Following the temporary upturn in the first half of 2026, momentum in the German transaction market for residential portfolios (30 or more residential units) has recently slowed again, as shown by the latest market analysis from NAI apollo, a member of NAI Partners Germany. Positive market momentum is being driven by a continued solid foundation of demand, the increasing return of international investors, and a high level of activity in the value-add and opportunistic segments. At the same time, geopolitical uncertainties, challenging financing conditions and the ongoing weakness of the property development market are holding back investment activity. Against this backdrop, the transaction volume fell from €2.4 billion in the second quarter of 2026 to €1.7 billion in the third quarter of 2026, reaching its lowest quarterly figure since the second quarter of 2024.
“Over the year as a whole, the market has shown a slight decline. After the first nine months, the transaction volume totalled 6.2 billion euros. Whilst this has already matched the full-year figure for 2023, it fell just short of the previous year’s volume of 6.3 billion euros for the same period. It is worth noting that, unlike last year, this result was achieved without the support of a single large-volume deal worth more than €500 million. Instead, market activity was characterised by portfolio transactions in the range of up to €100 million,” explains Dr Konrad Kanzler, Head of Research at NAI apollo.
“The pool of buyers for residential property portfolios in the higher three-digit million range remains limited amongst domestic investors at present. Many German market participants are instead focusing on smaller and medium-sized, regionally focused portfolios with active value-enhancement potential. With a purchase volume of 3.6 billion euros, domestic investors continue to account for the majority of the volume,” said Mario Stanke, Head of Residential Investment at NAI apollo.
“Transaction activity is increasingly determined by investors’ capital base and creditworthiness. Whilst lenders continue to provide debt financing on a selective basis, restructuring and special situations are gaining in importance. This benefits, above all, liquid investors who make targeted use of insolvency sales and portfolios with ‘manage-to-core’ potential for their investment strategies,” says Stefan Mergen, managing partner of apollo valuation & research GmbH.
Small and medium-sized transactions account for the strongest market momentum
In the first three quarters of 2026, the market was driven primarily by small and medium-sized transactions. Accounting for 68.9 per cent, or €4.2 billion, deals worth up to €100 million dominated market activity. The segment between 50 and 100 million euros showed particularly dynamic growth, with the traded volume rising by 49.7 per cent to 1.6 billion euros. By contrast, the segment of large transactions worth over 100 million euros accounted for 31.1 per cent of the total, with a volume of around 2 billion euros; however, the transaction volume in this segment fell by 21.9 per cent compared with the previous year. The absence of any mega-deals was a key factor in this.
At the same time, international investors expanded their activities in Germany, investing €2.6 billion – around 7 per cent more than in the same period last year. Over 40 per cent of this volume was accounted for by transactions exceeding €100 million. In this size segment, foreign buyers were thus responsible for almost 60 per cent of the transaction volume. “The high resilience of the German residential property market, the structural excess demand and the recent rise in yields are encouraging the return of international capital,” said Dr Marcel Crommen, Managing Director of NAI apollo.
Significant increase in acquisition activity by private investors and family offices; on the sell-side, asset and fund managers are ahead of project developers and property developers
On the buyer side, three investor groups are virtually neck and neck at the top, each with a purchase volume of around 1 billion euros. Purchase activity by private investors and family offices was particularly buoyant, with their purchase volume rising by 33.8 per cent compared with the previous year. The public sector also expanded its investments, increasing its purchase volume by 25.8 per cent. By contrast, the group comprising open-ended property funds and specialist funds recorded a 13.6 per cent year-on-year decline in purchase volume. Whilst open-ended retail funds continue to be characterised by outflows of capital and increased liquidity requirements, many specialist funds still have substantial capital commitments from institutional investors. This enables them to capitalise on the increasing availability of attractive residential portfolios for selective acquisitions.
On the sell-side, asset and fund managers increased their sales volume from €0.3 billion in the same period last year to €1.6 billion, thereby becoming the most active group of sellers. “This trend reflects the increasing pressure to sell resulting from maturing fund terms, refinancing requirements and rising investment needs in other asset classes,” says Mergen. By contrast, project developers and property developers have scaled back their sales activities. With a 45.8 per cent year-on-year decline in sales volume to €1.5 billion, they now rank second among the seller groups.
Purchase volume for property development projects falls
The decline in market activity amongst project developers and property developers is clearly reflected in the trading of forward deals. Following a transaction volume of around 1.0 billion euros in the first quarter of 2026 and 0.4 billion euros in the second quarter, the purchase volume of project developments fell to 0.3 billion euros in the third quarter. Compared with the same period last year, this represents a fall of 16.5 per cent for the first nine months of 2026. “Trading is currently focused primarily on subsidised housing developments, with the public sector representing by far the most important buyer group in this segment. The largest transactions continued to take place in the top seven locations,” said Stanke.
Transaction volume expected to fall below €10 billion once again
In autumn 2026, the German residential property investment market will be characterised by conflicting factors. Whilst the structural housing shortage, the persistently low level of new-build activity and the high demand for housing – particularly in conurbations – are underpinning the attractiveness of residential property investments, economic and geopolitical risks are dampening market momentum. “Additional uncertainty arises from interventions in housing policy. The debate in Berlin over the socialisation of housing, as well as calls for a nationwide rent freeze, are increasing regulatory risks and influencing future investment decisions. At the same time, the federal government is focusing on expanding the housing supply through a planned housing association for affordable housing and further support measures,” says Mergen.
“The increasing pressure on refinancing caused by the challenging interest rate and capital market environment is likely to lead to a growing supply of residential property portfolios in the coming quarters. Restructurings and NPL situations, in particular, may create additional investment opportunities,” explains Crommen.
“Investor interest will continue to focus primarily on small and medium-sized portfolios in the coming months. Consequently, the segmentation of larger portfolios will become increasingly important. Large residential portfolios will be split into smaller sub-portfolios that are in demand locally and in line with market conditions, thereby making them accessible to a wider range of buyers,” says Stanke.
For 2026 as a whole, the transaction volume for residential portfolios is expected to be less than 10 billion euros. Investment activity is therefore likely to remain at a similar level to that seen in 2025 (8.7 billion euros) and 2024 (9.4 billion euros). “The recent cautious acquisition strategy adopted by many institutional investors, coupled with restrictive lending practices, suggests that the current subdued market activity is set to continue into the final quarter of the year,” summarises Kanzler.
