German institutional investors are sticking to real estate as a strategic asset class – but only if they offer a yield advantage over fixed-income investments with low risk. At the same time, the requirements for ongoing distributions remain high. Residential and logistics real estate dominates investment plans. These are the key findings of the Real I.S. Investor Survey 2026, in which more than 80 institutional investors from Germany – insurance companies, pension funds and pension funds as well as banks and savings banks – took part in the first half of 2026.
"The survey confirms our perception from the dialogue with institutional investors. Real estate continues to be valued as an attractive asset class in the long term, especially in view of the ongoing macroeconomic and geopolitical uncertainties. At the same time, investment momentum remains subdued. The changed interest rate and macroeconomic environment, as well as the geopolitical situation, have significantly increased the requirements for returns, product design and risk management – investment decisions are being made more selectively as a result," says Dr. Christine Bernhofer, CEO of Real I.S. AG.
Real estate must offer a clear yield advantage over bonds
Rising bond yields have permanently changed institutional investors' expectations of real estate investments. Almost three-quarters of those surveyed (74 percent) now expect a yield premium of 150 to 250 basis points for core real estate compared to ten-year German government bonds. "Real estate must therefore generate a clear additional return compared to low-risk interest-rate investments in order to remain attractive. This yield premium is the guideline by which the real estate industry must measure itself if it wants to attract institutional money," Tobias Kotz, Global Head of Client Relations & Capital Funding, Real I.S.
Yield requirements differ significantly depending on the type of use
Institutional investors expect the highest distribution yields to be found in infrastructure, logistics and office properties, in some cases at over 5 percent. Traditional residential properties, on the other hand, are rated as a comparatively defensive investment with the lowest return requirements (between 3.5 and 4 percent). From the investors' point of view, operator-oriented residential concepts, such as student or senior living, must achieve an additional yield premium compared to classic housing.
Housing and logistics lead the investment plans
In terms of preferred types of use, residential and logistics properties continue to be clearly in the lead. 54 percent of institutional investors have residential as the focus of their investment strategy, 51 percent logistics. Office properties (31 percent) and retail properties (24 percent) follow at a considerable distance.
At the same time, a clear trend towards focused investment strategies is emerging: around two-thirds of respondents (64 percent) prefer type-specific funds to broadly diversified multi-sector products. Investors are therefore increasingly relying on specialized strategies with a clearly defined investment profile.
Real estate remains a long-term investment
Despite the more challenging market environment, institutional investors continue to regard real estate as a long-term investment. Around half of those surveyed prefer investment periods of more than ten years, while a further 29 percent consider an investment horizon of between five and ten years to be ideal.
With increasing internationalisation, risk management is also becoming more important. 72 percent of institutional investors expect active management of currency risks in international real estate investments. One in three investors even calls for full currency hedging at fund level.
"Especially in a market environment in which fewer transactions are being carried out than in the past, the lever for attractive dividend yields lies primarily in the portfolio. It is therefore elementary to consistently develop existing properties through targeted measures. Only those who identify tenant needs at an early stage and leverage property potential can create the conditions for sustainable income and long-term attractive real estate investments in a challenging market environment," says Christine Bernhofer.
