German institutional investors continue to consider real estate a strategic asset class, though its attractiveness largely depends on a clear return advantage over fixed-income, marginally risky investments. Simultaneously, expectations for the level of ongoing distributions remain high. These are key findings from the Real I.S. Investor Survey 2026, which surveyed over 80 institutional investors from Germany – including insurance companies, pension funds, provident funds, banks, and savings banks – in the first half of 2026.
Dr. Christine Bernhofer, Chairwoman of the Board of Real I.S. AG, confirmed that the survey results reflect perceptions from direct dialogue with institutional investors. Real estate is valued as an attractive long-term investment, particularly given ongoing macroeconomic and geopolitical uncertainties. However, investment momentum remains subdued, as the changed interest rate and macroeconomic environment, as well as the geopolitical situation, have significantly increased demands on returns, product design, and risk management. This leads to more selective decision-making regarding investments.
Rising bond yields have substantially altered institutional investors' expectations for real estate investments. Nearly three-quarters of the surveyed investors (74 percent) expect a return premium of 150 to 250 basis points for core real estate compared to ten-year German federal bonds. Tobias Kotz, Global Head of Client Relations & Capital Funding at Real I.S., emphasised that real estate must generate a clear excess return over low-risk interest-bearing investments to maintain its appeal. This demanded return premium serves as a guideline for the real estate sector to acquire institutional capital.
Return requirements vary significantly depending on the property type. For infrastructure, logistics, and office properties, institutional investors sometimes expect distribution yields of over 5 percent. Traditional residential properties, however, are classified as a more defensive investment with the lowest return requirements, ranging between 3.5 and 4 percent. Operator-managed residential concepts such as student or senior housing must, from an investor perspective, achieve an additional return premium over traditional residential.
Residential and logistics properties continue to dominate investment plans. 54 percent of institutional investors focus on the residential sector, while 51 percent are eyeing logistics properties. Office properties (31 percent) and retail properties (24 percent) follow at a significant distance. Concurrently, a trend towards focused investment strategies is emerging: around two-thirds of respondents (64 percent) prefer property-type-specific funds over broadly diversified multi-sector products. This signals an increasing orientation towards specialised strategies with clearly defined investment profiles.
Despite the more challenging market environment, institutional investors continue to regard real estate as a long-term capital investment. Approximately half of the respondents prefer investment periods of over ten years, and a further 29 percent consider an investment horizon of between five and ten years ideal. With increasing internationalisation, risk management gains importance. 72 percent of institutional investors expect active management of currency risks for international real estate commitments. One third of investors even demand full currency hedging at the fund level.
Ms Bernhofer highlighted that in a market environment with fewer transactions, the lever for attractive distribution yields primarily lies in existing portfolios. The consistent further development of existing properties through targeted measures is therefore fundamental. Only by promptly identifying tenant needs and leveraging property potential can the prerequisites for sustainable returns and attractive long-term real estate investments be created in a complex market environment.
