The German real estate investment market posted roughly €16.6bn in transaction volume in H1 2026, up 5% yoy. Residential is currently the strongest asset class in a market that can generally be described as trending sideways. The segment generated €4.4bn in transaction volume, down slightly less than 3%. The commercial real estate market posted an 8% increase in transaction volume (€12.3bn). H1 2026 has proven the strongest first half of the year since 2022 in terms of activity with well over 700 deals signed. These figures are based on the latest analysis by BNP Paribas Real Estate.
Overview of key results:
- Transaction volume up 5% yoy to just over €16.6bn
- Residential accounts for just under €4.4bn of this result (-3%)
- Commercial investments total nearly €12.3bn (+8%)
- Single-asset deals claim 75% (€9.2bn) of total commercial transaction volume, portfolio deals with €3.0bn
- Office takes pole position in the commercial segment with roughly €3.2bn, ahead of logistics (€2.5bn) and retail (€2.3bn)
- Munich is the undisputed leader among Germany’s tier-1 locations with roughly €1.2bn
- Net prime yields rise in Q2 across all asset classes. The high-street and discounter/supermarket retail sub-segments prove an exception, however, with prime yields posting in line with previous-quarter results
- Foreign investor market share remains unchanged at 44%
- More than 700 deals recorded
“Activity in the German real estate investment market during Q2 was impacted by the conflicts in the Middle East, which hold implications for overall economic performance as well as for the financing conditions that are crucial to real estate investment. Although deal activity did slow significantly for a time, it picked up considerably at the midpoint of H1, giving us €16.6bn in total transaction volume, up 5% across all asset classes,” explains Marcus Zorn, CEO of BNP Paribas Real Estate Germany, adding, “Geopolitical developments in the Middle East once again significantly shifted capital market assumptions around rising energy prices and inflation risk, particularly at the start of Q2. Not only have interest rate expectations and financing conditions changed, but economic forecasts have also been revised downward significantly. Many market participants have had to adjust their financing, business plans and anticipated purchase prices. We have been seeing a directional shift in purchase price negotiations in many locations. This has delayed transaction processes while also temporarily slowing down activity. The Memorandum of Understanding signed by the US and Iran, together with the emerging interest rate corridor set by major central banks, are giving market players more certainty and causing an uptick in the momentum behind finalising deals. Buyers and sellers have adjusted their calculations to reflect this shifting environment.”
Residential posts highest transaction volume
Residential assets generated the highest transaction volume in the German real estate market with €4.4bn, slightly down by under 3% yoy. Mid-year results were primarily driven by a significantly stronger Q2, which brought in roughly €2.4bn. “Residential real estate has proven highly relevant for domestic and foreign investors, particularly in the current, more volatile, investment environment. The key factor here is robust demand. In many regions, growing demand for rental housing is being confronted with limited availability and a drop in residential completions. Investors are once again also showing interest in larger residential portfolios as a result. Investors poured €900m into the German residential investment market in the past 3 months alone thanks to portfolio deals that changed hands in the 9-figure range,” explains Marcus Zorn.
Commercial real estate transaction volume up slightly – activity slower in Q2
Commercial transaction volume totalled €12.3bn in H1 2026, up 8% yoy. A lively Q1 with roughly €6.9bn was followed by significantly slower deal activity in Q2 (€5.4bn). “The market, however, did not come to a standstill in Q2, but rather experienced a recalibration. Market players are reassessing risk in the current environment. Refinancing issues, more conservative occupier market assumptions and higher risk premiums have led to a shift in how negotiations in some asset classes are being structured. Although this did slow market activity, it has ultimately proven necessary. After all, markets do not recover solely on the basis of hopes around lower interest rates, but because prices realistically reflect financing, rental prospects and asset complexity. Once this has happened and sellers again have a clear framework, transactions can be successfully concluded, as was the case particularly at the end of Q2. “Refinancing, strategic portfolio adjustment and strictly defined exit windows can be driving factors here,” explains Nico Keller, Deputy CEO of BNP Paribas Real Estate Germany.
Office remains strongest commercial asset class. Logistics and retail post similar performance
Office claimed pole position among the other commercial asset classes in H1 2026 with just under €3.2bn in transaction volume (+19% yoy) and a 26% market share. Although the market remains well below its long-term average, we have been seeing a gradual upward trend since the cyclical low in 2024. Activity has picked up, particularly in the high-volume segment. Office deals in the 9-figure range totalled roughly €1.2bn in Q1, with transaction volume in the high-volume segment doubling yoy.
Logistics followed in the ranks at just under €2.5bn, down 10% yoy primarily due to a temporary slowdown in activity in the mid-sized segment. At the same time, the nearly 70 deals signed in the past 3 months and a 16% qoq increase in transaction volume point to livelier market activity. A growing number of larger transactions have also been successfully changing hands, with deals exceeding €100m generating nearly €750m in transaction volume in the first half of the year.
Retail accounted for just under €2.3bn, down roughly 21% yoy. This decrease is mostly due to lower volumes in the shopping centre segment as well as in the discounter, retail warehouse and supermarket segments. However, this is less a reflection of declining demand than of limited supply, particularly when it comes to food-anchored formats. The fact that this segment accounted for half of total retail volume at mid-year is a clear indication of strong interest in local retail assets with stable tenant structures.
