BNP Paribas Real Estate publishes market figures for Q2 2025
The office investment markets closed the first half of the year with an investment volume of just under €2.7 billion. The very good start to the year, which also saw the sale of the Upper West in Berlin, was followed by a somewhat quieter second quarter, so that in total there is an increase of a good fifth compared to the same period last year. This is the result of the analysis by BNP Paribas Real Estate.
“Core and core-plus assets continue to be the focus of investors. Together, they are responsible for around 80% of the volume. The investors are not only focusing on the A-locations. Attractive office properties with a good tenant profile in A, B and even C cities are also in demand. This is underlined by the fact that these locations are reporting sales growth at a similar rate to the large metropolises,” says Franc Gockeln, Managing Director and Head of Office Investment at BNP Paribas Real Estate GmbH.
The portfolio segment is still underrepresented in the latest results. So far, the transaction volume has only been based on individual deals. On the other hand, transactions are becoming somewhat larger on average: After the average volume per deal amounted to around €20 million in the same period last year, it is currently slightly higher at €24 million.
The sideways movement in prime yields also continued in the office segment in the second quarter. Accordingly, the average net prime yield across all A locations remains unchanged at 4.36%, with Munich being the most expensive location at 4.20%, followed by Berlin and Hamburg at 4.25% each. It is followed by Cologne and Stuttgart with 4.40%. Bringing up the rear and cheapest A locations are currently Frankfurt and Düsseldorf with 4.50%.
In the current market environment, no uniform development in office investments can be observed for A-locations, which is due in particular to the presence or even more so the lack of an attractive investment product. Thanks to the Upper West (around €400 million), Berlin was able to almost double the previous year’s figure to around €750 million, and Munich also achieved its best result since 2023 (+129%) with €530 million, supported by the sale of Rosenheimer Straße 139. Unusually strong, but without the help of deals over €50 million, Cologne follows in third place with around €160 million. Hamburg (€150 million; -24%) and Frankfurt (€130 million; -75%) are unable to match the previous year’s figure, nor are Düsseldorf (€70 million; -69%) and Stuttgart (€60 million;
-19 %). The distribution of sales by size class is very balanced. The four categories between €10 million and €≥100 million account for very similar contributions between 22% and 24%.
Even though investment volumes are far from their long-term averages, the markets are experiencing a slow and steady recovery. The extent to which this will manifest itself further in the second half of the year and result in higher investment volumes depends on various factors. For example, the development of the office investment market is significantly shaped by national and international framework conditions, the dynamics of which can hardly be predicted validly at present. These include the announced tariffs by the USA and a fundamentally uncertain geopolitical environment, which are having a negative impact on the global economy and investment markets. In our baseline scenario, we assume that the German economy will pick up supported by the special fund, that trouble spots will not escalate further, and that rational solutions to the customs problem will be found.
Despite all the uncertainties, the fact that real estate is regarded by many investors as a comparatively crisis-proof asset class, especially in difficult times, and that a significant price correction has taken place, especially for office properties, speaks for a significant increase in transaction dynamics on the office investment markets. They are now among the best-yielding asset classes and offer investors attractive opportunities. The office letting markets continue to be robust with rising rent levels across the board. In the premium segment in particular, further rental price growth is likely to be extensive.
“Overall, the signs point to a noticeable revival in the German office investment market in the second half of the year. The pipeline is well filled and there are several transactions in the market that, if successfully completed, should send positive signals to the market in the summer months. Furthermore, increasing investor interest can be registered across the board. As soon as demand for adequate products is increasingly met again, especially in the core and core plus segments, which are primarily in demand, transaction momentum should pick up significantly. In the case of prime yields, there are signs of a continuation of the sideways movement,” explains Franc Gockeln.
