Geopolitical uncertainties are dampening the recovery of the German real estate market. This is the result of a survey conducted by Real Blue Kapitalverwaltungs-GmbH among asset and investment managers. A large majority of respondents, specifically three-quarters, assess the consequences of the conflict in the Middle East for the real estate investment market as negative. Of these, 24 percent see very negative and a further 52 percent rather negative effects. Only three percent expressed an expectation of positive effects.
According to the participants, the geopolitical situation primarily influences expectations for future interest rate developments. Approximately 70 percent of respondents anticipate a significant delay in interest rate cuts by the European Central Bank. A further 15 percent expect at least slight delays in this regard. This development contributes to current market uncertainty.
Perceived Risks and Differentiation by Asset Class
The respondents identified primarily rising energy prices (76 percent) and higher inflation (73 percent) as the most significant risk factors for the real estate industry. Additionally, nearly two-thirds of survey participants each saw worsened financing conditions and weaker economic growth as significant risks. Michael Eisenmann, Managing Director of Real Blue, comments that geopolitical uncertainty mainly influences the real estate market indirectly through factors such as energy prices, inflation, financing costs, and overall economic prospects. This could prolong a stabilisation of the market. In this market phase, increased differentiation by asset class, location, and property quality is observable. Investments and uses with long-term stable demand and resilience to the economic environment are therefore likely to gain importance.
- —Residential: 85 percent (as the most resilient asset class)
- —Food-anchored retail: 42 percent
- —Logistics: 39 percent
- —Healthcare properties as well as infrastructure and energy properties: 36 percent each
- —Data centres: 27 percent
Expectations for transaction volumes in the investment market are subdued, according to the survey. A total of 55 percent of respondents predict a declining transaction volume for the second half of 2026. One-third expect a stable market volume, while only 12 percent anticipate a slight increase. A rapid market recovery is expected by only a minority; only 18 percent expect a normalisation of market sentiment within the next six months. 30 percent expect this within one year, and a further 24 percent only after more than twelve months. A quarter of respondents are currently refraining from making a forecast.
Despite the current geopolitical situation, interest rate development remains the primary influencing factor for the German real estate market over the next twelve months for the respondents. 30 percent cited this as decisive, followed by economic growth at 24 percent. Geopolitical crises ranked third among the most important influencing factors at 15 percent.
