Smaller tickets form the new core foundation in the residential investment market

In addition, there is a shift in the geographical distribution of investment activities. In total, the top 7 cities accounted for around 2.3 billion euros or 56 percent of the transaction volume – an increase of 22 percent compared to the same period last year. This development underlines the increased risk aversion and the focus of investors on liquid core markets with stable fundamentals.

With a transaction volume of around 1.3 billion euros, Berlin was by far the most active market, followed by Hamburg with 345 million euros, Munich with 220 million euros and Frankfurt with 210 million euros. In the other top 7 locations, however, the transaction volume declined slightly.

The distribution by ticket size also illustrates the change in the market. With a transaction volume of EUR 1.7 billion, 41 percent of the total volume was accounted for by trades between EUR 15 million and EUR 50 million (previous year: 33 percent). The segment benefits from its current comparatively good financial viability and offers investors more opportunities for risk diversification.

Large-volume transactions of more than 100 million euros, on the other hand, remain the exception. Their share of the transaction volume fell to 35 percent or 1.5 billion euros, after 55 percent or 2.3 billion euros in the same period last year. Accordingly, the number of market-defining major deals remained limited in the first half of 2026. Large-volume transactions are primarily feasible with clear pricing, stable financing and high property quality.

On the buyer side, asset managers and asset and fund managers in particular shaped market activity with a share of 34 percent. This confirms the continued great importance of institutional capital, which remains active despite challenging conditions and concentrates primarily on core products. On the seller side, project developers and property developers again dominated with a share of 28 percent. Increased refinancing requirements are increasingly leading to further investment products coming onto the market.

Financing conditions have become one of the key influencing factors so far this year and have tightened again after the start of the Iran conflict. Banks are acting more restrictively, processing times have lengthened and the requirements for equity and property quality have increased. As a result, transactions currently fail less due to a lack of interest on the part of investors than rather due to their economic feasibility. Capital is generally available, but is used much more selectively.

Against this background, pricing on the market has also adapted. Returns on residential investments have risen by an average of 25 to 30 basis points. For young existing properties, the prime yield at mid-year was 4.1 percent in the top 7 cities and 4.8 percent in the other locations. These developments are adaptations to the changed framework conditions of financing costs and risk assessment, which have become more relevant since March. At the same time, the importance of stable cash flows continues to increase, while speculative value appreciation potential is being questioned more strongly.

Florian Tack, Head of Residential Germany at Colliers, explains: "The residential investment market is currently not characterised by a lack of interest, but by economic feasibility. Liquidity is generally available, but is used much more selectively. The financing conditions currently act as a market filter and play a key role in determining which transactions can be realized. Low-risk core products with stable cash flows and clearly calculable returns are particularly in demand."

The rental markets remain the stabilising factor, even if the momentum has weakened somewhat recently. In the top 7 cities, the average new rental rents of existing apartments rose by around 2 percent over the past twelve months and thus remain at a lower but stable positive level.

At the same time, the individual markets are developing differently. While Düsseldorf and Hamburg continue to show dynamic rent development, other cities, especially Berlin, are showing temporary downward trends. The average new contract rent for existing apartments is currently around 16.90 euros per square metre, while the prime rent is around 24.30 euros per square metre. However, the structural imbalance between supply and demand remains unchanged. The ongoing housing shortage continues to support the attractiveness of residential use.

Francesca Boucard, Head of Market Intelligence & Foresight at Colliers, adds: "Even though geopolitical uncertainties and the changing interest rate environment are currently dampening market sentiment, the macroeconomic fundamentals of the German housing market remain intact. The ongoing housing shortage continues to ensure high structural demand. As soon as the financing and interest rate environment stabilizes, the available liquidity is likely to be increasingly reflected in concrete transactions in the further course of the year."

For the second half of the year, there are signs of continued selectivity. Although larger transactions with a volume of up to 2 billion euros are in preparation, a rapid trend reversal is not expected in view of the restrictive financing environment. For 2026 as a whole, Colliers considers a transaction volume of up to 8 billion euros to be realistic.

Despite the challenging transition year, the residential investment market remains structurally well positioned and is likely to maintain its attractiveness for long-term investors.

The combination of stable demand, limited supply and long-term secured cash flows forms the basis for sustainable market development, even if it is selective and less dynamic in the short term. Compared to other usage classes, housing is thus likely to become even more attractive and attract additional investor capital in the future.