In Germany, apartment rents and purchase prices will continue to rise every year over the next four years. Against this backdrop, investment and asset managers want to invest primarily in core properties or subsidized housing in 2026. Germany remains an important investment destination. If good opportunities present themselves, value-add investments will also be an option in 2026 – for example in project developments or energy-efficient renovations. The participants see investment opportunities outside Germany in the Netherlands, Spain and Ireland, among others. Compared to other types of use, the mood in the residential segment is best in terms of investment and rental markets.
These are the core contents of today's online press conference "Residential Investment Market 2026: Will the Economic Crisis End the Fragile Upturn or Will the Recovery Continue?", which was attended by Simon Lieb, Managing Director, KINGSTONE Residential Investments, Felix Meyen, Managing Director, HIH Invest, Andreas Trumpp, FRICS, CREA®, Head of Market Intelligence & Foresight, PTXRE and Dr. Lars Vandrei, Head of Research, Catella Investment Management.
First of all, Andreas Trumpp stated: "The macroeconomic environment is not expected to provide any impetus for the real estate market. However, the residential segment is largely independent of this, as supply remains scarce and demand increases. This is also reflected in the real estate climate index, according to which the residential asset class is developing best compared to the other types of use. A major problem is the declining completion figures in Germany: from over 300,000 completed residential units before the interest rate turnaround, we are expected to fall to below 200,000 units in 2026. As a result, new contract rents will continue to rise significantly in the years 2026 to 2029." PTXRE also expects prices to increase significantly between 2026 and 2029. Prices have already risen in 2025 in both A, B, C and D cities. This development will continue until 2029 in all four city categories. Towards the end of 2029, prices in all four city categories are likely to be back at the level of the peak in 2022."
Core real estate remains in focus
What are the investment intentions of the participating asset managers in 2026? Dr. Lars Vandrei explains for Catella IM: "Our focus remains on core and core+ residential real estate in Europe. The focus remains on the German market, but we are also positive about the Netherlands and Spain, for example. Above all, we want to buy apartments with affordable rents. By this we do not mean subsidized housing, but apartments that are priced between subsidized and normal-priced housing. We have our own definition of affordability, which is based on the median rent in the market."
Value-add strategies are also coming into focus in the residential sector
On behalf of HIH Invest, Felix Meyen comments: "Housing will be the focus of our investment activities in 2026. In Germany and Europe, we are also focusing on the core or core-plus segment in large cities with more than 200,000 inhabitants." HIH Invest will also pursue new strategies in 2026. Meyen commented: "We will offer value-add strategies to selected investors. We are pursuing two approaches to this. Firstly, we buy older properties in established locations, renovate them to make them more energy-efficient and then sell them. Secondly, we are looking for ready-to-build project developments that we can get involved in. We then finish these and sell them. Investors can participate in both investment approaches through individual structures."
Subsidized housing in demand among institutional investors
For KINGSTONE Real Estate, Simon Lieb explains: "Subsidized housing is clearly in demand among institutional investors. Accordingly, our focus in the residential sector will be on this segment in 2026. For our first fund in the area of subsidized housing, we raised EUR 150 million in equity as part of an individual mandate and are currently in the investment phase, which we are scheduled to complete in 2026. The continued high demand from institutional investors confirms the attractiveness of this product line, so we are consistently pursuing this strategy. In addition, we continue to be active in the value-add segment in the residential segment, driven by opportunities." What returns do institutional investors currently expect? Dr. Vandrei says: "In very good locations in A-cities, investors are currently demanding distributions of around 3.0 to 3.5 percent p.a., preferably 4 percent, but we think this is not very realistic." Felix Meyen adds: "I see somewhat higher demands on the market. For core products, our investors want a dividend yield of 3.5 to 4.0 percent p.a."
Where do those involved see opportunities? Simon Lieb from KINGSTONE answers: "The opportunities of publicly subsidized housing lie in the combination of investment security and social responsibility. For investors, the product offers a long-term investment horizon with interest rate security at attractive conditions that is regularly secured over the entire rental period. At the same time, the high demand for affordable housing throughout Germany ensures low vacancy rates and stable earnings. In addition, potential investors are also making a concrete contribution to the creation of urgently needed, affordable housing."
On the subject of opportunities, Dr. Vandrei says: "We currently see opportunities mainly in Spain and the Netherlands. In both markets, we see a great need for energy-efficient properties with affordable rents. In Spain, this can be achieved with higher yields compared to Germany – in the Netherlands, energy efficiency has a positive effect on regulated rents. Ireland is also very interesting. Here, prices and rents have risen sharply in recent years. However, it must be taken into account that the market is also very volatile."
