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.

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Is it worthwhile?
Die wichtigsten Anlageformen
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 Main Types of Real Estate Investments and Their Respective Advantages and Disadvantages

Real estate is generally considered an alternative investment, as it is not classified as a traditional financial product. 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.

Buying Real Estate

The direct form of investment involves purchasing a property—whether commercial or residential—to generate rental income. This form of investment requires a significant capital outlay, which is typically tied up for the long term. In return, the investor earns direct income from rent, has sole control over the investment, and benefits directly from any increase in value. On the other hand, direct real estate investment requires ongoing management in the form of maintenance and administration, as well as continuous market monitoring, to avoid rental shortfalls and determine the right time to divest.

Real Estate Funds

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

Compared to buying real estate directly, an open-end real estate fund offers the opportunity to invest smaller amounts of capital. The fund pools the capital to build a diversified real estate portfolio and manage it professionally. While public funds are primarily designed for retail investors, special-purpose funds are aimed primarily at institutional investors such as insurance companies, pension funds, retirement plans, and foundations.

While open-end real estate funds can raise and invest investor capital with virtually no limits, closed-end real estate funds are focused on one or a few specific real estate projects, for which investors provide capital. Once the required amount is reached, the fund is closed to further investments from investors. Unlike open-end real estate funds, closed-end real estate funds tend to be long-term investments with fixed terms.

Real Estate Stocks

Purchasing shares in a real estate corporation also allows investors to participate indirectly in the real estate market. Like shares in other corporations, real estate shares offer the potential for dividends and capital gains; however, they are subject to market fluctuations and can be volatile.

REITs (Real Estate Investment Trusts) are a special type of real estate corporation. REITs generate their profits from renting and leasing their own properties and land, from interest income, and from gains on the sale of real estate. REITs have low barriers to entry and are required to distribute 90% of their profits. They therefore offer a steady and predictable dividend stream. Here, too, the shares are traded on the stock exchange and are thus subject to corresponding fluctuations.

Digital Real Estate Investments

… are typically crowdfunding platforms where investor funds are raised 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; therefore, these investments 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 real estates 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 investment, with transaction volumes increasing year after year. However, following the end of the low-interest-rate environment in 2022, a weakening economy and geopolitical upheavals created additional economic uncertainty. As a result, real estate investment fell by more than half in 2023. While the market has seen a slight recovery since 2024, transaction volumes remain well below the ten-year average, despite significantly lower interest rates and a renewed convergence of buyers’ and sellers’ price expectations.

The range of investment assets has also changed. Office properties, long the strongest asset class, temporarily lost their leading position. It was not until the first half of 2026 that they regained the top spot in commercial real estate investment, although transaction volumes remain significantly below the long-term average.

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.