Investment activity around healthcare assets has continued to intensify in recent months. Investors poured €1.6bn into the segment, up 71% yoy and 30% above the 10-year average. Several high-volume portfolio deals contributed to this strong result, among them Aedifica’s acquisition of an 80% share in Cofinimmo, which was finalised in Q1.
Single-asset deals dominant
Single-asset deals have been clearly dominating market activity in the current environment with roughly €9.2bn (+7% yoy) and a market share of about 75%. Portfolio deals generated €3.0bn, although their significance varied considerably across asset class. Traditional portfolio deals only play a minor role in the office segment at the moment with just around 5% of transaction volume. At the other end of the spectrum, we have the healthcare segment, where portfolio deals accounted for roughly 80% of transaction volume.
Foreign investors show strong presence in logistics and healthcare
Foreign investor activity currently varies widely across asset class. In terms of the overall market, foreign investors posted a 44% market share, which is in line with the long-term average. While the market for office and retail is clearly dominated by domestic investors (each with an 80% market share), foreign investors are the main players in logistics (75%) and healthcare (87%).
Munich is the undisputed leader among Germany’s tier-1 cities
Munich claimed pole position among Germany’s tier-1 cities with just over €1.2bn (+35% yoy). The city saw 2 office deals change hands in the 9-figure range in Q2: Prinzregentenplatz 7–9 and the Lindberg-Haus property. Hamburg took second place with just under €970m (+19%), followed by Düsseldorf with €750m (+34%) and Berlin with €630m (-52%). Berlin’s weak performance is primarily due to a lack of office transactions. The German capital only posted about €85m in office transaction volume at mid-year, marking a historic low. Next up was Frankfurt with roughly €600m (+153%), followed by Cologne with €350m (+12%) and Stuttgart with €250m (+35%).
Yields rise across all asset classes for the first time since late 2023
Net prime yields rose noticeably across all asset classes in Q2 for the first time since the end of 2023. This is primarily due to the fact that, following a period of increased volatility in the capital markets, the financing environment has once again become more challenging, and higher borrowing costs are being factored into purchase price calculations. Market players are also reassessing risk in the current environment. At the same time, valuations within the asset classes remain varied. Yield adjustments are particularly evident where financing costs are exacerbated by greater uncertainty around rental trends, property quality, operator structure and sensitivity to economic conditions.
Average net prime yields for offices in tier-1 locations rose 11 basis points (bps) to 4.49%. Munich remains the most expensive office market with yields unchanged at 4.20%; Frankfurt remained stable as well at 4.50%. Increases of 15 bps were recorded in Berlin (4.50%), Düsseldorf (4.65%) and Stuttgart (4.65%). Net prime yields rose 10 bps to 4.35% in Hamburg and 20 bps to 4.60% in Cologne.
Logistics prime yields rose slightly in Q2 to a current 4.60% (+10 bps) on average in the country’s tier-1 locations. Demand for modern logistics assets remains strong, but higher financing costs are also taking their toll on purchase prices in the sector.
The healthcare segment saw the most significant change, with an increase of 30 bps to 5.20%. In the segment, rising financing costs are facing a market environment that has already been dealing with segment-specific issues such as operator covenant, cost trends and regulatory requirements.
Net prime yields in the new-build residential segment rose to 3.65% on average across all tier-1 locations.
The situation in the retail segment currently paints a mixed picture. Shopping centres are posting 6.00%, or 10 bps higher than in the previous quarter. DIY stores, a format that is highly sensitive to economic conditions, are posting even 25 bps higher at 6.20%. The high-street segment, on the other hand, is moving sideways. Net prime yields remained unchanged at 3.85% on average in Germany’s tier-1 locations. Prime yields for food-anchored retail parks as well as supermarkets and discounters were also stable at 4.65% and 4.90%, respectively.
Outlook
The investment market environment is expected to gradually improve in the coming months. While geopolitical uncertainty will remain a major issue and economic momentum is likely to continue to lag for the time being, market participants can now look to the future with greater certainty and clarity when it comes to the development of capital markets and the real economy.
A key factor for the German economy will be the success of the country’s current transformation. The recently unveiled reform package marks an initial step towards promoting viability and growth. Prosperous regions such as the Munich area, with its strong tech sector and globally recognised achievements in robotics, show the potential that lies within the German economy and its businesses. Foreign investors are particularly keeping an eye out for attractive investment opportunities. Robust tenant markets offer additional security for investors. If location and property are a good fit, there is significant potential here for rental growth.
The key factor for the rest of the investment year will be the trend in financing costs. We do not expect any surprises. The market has already priced in the possibility of another interest rate hike by the ECB, and the latest eurozone inflation data have eased concerns about further hikes. However, this does not mean that the threat of inflation has been completely tamed, and it is unlikely that we will see a sustained improvement in financing conditions. Accordingly, conservative financing assumptions, higher risk premiums and a focus on asset quality continue to play a key role in transactions.
“It will not only come down to the availability of capital but also to whether buyers and sellers can find a middle ground at a price level that allows for a deal to be closed. Current transactions show that buyers and sellers are once again finding that middle ground. This trend is unlikely to translate directly into a significant increase in transaction volume for the time being, but we expect transaction activity to pick up considerably towards the end of the year, also in the high-volume segment. For the most part, the market is likely to move sideways compared to 2025, with the potential of a stronger finish to the year. Total annual transaction volume is very likely to land close to the €40bn mark. We expect to see yields rise in certain areas,” Marcus Zorn summarises the outlook.