Subdued transaction activity, refinancing gap, new impetus for healthcare real estate: The third edition of Baker Tilly Real Estate Trends paints a differentiated picture of the current situation on the German real estate market ahead of EXPO REAL.
The German real estate market is moving sideways despite the recent brightening of economic sentiment. This is shown by the current issue of Baker Tilly Real Estate Trends for the third quarter of 2026. Prime yields and commercial rents remain unchanged, with only residential rents continuing to rise due to inflation.
Interest rates continue to rise, the market is waiting for substance
The ECB's interest rate hikes were therefore already largely priced in. However, rising bond yields are keeping the pressure high. Investors are monitoring the situation before trading again on a significant scale. Andreas Röhr, FRICS, partner in the Real Estate Valuation practice at Baker Tilly, says: "Market participants are acting selectively and concentrating on properties with reliable cash flows. Large-volume or risky transactions remain the exception."
"As long as rising interest rates make financing more expensive and buyer and seller expectations do not converge in terms of prices, transaction momentum will remain subdued"
– Andreas Röhr FRICS
Refinancing as a stress test for the industry
Against the backdrop of the latest interest rate hikes, ten-year German government bonds yield well over three percent. As a result, established companies are also coming under increasing pressure when it comes to refinancing. Today, follow-up financing comes with a higher capital service and a lower financeable loan volume.
At the same time, offices and retail are under price pressure due to higher return expectations, vacancies and ESG requirements. If the mortgage lending value falls, the loan falls – a gap that must be closed with equity.
"This means that the refinancing gap is no longer an abstract market observation. It is increasingly affecting established market participants."
– Andreas Röhr FRICS
According to industry estimates, the funding gap will be more than 6 billion euros in 2026. In contrast to the aftermath of the financial crisis, Baker Tilly Real Estate Trends says that homogeneous NPL portfolios have hardly been created so far – credit structures are more complex, and case-by-case solutions are the rule.
Spotlight Healthcare: Healthcare real estate experiences strongest first half of the year since 2022
While even first-class office properties fail to provide financing, international capital is specifically looking for healthcare properties with long-term leases and experienced operators, according to the market report. The existing market already offers liquidity and pricing, while in new construction there are opportunities at best for specialized players with expertise and patience.
"The market for existing nursing and healthcare properties is working again – but new institutional construction activity is hardly any more. High construction costs, expensive debt capital and low sales factors prevent risk and return from matching"
– Andreas Röhr FRICS
With a view to the market as a whole, he sums up: "The hour has come for the active, equity-strong investor. Those who do not allow themselves to be paralyzed by this environment will find selective opportunities: quality, location and creditworthiness are increasingly determining the performance of individual properties, while the overall market is treading water."
Meet the authors of the market report and other experts from Baker Tilly at EXPO REAL in Munich (booth B3.125).
