Investors are becoming interested in property as an asset class again, and data from major estate agents shows that there was an uptick in deal activity last year. Around 35 billion euros worth of commercial properties, as well as residential developments, student residences and retirement facilities changed hands in 2024. This is significantly more than in 2023 – though still a far cry from the boom year of 2021, when transaction volume was around three times as high.

2021 was the end of a long property boom. Are we back to normal now? Probably not. The long-term transaction average has not yet been reached again, and this is mainly due to office property. The figures for Frankfurt are a good illustration of the misery in the market. Activity in the biggest office market in Germany was less than 2 billion euros last year.

As has been the case for many years, investors prefer to focus on residential property, according to the motto: you always have to live. Affordable living space is in short supply, especially in urban centres, and will remain so for the foreseeable future. Berlin remains a boomtown in this respect, as the 2024 figures once again impressively show.

However, much more could be done in the housing market. The demand is there and so is the capital, especially from long-term investors such as insurance companies and other pension funds. However, high construction costs and complex building regulations are a massive obstacle to new construction. A new federal government could do a lot here.

What remains for potential property investors? Logistics. What used to be a niche with low transaction volumes has now become the second largest type of usage. There are no signs that this will change. Online shopping is still on the upswing, and the relocation of supply chains also requires related storage and handling capacities. One of the few downsides that is clear, however, is the need to catch up in terms of the green transition. There is still a lot to be done in the logistics property sector.

All in all, the signs are positive for the German property investment market. Domestic and foreign investors will continue to invest more in 2025. However, in light of the (global) political and economic uncertainties, only in moderation.