BNP Paribas Real Estate publishes figures on the residential investment market for Q4 2025
In the fourth quarter of 2025, the German residential investment market continued its market recovery from the first half of the year with slightly increased momentum. In total, around €8.9 billion was invested in larger residential portfolios of 30 residential units or more in 2025. This was just short of the previous year’s result (by 4%). In view of the completion of the consolidation phase, the improved availability of investment products and the continuing pressure on the rental housing market, an accelerated market recovery and a higher residential investment volume are expected for the current year compared to the previous year. This is the result of the analysis by BNP Paribas Real Estate.
“In 2025, the residential investment volume amounted to €8.9 billion. Residential is thus the asset class with the highest turnover in the German real estate market. The solid result for this market phase and the improved sentiment are reflected in the increased contribution of large-volume portfolios, including those from the value-add segment, as well as forward deals. The market recovery is being driven by the renewed demand for existing portfolios throughout Germany and shows that investors are increasingly realising investment opportunities away from the A-cities,” explains Christoph Meszelinsky, Managing Director and Head of Residential Investment at BNP Paribas Real Estate GmbH. “The registered investment volume picked up again in the final quarter compared to the previous two quarters. This is also visible in an increased transaction frequency, which can be seen as a positive indicator for the market. Despite the continuing weakness of the economy and existing geopolitical risks, the German residential investment market is well supported by the good prospects on the user side and the improved availability of capital. This is reflected in an extensive deal pipeline that will have a significant impact on market dynamics in the coming months.
Size segments up to € 100 million in the range of the long-term average
Large deals with a volume of over €100 million currently account for a third of the total investment volume. Although this is the highest market share, the large-volume segment contributes less to the total volume than the long-term average (53%). In contrast, the size segments up to € 100 million are comparatively lively at a good € 5.9 billion and can also post an investment volume in the range of the long-term average in absolute terms.
Above-average participation in new construction
Forward deals currently account for an above-average share of sales at 29%. Modern existing properties account for a share of 12% (Ø10 years: 6%), which also indicates an increased attractiveness in this segment. This development reflects both the improved access to debt capital in recent quarters and the continued strong demand for new-build properties. Large-volume portfolio portfolios are also currently making an increased contribution to total investment revenue, with a market share of 40%.
Investor base now much broader again
Evidence of the market recovery, which is also gaining momentum across the board, is the high demand from various buyer groups: five buyer groups each account for market shares in the double-digit percentage range or a transaction volume of over €1 billion. Investment/asset managers are the buyer group with the highest turnover at €1.7 billion and have an above-average market share of 19%. It is striking that two buyer groups in particular are recording significant growth: On the one hand, equity/real estate funds are strongly represented with € 1.6 billion (+80% compared to the long-term average). While many buyer groups tend to wait and see in a selective market, they are characterized by a high level of ability to act due to their good equity base and are often able to resolve transactions via more flexible structures. On the other hand, family offices (€1.1 billion, +100% vs. long-term average) are also taking advantage of the opportunity to place their capital cheaply.
The current high market share of foreign investors on the buy-side (33%) can be seen as a positive signal. These investor groups are increasingly taking advantage of the currently favourable and further improving framework conditions to take advantage of attractive investment opportunities in Germany in a targeted manner.
A-cities with relatively low market share of 38%
Last year, A-cities contributed around €3.4 billion or 38% to the total investment volume, significantly less than in the previous year (€5.1 billion). However, this is not due to a dwindling interest, but rather to a lack of high-volume core product in the top cities, which cannot be outweighed by the high number of smaller transactions that are currently being registered. Accordingly, Berlin continues to be the clear investment hotspot as the only A-city with an investment volume in the billions (€1.8 billion).
Prospects
The renewed interest of investors in value-add and forward deals, as well as the significant increase in the number of completed transactions and large nationwide portfolio sales, confirm the ongoing upswing in the German residential investment market. In contrast to the past two years, investments are increasingly being made outside the A-cities. In addition, there is a broad diversification across different sub-asset and risk classes – an indication of the market recovery that is also spreading across the board. This development is particularly noteworthy in view of the continuing weak economy and geopolitical and trade policy uncertainties. The moderate economic upturn forecast for this year, supported by the Federal Government’s investment package, as well as the stabilised and more predictable borrowing costs are likely to clearly outweigh the negative trends and give the German residential investment market an additional boost.
The sustained increase in demand for housing in recent years has been offset by a decline in new residential construction and has resulted in a tense supply-demand relationship on the German residential real estate market. In the top markets in particular, this discrepancy manifests itself in very high rental price dynamics, especially in the new-build segment. It can be assumed that the trend of rising rents will continue, as the supply of housing is still not sufficient to meet the high demand. Consequently, the excess demand on the rental markets is likely to persist in both the short and medium term, which speaks for a permanently high and continuing to increase investor demand. Anglo-Saxon investors in particular have already increasingly positioned themselves as buyers on the German residential investment market in 2025 and continue to show a pronounced interest in the German housing market.
“For 2026, we expect an accelerated market recovery and a significant increase in investment volume. The high level of uncompleted transactions, which has resulted from numerous investment products launched on the market in the course of 2025, makes a significant contribution to this. In view of a well-filled deal pipeline and the expected further portfolio adjustments, we expect the investment volume to be in the double-digit billion range by the end of the year for the first time since 2022,” says Christoph Meszelinsky, summarizing the further outlook.
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