After a significant decline in the previous quarter, the real estate industry in Germany is showing initial signs of stabilisation. This is according to the latest survey for the ZIA-IW Property Sentiment Index (ISI) for the third quarter of 2026. Both the assessment of the current business situation and the future expectations of the companies surveyed have moderately improved. However, a lasting trend reversal cannot yet be determined based on the available data.
The evaluation of the business situation rose by 2.4 points to a value of 10.2 points. Expectations saw an increase of 4.2 points, but remain in negative territory at minus 7.1 points. Overall, the property climate improved by 3.3 points to 1.3 points, thereby narrowly returning to positive territory. Iris Schöberl, President of the ZIA, noted that the results indicate a stabilisation at a low level rather than a sustainable upturn. She attributed this to geopolitical uncertainties, interest rate developments, and unclear political frameworks, which hinder investment and lead to general market caution.
Investment Obstacles
A special question in the current survey highlighted specific investment obstacles. Companies identified lengthy planning and approval procedures as the biggest hurdle (88 percent). The ongoing discussion about further regulations (87 percent) as well as existing regulation (83 percent) were also cited as significant factors. Additionally, the general economic situation (78 percent) significantly impacts the investment climate. High financing, energy, and decarbonisation costs also contribute to this environment, which complicates capital commitment.
In this context, Ms Schöberl emphasised that capital follows trust. She elaborated that trust arises where political decisions are comprehensible, regulatory frameworks offer reliability, investors can plan long-term, property rights are protected, approval processes function efficiently, and economic policy objectives endure beyond legislative periods.
Development of Market Segments
In the office segment, sentiment stabilised after a previous sharp decline. The assessment of the current business situation remained almost unchanged at 13.8 points, while expectations improved by 6.8 points to 5.0 points, thus becoming positive again. The property climate for office properties rose to 9.4 points. A continuously robust situation is supported by long-term leases and stable demand in the service sector. The improved expectations suggest that some market participants believe the low point of economic uncertainty has passed.
The retail segment shows a mixed picture: the current business situation slightly increased to 16.5 points, but expectations significantly worsened to minus 6.0 points. Consequently, the property climate declined to 4.9 points. The market remains characterised by a structural dichotomy, where demand for space in food retail continues to grow, but demand for sales areas in brick-and-mortar non-food retail is declining.
A slight improvement in sentiment was also recorded in the residential segment. The assessment of the current business situation increased by 5.1 points to 8.8 points. Expectations also rose, but remain significantly in negative territory at minus 17.4 points. The property climate improved to minus 4.8 points. These results indicate that the housing market continues to be under significant strain. New regulatory requirements and political discussions are cited as additional factors creating uncertainty and hindering investment.
Project development continues to face the most difficult situation, with an assessment of the current business situation at minus 25.5 points, the lowest value of all segments. At the same time, expectations significantly improved to 13.7 points, reaching their highest level in several quarters. The property climate here remains negative at minus 6.9 points. The discrepancy between the tense current situation and the significantly more positive expectations reflects the industry's hope for better framework conditions, but the current crisis is not yet overcome. The survey was conducted between 13 August 2026 and 7 September 2026.
