Real estate investment in Germany: opportunities, strategies, and current trends

Real estate has always been considered a stable investment with long-term potential for value appreciation. But what types of investments are available, what opportunities and risks should investors be aware of, and how is the market currently developing? EXPO REAL provides you with an overview.

On this page

Is it worthwhile?
The most important types
Terms of real estate investments
Advantages and disadvantages
Investing in real estate
Current trends
Networking and exchange

German real estate is a stable long-term investment with income and appreciation potential
Investment types: direct (purchase) and indirect (funds, stocks, REITs, crowdfunding)
Benefits: inflation hedge, steady income | Risks: interest rates, vacancies, low liquidity
Key success factor: location, market knowledge, asset selection
Trends: logistics & residential strong, office weaker, healthcare growing

Real estate investment in Germany: Is it worthwhile?

Basically, the answer is “yes,” because unlike other forms of investment, real estate offers secure long-term returns and value appreciation. A brief overview shows what types of investment are available, the advantages and disadvantages of each investment option, and what to look out for when investing in real estate.

The most important types of real estate investments, their respective advantages and disadvantages

Real estate is generally considered an alternative investment, as it is not one of the traditional financial products. There are both direct and indirect ways to invest in real estate. They all have advantages and disadvantages that everyone should consider when making a decision that suits their situation and goals.

Real estate purchase

The direct form of investment is the purchase of real estate, whether commercial or residential, to generate rental income. This form of investment requires a high capital outlay, which is then usually tied up for the long term. In return, the investor generates direct income from rental income, has sole control over the investment, and benefits directly from the increase in value. On the other hand, direct real estate investment requires constant management in the form of maintenance and administration, as well as market observation, in order to avoid rental losses and choose the right time for divestment.

Real estate funds

A real estate fund is a real estate investment fund that invests the capital collected from investors in the acquisition, construction, or financing of real estate. A distinction must be made between open-ended and closed-ended funds.

Compared to direct real estate purchases, open-ended real estate funds offer the opportunity to invest smaller amounts of capital. The fund collects capital in order to build up a diversified real estate portfolio and manage it professionally. While public funds are primarily designed for private investors, special funds are primarily aimed at institutional investors such as insurance companies, pension funds, pension schemes, and foundations.

While open-ended real estate funds can collect and invest investor funds with virtually no restrictions, closed-ended real estate funds focus on one or a few specific real estate projects, for which investors provide capital. Once the required amount has been reached, the fund is closed to further investments by investors. In contrast to open-ended real estate funds, closed- e real estate funds tend to be long-term investments with fixed terms.

Real estate stocks

The acquisition of shares in a real estate stock corporation also allows indirect participation in the real estate market. Like other stock corporations, real estate stocks offer the possibility of dividends and share value increases, but on the other hand, they are market-dependent and volatile.

REITs (real estate investment trusts) are a special form of real estate stock corporation. REITs generate their profits from renting and leasing their own real estate and land, from interest income, and from profits on the sale of real estate. REITs have low entry barriers and must distribute 90% of their profits. They therefore offer a steady and easily predictable dividend income. Here, too, the shares are traded on the stock exchange and are therefore subject to corresponding fluctuations.

Digital real estate investments

... are mostly crowd investing platforms on which investor funds are collected for a specific project. They offer a high degree of flexibility and require only a small capital investment. The success of such an investment depends on the quality of the platform and the quality of the projects, so they also carry a high risk of default.

What can you expect at EXPO REAL in terms of real estate investments?

This topic is the focus of EXPO REAL, the international trade fair for real estate and investment. Here, you can find out about investment opportunities and potential investment projects, markets, and specific requirements and trends for individual types of real estate. In the conference program, experts discuss changes and challenges in the investment markets and explore specific investment topics in greater depth ...

Advantages and disadvantages of real estate investments

Real estate investments offer higher returns and better inflation protection than “traditional” investments such as savings accounts, fixed-term deposits, and call money, but lower returns than stocks and cryptocurrencies, both of which are associated with a correspondingly high level of risk. Unlike stocks and cryptocurrencies, real estate is a tangible asset that offers potential for regular rental income and appreciation in value.

While the market for stocks and cryptocurrencies is very liquid, it takes significantly longer to sell a property if necessary. Direct real estate investments and investments in closed-end funds are particularly less flexible.

However, real estate investments also carry certain risks. Longer periods of vacancy and market fluctuations can have a negative impact on returns and value appreciation. Direct real estate investments in particular are subject to interest rate fluctuations, which can make external financing more expensive than originally planned.

