The German commercial real estate market is currently characterised by an increase in risks. Non-performing loans are on the rise, while property valuations are coming under pressure. At the same time, upcoming maturities and increasingly complicated refinancing conditions are restricting the room for manoeuvre for many market participants. However, the market correction expected in this context, through the sale of non-performing loan portfolios, has not yet occurred.
Rita Marie Roland, Partner and Head of Financial Services Real Estate Transactions at KPMG in Germany, explains the current situation. She states that many lenders are currently focusing on extending loan terms and restructuring measures. However, she predicts that with a growing number of maturities, increased regulatory scrutiny, and increasing refinancing pressure, the willingness of market players to realise losses is likely to grow.
The current KPMG Non-Performing-Loan Market Monitor illustrates a growing discrepancy between the increasing burden and actual market activity. Although pressure on commercial real estate financing is continuously increasing, the number of larger transactions involving non-performing commercial real estate loans remains limited. This reluctance in transaction activity has far-reaching consequences: it complicates price discovery in the market, delays necessary market adjustments, and increases uncertainty for all parties involved, including banks, investors, borrowers, and the entire real estate market.
Key Figures and Challenges
The analysis from the KPMG Non-Performing-Loan Market Monitor provides precise data points on the current situation. Accordingly, the volume of non-performing loans in Germany has risen to EUR 50.1 billion. This represents an increase of 11.8 percent in the first quarter of 2026 compared to the previous year. The current phase of non-performing loans is primarily concentrated in commercial real estate, indicating a sector-specific rather than a systemic development.
A significant proportion of German NPL portfolios, specifically around 36.5 percent, are attributable to commercial real estate. In the European context, 31.4 percent of all European CRE NPLs are located in Germany. Declining property valuations, breaches of loan covenants, and the aforementioned difficult refinancing conditions are increasing the pressure to act for both borrowers and financiers. Despite these growing burdens, the number of larger CRE NPL transactions remains low, meaning that price discovery and market transparency continue to be limited.
