking resilient and niche segments. For example, in Q2, Branicks Group successfully sold an IOS portfolio to a French specialist fund, highlighting renewed activity and confidence in this segment.
Transaction Volume Industrial & Logistics (in € bn.)
Source: Colliers, 2025 Prognosis
Portfolio sales to special funds dominate the summer market
Driven by several major deals in Q3, the share of portfolio transactions rose to 30% of total volume. Among the most significant portfolio sales was the Helix portfolio, comprising 12 logistics properties, sold by Nuveen and Palmira to U.S.-based investment firm Starwood Capital. Another market-shaping transaction was the sale of the Urban Logistics portfolio, consisting of 11 assets, to Highbrook’s CityLink platform, also backed by U.S. capital. In the single-asset segment, two large-scale deals stood out: a specialized industrial property owned by an automotive manufacturer in the Ingolstadt region was sold for over €130m to an Israeli pension fund, while a newly developed logistics property by Garbe in the Leipzig logistics region changed hands for more than €120m.
Interest in portfolio transactions is particularly strong among new international players seeking to increase their allocation to the industrial and logistics segment. At the same time, seed portfolio acquisitions are currently especially attractive, as sellers are unable to command portfolio premiums in the current market environment.
Furthermore, the German market continues to stand out in the global context for its political stability and ongoing economic investment, such as the special investment fund introduced by the new federal government. Both factors are viewed particularly favorably by international investors.
By the end of Q3, the largest buyer group, accounting for around 31% of total transaction volume, consisted of open-ended real estate and special funds, followed by asset managers with a 17% share. The majority of these investor groups were backed by international capital, bringing the share of foreign investment to 59% of total transaction volume after nine months. European investors represented the largest source of capital, contributing nearly one-third of total international inflows.
For foreign investors, the notably higher momentum in the leasing market is a key consideration. New market trends and government support programs, such as the special infrastructure investment fund and the boom in the defense industry, are expected to provide positive impulses for leasing activity going forward.
The resurgence of leasing activity among e-commerce companies currently represents the most defining trend in the market. However, the biggest challenge for investors lies in the flattening rental growth rates. The prime rental increases seen during the boom years of 2020 to 2022 are no longer achievable under current market conditions. The trend toward shorter lease terms in the leasing market has become a key discussion point for core investors. While occupiers increasingly opt for leases of three to five years, core investors continue to prefer long-term commitments of around ten years. Nevertheless, the German industrial and logistics property market still offers specialized asset types such as industrial outdoor storage (IOS) and cross-dock facilities, which typically feature above-average lease lengths and “sticky tenants.” These tenants tend to remain in place longer due to the built-to-suit (BTS) nature of the properties and the high customization and fit-out costs involved. The rising parcel volume, expected to increase by 2.4% yoy according to the German Parcel and Express Logistics Association, is further driving demand for cross-dock properties. In the medium term, government infrastructure investments financed through special-purpose funds are expected to stimulate additional demand for open and development land from occupiers.
Prime yields remain stable
The prime gross yield for core logistics properties larger than 3,000 sqm has remained stable since Q1 2024.
Yields for industrial and logistics properties have been moving sideways for the past 18 months. Starting next year, a potential yield compression appears realistic, driven by increasing market momentum
For many owners with holding periods of five to ten years, the current environment presents an opportunity to sell with the goal of locking in returns. These transactions are meeting buyers focused on portfolio expansion, who are simultaneously taking advantage of attractive pricing levels in the German market to advance their allocation strategies. While a more active Q4 is expected, the annual result is likely to come in slightly below last year’s level. However, based on the current transaction pipeline, the market is well-positioned for a strong and lively start to 2026.
Prime Yield Industrial & Logistics (in %)
Source: Colliers
Interest in large-scale assets reawakens, but the retail park segment remains the key market driver for now
In the first three quarters of 2025, retail properties in Germany recorded a transaction volume of €3.8bn, matching the level of the same period last year, as already observed at mid-year. With a market share of around 22%, the retail sector ranks as the third-strongest commercial property segment, following office (24%) and industrial & logistics (23%), with only a narrow margin separating the three asset classes.
Market recovery driven by large-scale single-asset transactions
An analysis of the quarterly results shows a noticeable market revival over the past three months compared to the first half of the year. After two quarters with a similar number of deals, the number of transactions increased by 45% in Q3.
Between July and September, total transaction volume reached €1.3bn, falling only slightly short of the previous quarter’s level. Even without the one-off impact of a major corporate acquisition. In Q2, over half of the total volume was generated by XXXLutz’s acquisition of more than 120 Porta furniture stores, marking the largest retail transaction of the year.
At the same time, there is rising investor interest in centrally located urban assets, particularly in prime high-street locations. This trend could continue in the coming months, as growing refinancing pressure on sellers coincides with buyers’ perception of favorable market opportunities, leading to more completed transactions.