Investing in real estate—what you should look out for

It is a oft-repeated phrase, but one that remains valid: “Location, location, location!” Location determines the success of a real estate investment: the country, the city, or the location in a particular environment, as well as the respective (micro) location. A country with a booming economy will attract investment more easily than an economically weak country with little prospect of future growth. However, it is also important to consider framework conditions such as legal and regulatory certainty, market liquidity, and tax issues.

Although logistics properties are not usually located in the immediate urban environment, they cannot be located entirely in the countryside either—the location must at least be connected to transport routes (road, rail, port, airport). For office, retail, and residential properties, the focus tends to be on cities, although these do not always have to be large cities; depending on requirements, property type, and investment horizon, medium-sized and regional cities can also offer opportunities. In any case, it is important to determine long-term demand, but also to consider the immediate environment, as apartments in a “dormitory town” without any infrastructure or offices far away from an urban environment, for example, are rather difficult to sell. Detailed knowledge of the market in general and the micro-market in particular, as well as consideration of general and location-specific market trends, are necessary.

In addition to location, the question of “new construction or existing property” is also important. While new construction projects, for example, usually meet sustainability requirements, older properties may require additional investment in energy-efficient renovation and modernization.

Current trends—Does it still make sense to invest in real estate in Germany?

For a long time, Germany was considered a "safe haven" for real estate investments. Accordingly, transaction volumes increased every year. However, after interest rates rose sharply in 2022 , the economy weakened and the conflict in Ukraine caused additional economic uncertainty, real estate investments slumped by more than half in 2023. Although there has been a slight recovery since 2024, transaction volumes are still far below the ten-year average, even though interest rates have fallen significantly and the price expectations of buyers and sellers have converged again.

The spectrum of investment properties has also changed. Office properties, long the strongest asset class, have lost their leading position in the past two years. This is due to the fact that, on the one hand, more people have been working from home since the coronavirus pandemic and, on the other hand, companies are not increasing their workforce in times of economic weakness, but are at best maintaining it at the same level.

There has also been a significant shift in retail properties. Whereas shopping centers in city centers used to be in high demand, it is now retail parks and local amenities in neighborhoods or regional towns that appear to be promising.

Logistics facilities have been the “shooting stars” of recent years. One driver here has been the growth of online retail, but also developments in industry, which is relying on just-in-time deliveries instead of maintaining its own warehouses.

Investments in hotel real estate are not a new development, but the coronavirus pandemic and its travel restrictions have caused a sharp decline in this segment. Although the market for hotel real estate is now slowly recovering, the general geopolitical uncertainty is also having an impact on this segment.

Healthcare real estate—nursing homes, assisted living facilities, medical centers, hospitals, and rehabilitation facilities—is a small but important segment. Demographic change, with an increasingly aging society, is attracting greater investor interest in these healthcare properties.

In addition to these commercial properties, apartments in multi-family buildings are also a separate investment class and currently generate the highest turnover. Forward deals and modern existing properties are in above-average demand. The sharp rise in demand for housing is currently being offset by a decline in new housing construction, which is hesitant at best. It can be assumed that the trend of rising rents will continue to solidify in the medium term.

Networking and exchange for investors at the trade fair

EXPO REAL offers an ideal platform for investors, who can obtain information about locations and markets directly here and meet project developers and financiers to discuss potential investment opportunities.

Frequently Asked Questions

Is real estate investment in Germany worthwhile?

Yes, it is considered a stable long-term investment with potential for capital appreciation and rental income, despite short-term market fluctuations.

What types of real estate investments exist?

There are direct investments (property purchase) and indirect options such as funds, stocks/REITs, and crowdfunding.

How much capital do you need to invest in real estate?

Typically 20–30% equity plus transaction costs for direct purchases; indirect investments can start with smaller amounts.

What are the main risks of real estate investments?

Risks include vacancies, price declines, rising interest rates, and unexpected maintenance costs.

What is the most important success factor?

Location—both macro (city/region) and micro (neighborhood, infrastructure)—is crucial for returns and value growth.

How is the real estate market developing?

After a decline since 2022, the market shows early signs of recovery, with varying trends across asset classes.

Which property types are currently in demand?

Residential and logistics properties are strong, while office real estate has weakened.

Is real estate a good hedge against inflation?

Yes, as rents and property values tend to rise with inflation over time.