Professional investors from Germany intend to keep their real estate quotas stable within their overall portfolios, despite a challenging market environment. This is a key finding of the fifteenth annual real estate survey conducted by Universal Investment. For this survey, the capital management company questioned institutional investors about their investment behaviour and market expectations in July and August 2026.
The participating pension schemes, insurance companies, credit institutions and corporates from Germany, representing approximately EUR 355 billion in assets under management, currently hold an average of 23 per cent of their total investments in real estate. This figure is expected to be maintained over the next twelve months. The primary arguments cited by participants for real estate as an asset class were stable ongoing returns (67 per cent), followed by inflation protection and low correlation to other asset classes (each 63 per cent). Kurt Jovy, Head of Real Estate at Universal Investment, emphasised that real estate has proven itself as a valuable portfolio component over decades, which is more significant for investors than short-term developments.
Valuation and Regional Diversification
Regarding current valuations, 91 per cent of respondents anticipate further downward price adjustments. For new investments, 62 per cent of investors in Germany assess prices as high but still acceptable, whereas this applies to only 47 per cent for Europe excluding Germany. A fifth of respondents consider prices in Europe to be fair, and another fifth even see buying opportunities there. For Germany, merely just under 5 per cent believe that real estate prices, across all property types, are fairly valued on average. This marks a change from the previous year, when prices in the various regions were considered more attractive. Price development and valuations are the most pressing issues for 83 per cent of survey participants, followed by financing questions (63 per cent). One in two respondents (50 per cent) finds debt procurement more difficult, and 21 per cent even find it significantly more difficult.
Germany continues to dominate as an investment region, being the primary market in real estate portfolios for 75 per cent of respondents. This is followed by wider Europe (21 per cent), North America (2 per cent), and the Asia-Pacific region (1 per cent). The results underscore a trend towards greater international diversification, which was already evident in the previous year. Investors wish to increasingly utilise the diverse opportunities of real estate as an asset class in the future. The share of North America is expected to rise to approximately four per cent in future investments, and that of Asia to just under two per cent. Germany will continue to account for the largest share of new investments at 73 per cent, while Europe is expected to increase to just under 22 per cent.
Sectoral Realignment and Market Trends
Changes are also discernible in sectoral allocation. The office share is expected to be reduced from an average of 34 per cent to just under 28 per cent. Conversely, a significant increase in the residential share from currently 36 per cent to an average of 41 per cent is planned. Jovy explained that the residential segment continues to evolve through modern living concepts for seniors, students, or commuters, which boosts investor interest. Logistics properties, which gained favour in the previous year, are set to see a slight increase from 13 to 14 per cent. The weightings of retail properties and hotels are expected to remain stable at around nine and just over two per cent of the total real estate portfolio, respectively.
