Ulrich Höller, Managing Partner of ABG Real Estate Group, provided assessments of current developments in politics, economics and real estate markets during a journalist dinner in Frankfurt on 23 September 2026. These statements were made in the run-up to the Expo Real property trade fair, which takes place from 5 to 7 October 2026. Höller emphasised the profound links between geopolitical risks, monetary policy and the real estate market.
The market continues to lack growth momentum, while geopolitical risks are increasing. According to Höller, the effects of geopolitical conflicts on energy prices and inflation, which quickly transfer to monetary policy, are currently discernible. Although the real estate market has adjusted to a higher interest rate level, it is not the individual interest rate decision of the ECB that is primarily relevant for investors, but rather the reliability of the economic framework conditions. Capital is available, but under these circumstances, it is being deployed more selectively.
Capital and Implementation as Key Factors
Höller noted that Germany has less of a capital problem than an implementation problem. Capital is fundamentally available for investments, but the country needs to improve at converting it into concrete projects. Lengthy planning and approval procedures, as well as complex regulatory requirements, delay investments and make projects more expensive. Measures such as the Housing Construction Turbo and the amendment to the German Building Code (BauGB) address the right issues. However, actual acceleration depends on the municipalities, which must utilise new scope for action and make swift decisions.
In the investment market, buyers' and sellers' price expectations are converging. Commercial transaction volume in the first half of the year stood at 12.3 billion EUR, representing an eight percent increase compared to the same period last year. However, a broad recovery is not yet evident. Differentiation at the property level has increased, with marketability, investment requirements and long-term competitiveness determining a property's value. Good properties attract capital, while for properties with structural deficits, price discovery remains difficult. The higher interest rate level has largely been priced in and provides certainty for calculations. However, a further increase in the risk-free rate due to rising German government bond yields could increase profitability pressure on real estate investments.
Höller also pointed out that the refinancing of many loans, which were concluded under different interest rate and valuation conditions, is due in the coming years. Should lower property values then encounter more conservative loan-to-value ratios, financing gaps could arise. Since not all owners would be able or willing to provide additional equity, selling pressure is to be expected. This would open up new entry opportunities for financially strong investors.
Importance of Existing Stock and Housing Construction Challenges
The future value creation task lies increasingly within existing stock. Value creation no longer arises automatically from a rising market, but must be developed from the property itself. Transformation, repositioning, repurposing and active asset management are therefore key tasks for the coming years. For older properties, it will now be decided whether they can be made competitive through investment or will permanently lose attractiveness and value.
Regarding the office market, Höller emphasised that the office of the future will not necessarily be smaller, but better. While home office and hybrid working have changed space requirements, the demands on the required spaces are simultaneously increasing. Modern, well-connected and flexibly usable offices with high quality of stay are in demand. The rise in prime rents in this segment, while older stock comes under pressure, demonstrates the growing divergence in the market. Vacancy here is often a product problem and shows the necessity of transformations. A good address alone no longer guarantees successful office letting today, especially if spaces are not flexibly usable, are not energetically convincing, or require significant investment. Owners are facing pressure to consider investments, repositioning and alternative uses early.
In housing construction, Germany continues to fail in implementation. Current figures from bulwiengesa highlight the gap between planning and actual construction activity. While the recorded residential project volume had risen by 2.9 percent to approximately 68 million square metres by mid-2026, around 31 million square metres are still in planning and only 15.5 million square metres are under construction. The volume of construction starts remains 67 percent below the 2022 peak. Therefore, one cannot speak of a turnaround in housing construction, but rather a market blockage, caused by cancellations and extended construction times. High new-build rents are not a consequence of greed for profit or excessive demand, but of high construction costs. These must be reduced by strengthening serial construction and, in particular, by reducing cost-driving building regulations.
