DIP partner Aengevelt Immobilien analyses the consequences of the 16th coordinated population projection for various asset classes, which has just been presented. Despite a slight nationwide population loss, there is still a housing shortage in numerous large cities for decades. However, the demand for office space will fall due to the decline in the number of people of working age. Retail properties are burdened by the sharp increase in the number of pension recipients and rising duties and taxes. On the other hand, the growing number of older people and especially the very elderly creates opportunities for senior, care and healthcare properties.
Since 1966, the Federal Statistical Office, together with the statistical offices of the Länder, has been compiling coordinated population projections, which are continuously updated. The 16th projection, which was presented on 11 December 2025, replaces the previous projection from 2021. The projections are model calculations that are made on the basis of different forecast variants on the most important parameters of demographic development: birth rate, life expectancy and net migration. Although some of these parameters (in particular net migration) are dependent on unforeseeable events, it is most likely that a combination of the middle variants of these assumptions will occur.
Overall population decline, but further growth in A and structurally strong B and C cities.
According to the medium variants, the nationwide population is to fall by 2.4% from the current 83.4 million to 81.4 million by 2040 and by 4.7% to 79.5 million by 2050. There will continue to be regional differences. For example, the population is expected to decline by only 0.6% in Bavaria by 2040, by 1.0% in Baden-Württemberg and by 1.3% in Hesse, and by as much as 10.4% in Saxony-Anhalt. In contrast, the number of inhabitants in Berlin is expected to increase by 1.2% by 2040 and by 1.3% in Hamburg. Apart from the city-states, the coordinated population projection does not make any statement about individual cities. However, Aengevelt Research assumes that the number of inhabitants in all A cities as well as in the structurally strong B and C cities will continue to grow at least until 2050, while rural areas and structurally weak cities will decline in population.
Different effects depending on the asset class.
Depending on the asset classes, demographic developments and the associated structural changes in the population have different effects:
Demand for housing continues to grow.
The demand for housing does not depend on the number of inhabitants, but on the number of private households. As the average household size continues to decline in view of demographic developments, the number of housing requirements in most cities will continue to increase for the foreseeable future, even in places where the number of inhabitants is expected to fall slightly. According to Aengevelt, the housing shortage will therefore accompany the big cities for decades to come, especially since even after several changes of government, there is still no determination to effectively and sustainably improve the framework conditions for housing construction.
Office.
For the Office asset class, it is relevant that the number of people of working age (20 to 67) will fall by around 12% by 2050, with the sharpest decline already taking place in the next ten years, when the baby boomers retire and can no longer be replaced by the younger generation. In addition to working from home, general economic development and relocations, a significant decline in demand for office space can therefore be expected from demographic developments alone, even if there is still moderate net immigration of people of working age.
Mirroring this, the number of residents of retirement age will increase by around 25% over the next ten years. For the social security systems, which are still largely financed on a pay-as-you-go basis, it will be dramatic that the old-age dependency ratio will rise by 36% over the next ten years, from the current 33 pensioners per 100 employed persons to 45. The governing coalition has just decided to keep the pension level largely stable by closing the financing gap through increasing federal subsidies. According to Aengevelt, this will not be enough and will also cause tax increases sooner or later. After all, the active pension represents a start to postponing the retirement age, which is the most effective measure against the increase in the old-age dependency ratio, because it acts on the numerator and denominator at the same time.
Retail.
For the retail trade, these are sobering prospects. Ageing alone will weigh on sales development, because pensioners consume significantly less than those in employment. Reduced benefits, which may occur in several branches of social protection, and refinancing through rising taxes will also weigh on available purchasing power. The demographic development will further accelerate the trends that have already been observable for decades towards a reduction in the number of profitable retail locations, the partial displacement of brick-and-mortar retail by online retailing and the structural change of the retail trade.
However, the sharp increase in the number of younger pensioners also represents an opportunity for city centres, as they can use their increased time budget for various city-related activities. Owners and operators of city properties will have to be prepared for the fact that the substitution of retail by gastronomy, services – especially health-related services – and leisure facilities will continue.
Senior and care properties.
The number of very old people over 80 will not increase significantly until 2035, but will then be almost 50% higher than the current level in 2050. As the income and asset situation of the very old will continue to spread, this means that the demand for all types of senior citizens’ real estate will increase massively – from publicly subsidised barrier-free housing to assisted living at different quality and price levels to different types of care facilities – from dementia flats to classic nursing homes to hotel-like retirement homes.
Result.
Dr. Wulff Aengevelt, Managing Partner of Aengevelt Immobilien: “As an industry that trades in a particularly durable asset, the real estate industry is well advised to carefully analyse the forecasts for population development. Demographic development offers opportunities as well as risks. However, it also depends on political decisions as to whether, where and how the positive or negative effects outweigh the negative effects. From the point of view of the real estate industry, the most urgent imperatives are to promote the immigration of qualified skilled workers and to stabilize the social security systems by postponing the de facto age limit.”
