Apartment buildings – Your crisis-proof capital investment

The residential investment market is an excellent choice if you are looking for good investment opportunities in Germany. Apartment buildings in large and medium-sized towns in particular make fantastic capital investment objects thanks to their potential for appreciation.

Good framework conditions mean that capital investment in apartment buildings is profitable and reliable. Click here for all key information on this attractive market. 

Interactive diagrams and downloadable local market reports

Use our interactive diagrams to compare current prices in different German towns and cities. Our database is continuously updated. You can also download PDF files with market report summaries for every town and city. They are updated twice a year. Visit the page for the respective city to access the PDFs. Click the following button to request the complete market report for Germany.

Interest in residential and commercial properties in Germany remains high, which is also reflected in the transaction data: after transactions began to rise again in 2024, the positive trend continued in 2025. Our forecasts assume 37,000 to 39,000 sales, which corresponds to an increase of 7 to 13% over the previous year. The transaction volume also rose in 2025, with a cash turnover of between EUR 35 and 38 billion expected to be achieved.

The German economy is in a phase of stagnation and recorded growth of only 0.2% in 2025. Nevertheless, some economic factors have developed positively, which is also strengthening interest in purchasing residential and commercial buildings. The inflation rate has stabilized slightly above the target at an annual average of 2.2%. In addition, with a few exceptions, construction interest rates are less volatile than in previous years. This ensures greater planning security for investments.

Construction interest rates are mainly based on the yield on ten-year German government bonds. This is expected to increase moderately in the course of 2026 due to higher government spending. Construction interest rates are therefore likely to be around 4% in 2026. However, it is not so much the level of construction interest rates as their stability and thus their predictability that is decisive for a successful investment. We therefore expect trading activity to increase moderately in 2026.

Conclusion: Combined with the current attractive price level, there are currently good opportunities for a favorable market entry and a lucrative long-term investment. Furthermore, increased demand for housing coupled with limited supply means that residential property will remain a desirable asset class in the future.

There is currently an opportunity for attractive market entry. The nationwide asking price for existing properties averaged EUR 1,996/m² in the fourth quarter of 2025. This represents an increase of 3.0% over the same quarter of the previous year. Nevertheless, asking prices are on average around 5.5% below the peak reached in the second quarter of 2022. The average asking price for new-build properties nationwide was EUR 4,019/m². Since the beginning of 2025, new-build prices have stabilized at this level and are thus more than twice as high as those for existing properties.

The price difference between existing and new properties creates the necessary scope for additional investments, such as modernization measures. Prospective buyers are therefore clearly focusing on existing properties and value-add strategies.

For property owners, high demand coupled with limited supply in many locations means good lettability, as the risk of rental losses is extremely low. Rental rates are particularly high in major cities and many university towns, making these markets especially attractive to risk-averse investors.

The need to renovate many existing properties also offers solid potential for rent increases. Rents have risen steadily across the board in recent years. In the fourth quarter of 2025, apartments in Germany were offered at an average price of EUR 10.42/m². Compared to the same quarter of the previous year, this represents an increase of 4.1 percent.

Particularly in large cities and metropolitan areas, vacancy rates are already extremely low and available living space is very limited. According to the CBRE-empirica vacancy index, the market vacancy rate in multi-family dwellings nationwide was 2.2 percent in 2024, which corresponds to 521,767 vacant apartments.

In particular, ongoing net migration coupled with a decline in completions is causing a shortage of apartments. Although there will be a positive trend in building permits again in 2025, this will not be reflected in completions until the end of 2027 at the earliest.

Renovated existing properties offer solid potential for value appreciation. In addition, current entry prices, including modernization costs, are on average lower than prices for new builds. This is driving up demand for existing properties, especially as they are also available in popular inner-city locations.

Multi-family homes in good energy efficiency condition also comply with the prescribed ESG guidelines in the long term. Investing in existing properties therefore offers the opportunity to expand the portfolio with top-quality real estate in the long term. In addition, subsidies can be used for renovation, which increases the attractiveness of investing in existing properties.

Yields for multi-family homes rose moderately in 2025. However, the days of rapid yield increases are over, as prices and rents are no longer moving in different directions. Nevertheless, yield compression is unlikely in the course of 2026.

For investors, the gross initial yield for a residential and commercial building is quite attractive. The national average was 5.4% in the fourth quarter of 2025. In A cities, the average yield was 4.1%, which is still above the yield on ten-year German government bonds (2.7% in the fourth quarter of 2025).