The Munich investment market closed September with a commercial investment volume of around €1.7 billion, thereby remaining the investment location with the highest turnover amongst the ‘A’ cities. Against the backdrop of a further interest rate rise and ongoing geopolitical conflicts, the third quarter saw slightly weaker turnover at around €470 million, in line with the nationwide trend. However, the fact that both large-volume transactions and several deals in the non-core segment were successfully completed in recent months testifies to the fundamentally high level of confidence in the Bavarian metropolis. This is underpinned by the office tenant market, which has reported its best results since 2022 and is generating strong rental growth, particularly in the premium segment. Compared with the same period last year, there was also an increase in the number of large-volume transactions. These include, in the retail segment, the sale of the Alte Akademie, which was acquired by the Thiele Foundation, and, in the office segment, the sales of the city-centre office assets at Prinzregentenplatz 7 to 9 and at Sonnenstraße 15 (formerly the Lindbergh House). This is the finding of an analysis by BNP Paribas Real Estate.
“In terms of prime office yields, Munich ranks amongst the most stable locations. Whilst initial adjustments have been made in other cities against the backdrop of changing conditions on the capital market, the net prime yield has remained stable at 4.20 per cent since 2023. Adjustments for high-street assets are also comparatively minor; at 3.50 per cent, they are just 5 basis points higher than the previous year. It is only in the case of logistics assets that Munich cannot escape the nationwide trend; here, the prime yield stands at 4.70 per cent, 30 basis points above the previous year’s figure,” explains Michael Morgan, Head of the Munich branch of BNP Paribas Real Estate GmbH.
Office transactions dominate, with an above-average proportion of large deals
The breakdown of investment volume across the various asset classes is largely similar to that of the same period last year. Once again, office properties account for just under half of the volume, representing a significantly higher proportion than the national average (26 per cent). Whilst the majority of the volume was generated in the city centre, around €200 million was also invested in outlying areas. Retail properties account for a good fifth of the total, driven primarily by the Alte Akademie. Hotels, which contributed 19 per cent last year thanks to the sale of the Mandarin Oriental, have now returned to their usual level of 8 per cent.
From a geographical perspective, the bulk of the volume is concentrated in the city centre (56 per cent), where all sales in the three-digit million range are also located. However, substantial investment was also made in secondary locations
(18 per cent) and the outskirts (21 per cent) – including in office properties and development sites – whilst the city fringe remains under-represented at just under 5 per cent. In terms of distribution by size category, the segment above €100 million has accounted for a high proportion of the market this year. At over 43 per cent, it is currently not only the strongest in terms of turnover; in absolute terms, turnover in this segment was also significantly higher than in the same period last year. In all other segments as well – with the exception of the mid-range segment between €25 million and €50 million – investment levels were higher than in Q1–Q3 2025.
Outlook
“The Munich investment market remains as strong as ever and is consolidating its position as Germany’s most important investment location. Thanks to a large number of high-value transactions, Munich has even recorded a significant year-on-year increase in turnover, bucking the national trend; furthermore, even following further key interest rate rises, there has been no slump in transaction activity over the last three months. The investment market is being buoyed by the strong economic environment and positive figures from the end-user markets, whether in the office, retail or logistics sectors.”
Nevertheless, the Bavarian capital is also facing a challenging environment characterised by several global flashpoints and a changing capital market, along with the resulting implications for the investment landscape. Whether, and to what extent, the final quarter will see a pick-up in investment activity depends not least on the pace of transactions, which has slowed as a result of the changed conditions on the capital market. It remains to be seen whether, and to what extent, prime office yields in Munich will also be adjusted in this context. What is certain, however, is that Munich has a well-stocked pipeline of attractive investment opportunities and, like almost no other city, is able to attract investor interest,” said Michael Morgan.
Link to the market report: https://www.realestate.bnpparibas.de/marktberichte/investmentmarkt/muenchen-report
