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The German residential investment market was stable in the third quarter. According to Colliers, around 2.2 billion euros were turned over in the institutional residential investment segment. This corresponds to an increase of around 13 percent compared to the previous quarter. This brings the transaction volume for the first nine months of the year to 6.5 billion euros. This is around 7 percent below the same period last year, when 7 billion euros were invested.
With 83 transactions, the third quarter was the most active of the year. Individual deals dominated with a share of over 87 percent of the transaction volume, while portfolio transactions accounted for only 13 percent. The average deal size was around 26.6 million euros.
Ten transactions worth more than EUR 100 million together reached a volume of around EUR 2.95 billion and accounted for more than 40 percent of the total annual volume. In addition, almost 39 percent were accounts for deals between 10 and 50 million euros. Three large-volume transactions in the third quarter together generated around EUR 710 million, about a third of the quarterly volume. Particularly noteworthy is a three-digit major deal in Berlin. There was also brisk market activity outside the A-cities, such as the acquisition of 450 residential units in Dresden by the Optima Aegidius Group.
While the focus in the first half of the year was mainly on the top 7 cities, these increasingly came back into the focus of investors in the third quarter of 2025. With a transaction volume of around 1.08 billion euros, the seven largest cities accounted for almost 49 percent of the total market. Berlin once again leads the ranking with around 620 million euros, followed by Munich (157 million euros) and Cologne (119 million euros). The market-defining deals in Berlin include the acquisition of 220 apartments for a German family office and the sale of a residential and commercial portfolio with predominantly Wilhelminian properties.
Investors' interest continues to be in low-cost existing properties. At the same time, transactions in the student housing, furnished apartments and forward deals segment have increased significantly in recent months. Interest rate cuts by the ECB, moderate inflation and high demand for housing had a positive impact on investor decisions for new projects.
Florian Tack, Head of Residential Germany at Colliers, comments: "In the third quarter, we observed a slightly positive market development with increasingly high-quality products in the Core and Core+ segments. Demand for residential real estate remains high, especially as investors increasingly turn to alternative types of use in view of the weak demand in the office sector. At the same time, there is still a willingness to respond to sellers' demands in terms of price, supported by an increasingly predictable and friendly interest rate landscape. Over the course of the first nine months of 2025, we saw a stabilisation of yields: young existing buildings in Class A cities achieved an average of 3.85 per cent, while in other locations they were 4.50 per cent."
The rental growth of recent years is continuing, although the momentum has weakened noticeably in recent quarters. Compared to the same period last year, asking rents in the Class A cities rose by around 5 percent in the existing segment, while they rose by 3 percent in the new construction segment. This means that the portfolio has once again recorded a significantly stronger increase than new construction. This development can be explained above all by an increased demand for existing apartments with limited supply at the same time. In addition, there is a noticeable decline in new construction activity, which is further increasing the pressure on the stock and thus also causing rents to rise.
The market remains dynamic overall. The positive mood on the investor side is likely to continue to support activity in the coming months and provide additional impetus at the end of the year. Forward deals, existing properties and microliving in particular are the focus of investors and funds with strong equity.
At the same time, restrictive lending by banks and the uncertain economic situation are acting as a braking factor. Against this backdrop, Colliers has adjusted its original full-year forecast of around €12 billion to a transaction volume of between €9 billion and €10 billion. Nevertheless, a strong fourth quarter is expected, which should make a significant contribution to the overall result.
