NAI apollo: German transaction market for residential portfolios shows slight upturn in mid-2026

The transaction market for residential portfolios (from 30 residential units) in Germany shows a slight revival of activity in the second quarter of 2026 despite continued challenging market conditions, as an analysis by NAI apollo, a member of NAI Partners Germany, shows. With a volume of EUR 2.44 billion, earnings are both higher than in the previous quarter (Q1 2026: EUR 2.03 billion) and above the level of the second quarter of 2025 (EUR 1.97 billion). So far this year, the transaction volume has totalled EUR 4.47 billion, also exceeding the previous year's figure at mid-2025 (EUR 4.26 billion). Excluding large-volume deals of more than EUR 500 million, the highest first half-year result since the interest rate turnaround in the summer of 2022 was achieved (Ø H1, 2023 - 2025: EUR 3.58 billion). At the same time, the increase in the number of registered transactions compared to the first half of 2025 points to more buoyant demand. 

"The German transaction market for residential portfolios was once again robust in the second quarter of 2026 despite persistently high financing costs, a fragile economic environment and persistent geopolitical uncertainties. Residential investments continue to assert themselves as comparatively safe investment products. The continued high willingness of market participants to acquire in the three-digit million range underlines confidence in the robust fundamentals of the residential real estate market and points to a gradual trend towards market recovery," explains Dr. Marcel Crommen, Managing Director of NAI apollo. 

Market activities are mainly driven by German investors. "Foreign investors account for 37.2 percent or around EUR 1.66 billion of the transaction volume and are significant buyers, especially in large-volume portfolio trading in the value-add and opportunistic segments. In addition to A and B locations, medium-sized cities are becoming increasingly important, driven by more attractive yield levels. In addition, seed portfolios of selectively selected assets are increasingly establishing themselves as an integral part of institutional strategies," explains Stefan Mergen, Managing Partner of apollo valuation & research GmbH.  

A differentiation by size class shows that there was a significant year-on-year increase in transaction activity, especially in the medium and large-volume market segments. This development was largely driven by increased closing momentum in the value-add and opportunistic risk clusters. "In the segment with the highest turnover between 100 and 500 million euros, a transaction volume of 1.46 billion euros was achieved in the first half of 2026, which corresponds to an increase of 39.4 percent compared to the same period in 2025. There was also a significant upturn in the second-strongest cluster of EUR 50 to 100 million, with an increase of 73.6 percent to EUR 1.18 billion," said Mergen. In contrast, the segment declined from EUR 25 million to less than EUR 50 million (−16 percent compared to the previous year). The transaction volume in the smaller clusters up to EUR 25 million adds up to EUR 0.97 billion, an increase of 27.5 percent compared to the first half of 2025. In the area of major transactions above EUR 500 million, no transactions were registered in the reporting period, unlike in the previous year.  

"The public sector is increasingly playing a stabilising role in the residential investment market. In doing so, the state actors focus on the long-term expansion and preservation of affordable housing. Core assets in medium-sized portfolio clusters are in particularly high demand," explains Dr. Konrad Kanzler, Head of Research at NAI apollo. In the first half of the year, public or municipal housing companies increased their acquisition volume by 24.2 percent year-on-year to EUR 0.77 billion and occupy the top position on the buyer side with a market share of 17.3 percent. In second place are real estate companies from the private sector, which achieved a transaction volume of EUR 0.72 billion at mid-year (H1 2025: EUR 0.44 billion).  

On the sell-side, project developers and property developers were not able to expand their activities in contrast to the previous year, but with a transaction volume of EUR 1.30 billion, they remain the strongest buyer group (H1 2025: EUR 1.51 billion). Real estate stock corporations and REITs, on the other hand, have significantly expanded their presence on the sell-side compared to the previous year and now occupy second place in the industry ranking. "As a result of changing market and financing conditions, real estate stock corporations and REITs are increasingly gearing their strategies towards stabilising existing portfolios; selective portfolio adjustments serve to generate liquidity. In the first half of the year, they sold properties with a total value of EUR 1.23 billion, significantly increasing their sales volume compared to the same period last year, when only EUR 0.27 billion were sold," said Mergen.  

The market for project developments has lost momentum in the past three months. The volume of forward deals fell to EUR 0.43 billion in the second quarter of 2026, significantly below the strong start to the year of EUR 1.02 billion. At the same time, the market importance remains high. With a market share of 32.6 percent of the total volume in the first half of the year, the level exceeds the previous year's figure by 6.7 percentage points.  

"Among other things, the still high construction costs and increased calculation uncertainty are slowing down project developments. In addition, regulatory requirements and project-specific risks make it difficult to implement new projects. Despite these challenging conditions, there is increased trade, especially of project developments in the social housing and microliving segment as well as projects in mixed-use neighborhoods," said Kanzler. 

In the summer of 2026, the German residential investment market is developing slightly positively, but remains characterised by pronounced selectivity on the investor side. In particular, factors such as location, structural condition and long-term income security are becoming increasingly important in investment decisions. "While highly leveraged project developments remain under pressure, core and core+ portfolios are benefiting from structural housing shortages, stable rental developments and a trend towards falling risk premiums. In the value-add segment, the focus is increasingly on manage-to-ESG strategies and a clear focus on sustainable, resilient cash flows," explains Crommen.  

At the same time, regulatory uncertainties are having a dampening effect on the willingness to invest. "The planned regulatory interventions, especially in indexed rents and in the micro-living segment, are likely to continue to weigh on the investment climate, especially in new construction. In combination with high construction costs, this is leading to a growing reluctance to implement project developments," says Mergen. In contrast, politicians are increasingly focusing on impulses to strengthen new construction. "The new amendment to the Building Code presented by the Federal Cabinet in May, which is to follow on from the construction turbo adopted last year, is also aimed in particular at promoting housing construction; among other things, with the prioritization of residential uses in tense markets," Kanzler emphasizes.  

"Transaction activity is expected to stabilise at a low level in the further course of the year. Slight upward momentum, as observed in the second quarter, is not likely to intensify until the final quarter. In 2026, as in the past three years, the total volume will in all likelihood remain below 10 billion euros," Chancellor predicts. "In the medium to long term, however, there are prospects for recovery, provided that the interest rate environment stabilizes, short-term planning security increases and the macroeconomic and geopolitical environment gains security," explains Crommen.