Colliers publishes its own report on the German alternative living market for the first time. The analysis sheds light on the development and structure of the segment, its different forms of housing and the investment market. It shows that alternative living is gaining in importance in Germany, but is encountering structural bottlenecks. While demand from different user groups is high, alternative forms of housing have so far accounted for only 4 to 5 percent of apartment completions in Germany.
Alternative living includes different forms of housing such as student housing or purpose-built student accommodation (PBSA), micro-living, co-living and senior living, as well as serviced apartments and aparthotels. In Germany, there is currently a shortage of between 800,000 and 1.4 million apartments. At the same time, the growing number of single-person households, stable student numbers, mobile employees and demographic change are creating an increasing demand for different housing concepts.
Demographics and changing life models are supporting demand
The number of single-person households in the top 7 cities is expected to increase by around 171,000 or 5.6 percent by 2040. In the 50 largest German cities, an increase of around 282,000 households or 4.3 percent is expected.
Germany has around 3 million students, almost 493,000 of whom come from abroad. Around 68 percent of them are enrolled at universities in the 50 largest German cities. In addition, there are more than 2.7 million employees who are among the mobile target groups due to long commutes or changing workplaces.
The progressive aging of the population is also increasing the need for specialized forms of housing. By 2040, the number of people over 65 years of age is expected to increase by around 3.4 million or 18 percent. The group of 75 to 85-year-olds is growing particularly strongly, with an increase of 45 percent.
The new building is lagging behind the demand
Only around 11,000 to 15,000 units are built in alternative forms of housing in Germany every year. This means that they account for only 4 to 5 percent of total residential completions. Increased financing costs, regulatory uncertainties and low new construction activity are slowing down the development of new residential projects.
Student housing currently dominates the new construction pipeline in the alternative living segment. The sub-segment also has particular weight in the investment market: on a five-year average, around 43 percent of the transaction volume was accounted for by student housing or PBSA.
The investment market is gaining momentum
The transaction volume in the German alternative living market rose by around 74 percent to 1.1 billion euros in 2025 compared to the previous year, and funds, platforms and investment strategies for alternative living in Europe now account for a targeted capital volume of at least 12 billion euros. Of this, around 4.5 billion euros are attributable exclusively to Germany. Investor interest is particularly focused on student housing or PBSA and serviced apartments.
Quality of operations is becoming increasingly important for investors
As the market matures, the focus is increasingly on the property itself as well as on ongoing operations. Professional rental management and efficient processes play an important role in alternative living concepts. Micro-living concepts currently achieve occupancy rates of around 95 to 96 percent.
Von Saucken emphasizes: “With Alternative Living, the quality of the property is not the only thing that determines the success of an investment. At least as important is an operator who can establish the concept on the market in the long term. That’s why investors today look very closely at who operates a property and how resilient the business model is.”
Better framework conditions are needed for further growth
In order for alternative living to continue to develop in Germany, Colliers believes that more suitable properties, reliable regulatory frameworks and professional structures among operators, investors and financiers are needed above all. New housing offers can be created both through new construction and through the conversion of existing properties. In particular, the conversion of suitable office properties can play a role in certain areas.
The full report is available for download here:
http://www.colliers.com/de-de/research/alternative-living