In addition to equity-strong domestic private investors, foreign investors are increasingly taking advantage of the current window of opportunity. In fact, international capital accounts for 56% of all retail transactions, significantly above the 44% average across all commercial real estate segments.
Three major inner-city deals recorded in Q3
Three out of four single property transactions in the range of €100m to €250m registered since the beginning of the year were signed in Q3. These are the “Gropius Passagen” shopping centre in Berlin, the former Karstadt department store “Alsterhaus” in Hamburg and the “Sporthaus Schuster” in the city of Munich. The fourth property, the Designer Outlet Berlin in Wustermark, was sold in Q1.
In view of the above-mentioned transactions, there were noticeable shifts in the distribution of investment volumes among the three major retail business types. Shopping centres increased their market share from 13% to 20% within three months, high street properties, which also include department stores, from 12% to 21%. Despite the relative decline in share, the market continues to be dominated by the retail warehouse segment, which has a market share of 59% in the period from January to September. Apart from the aforementioned Porta takeover, food-anchored specialist stores and retail parks still accounted for around half of the retail warehouse-related transaction volume. The share in the number of transactions is around three quarters.
Small-scale trade with local suppliers will continue to be a central pillar of transaction activity for the time being. Since the turn of the year, retail companies have been selling parts of their branch portfolios in order to raise capital for future-oriented expansion.
The numerous parcel sales by Aldi Nord are just one example. On the investor side, the focus is primarily on buying opportunities with value appreciation potential, while they are still cautious about investments in the core segment. At the same time, some retailers also act as the highest bidder in order to secure good locations for competitive reasons.
Three buyer groups account for 82% of the transaction volume
In line with the market developments outlined above, three buyer groups account for over 82% of the current investment volume. Behind asset and fund managers (37%), corporates and owner-occupiers are the second-largest buyer group (29%). Equity-rich private investors follow in third place with 16%. Institutional investors such as open-ended real estate and special funds, insurance companies and pension funds remain scarce. On the seller side, corporates and owner-occupiers rank first with 29%, followed by asset and fund managers in second place with 21%.
Transaction Volume Retail (in € bn.)
Transaction Volume by Type of Building (in %)
Source: Colliers
Prime yields remain stable
Despite the above-mentioned deals, the number of transactions of commercial buildings in prime city centre locations and highly frequented shopping centres remains low. In the top locations of the seven major investment hubs, gross initial yields range from 4.25% in Munich to 5.00% in Berlin, Dusseldorf and Cologne. Prime yields of shopping centres are to be set at around 6.70%
In the retail warehous segment, the stabilization of prime yields continues. Since the beginning of the year, they have remained unchanged at 5.70% gross for retail parks and 5.40% gross for retail warehouses. A food anchor remains a central selling point and guarantor of value. Based on these peak values, the yield requirements increase significantly with increasing property size and decreasing food content.
Outlook: Annual financial statements at least achievable at previous year’s level
Over the coming months, retail property transaction volumes are expected to increase gradually, supported by reviving investment activity in shopping centers and large-scale high-street retail assets.
For the full year 2025, reaching the €5bn mark achieved in the previous year appears realistic. The pipeline of assets and projects currently under negotiation — some originating from the insolvency estates of major portfolio holders and developers — remains well stocked. However, predicting marketability and closing timelines remains challenging, given the ongoing protracted price negotiations. Outside the core segment, high price discounts continue to limit transaction volumes, while financing availability and costs remain restrictive. Encouragingly, recent surveys indicate an improvement in sentiment among both retailers and investors, particularly regarding future investment prospects in the retail property sector.
Prime Yield High Street (in %)
Source: Colliers
Hotel investments continue recovery – Q3 marked by portfolio deals
In the first nine months of 2025, a transaction volume of around €1.3bn was recorded on the German hotel investment market. This was a significantly better result than in the same period of the previous year (€915m). The market thus continued its recovery and recorded its highest nine-month figure since the interest rate turnaround in spring 2022.
Pricing levels in the hotel asset class have stabilized over the past several quarters. The most resilient, ESG-compliant core assets represent the top tier of the market, achieving a prime gross yield of 4.70%.
This solid foundation is also reflected in the Q3 performance. Although investment volume in Q3 2025 reached €487m, slightly above the previous year’s figure (€480m), it marked an 11% decline compared to the strong Q2 2025 (€546m).
Hotel investment market strengthens its position
The hotel investment market significantly strengthened its position in the first nine months of 2025. With a current share of 8% of the total commercial investment volume, the hotel sector is clearly above the level of the pandemic years (around 3%) and also above the long-term annual average of around 6% before the interest rate turnaround. This underlines the fact that hotels have once again become significantly more important to investors.
Large-scale transactions have characterized the market so far in 2025
In the first nine months of 2025, transaction volume rose by 44% and the number of deals by 33% compared to the previous year, indicating strong demand for large-scale transactions. In Q3, total volume declined slightly by 11%, while the number of transactions surged by 72%, indicating a short-term uptick in smaller deals. Nevertheless, large-scale transactions have continued to dominate the market throughout the year.
A key driver of the market recovery was the Keystone portfolio, valued at over €100m comprising 17 hotels under the ibis and Mercure brands. The average deal size was approximately €16m, with several smaller transactions below €10m. Another notable trend is the geographical shift in investment activity. In Q3, the focus of transactions increasingly shifted to locations outside the top seven cities, particularly in the wider metropolitan area and the surrounding areas of established large cities. This development highlights the growing diversification of investor strategies within the hotel investment market.
Owner-occupiers from germany dominate on the buyer side
The most active buyer group so far this year has been owner-occupiers, who account for 45% of the market and are investing primarily in 3- and 4-star hotels. Boarding houses are also a popular type of use within the hotel segment, accounting for 19% of the market. The high proportion of German investors on the buyer side is striking, accounting for 68% of the transaction volume. Demand is mainly concentrated on core and core-plus properties, while value-add strategies continue to be pursued selectively
Transaction Volume Hotel (in € bn.)
Transaction Volume by Type of Hotel (in %)
Source: Colliers
Outlook: Strong year-end business thanks to conversion projects
Conversions remain a key growth driver in the hotel market. Major hotel chains are increasingly aligning their expansion strategies with the conversion of existing properties, particularly vacant office buildings, which offer significant potential for creating additional hotel capacity.
The now stabilized interest rate environment provides a solid foundation for renewed investment activity. Several large-scale transactions and portfolio deals are currently in preparation, indicating the potential for a strong year-end performance. This trend will continue to shape the hotel investment market in the coming years.
Prime Yield Hotel (in %)
Source: Colliers
Stable residential investment market in Q3
The German residential investment market remained stable in Q3. Within the institutional residential investment segment, total transaction volume reached approximately €2.2bn, representing an increase of around 13% compared to the previous quarter. This represents an increase of around 13% compared with the previous quarter. The transaction volume for the first nine months of the year thus totals €6.5bn, which is around 7% below the result for the same period last year.
With 83 transactions, Q3 was the most active so far this year. Single asset deals dominated, accounting for over 87% of the transaction volume, while portfolio transactions accounted for only 13%. The average deal size stood at approximately €27m.
Large deals worth over €100m are gaining in importance
Ten transactions, each worth over €100 million, together reached a volume of around €3 billion and accounted for more than 40% of the total result for the year to date. In addition, deals between €10m and €50m accounted for just under 39%. Three large-volume transactions in Q3 generated a total of around €710m, approximately one third of quarterly turnover.
Investment focus shifts back to top 7 cities
While investment activity until the middle of the year was still predominantly concentrated outside the top 7 cities, these markets regained investor attention in Q3. With a transaction volume of approximately €1.1bn, the seven largest cities accounted for around 49% of the total investment volume. Berlin once again leads the ranking with around €620m, followed by Munich (€157m) and Cologne (€119m).
Yields stable and investor sentiment remains positive
Investors continue to focus on existing properties. At the same time, transactions in the student housing, furnished apartments and forward deals segments have increased significantly in recent months. Interest rate cuts by the ECB, moderate inflation and high demand for housing are having a positive impact on investors’ decisions to embark on new projects.
Q3 showed a slightly positive market trend with increasingly high-quality products in the core and core+ segments. Demand for residential property remains high, particularly as investors are focusing more on types of use outside the commercial property segments. Yields have remained stable so far in 2025. For existing properties of recent construction, these average 3.85% in the top 7 cities and 4.50% in other locations.
Rental dynamics slows down – existing rents rise again
The rental growth of recent years is continuing, although momentum has slowed slightly in recent quarters. Compared with the same period last year asking rents for existing flats in the top seven cities have risen by around 5%, while rents for first-time lets in the newbuilt segment have increased by 3%. This means that existing properties are once again recording significantly stronger growth than new builds. This development can be explained primarily by increased demand for existing apartments coupled with limited supply. In addition, there has been a noticeable decline in new construction activity, which is further increasing pressure on existing properties and causing rents in the existing segment to rise more significantly.
Outlook: Market activity picks up towards the end of the year
The market remains dynamic overall. The positive sentiment among investors is likely to support activity in the coming months and provide additional momentum at the end of the year. In addition to existing properties, investors are focusing on forward deals and new construction projects as well as types of use in the micro-living segment.
Restrictive lending by banks and the uncertain macroeconomic environment will remain challenging. Nevertheless, strong year-end business is expected, which should contribute significantly to the overall result between €9bn and €10bn.