The market for residential real estate investments in Germany is currently in a differentiated phase. For investors with a secured financing basis, expanded opportunities are now available that were not present in this form in recent months. The reluctance of some market participants can be attributed to the difficult-to-assess development of key interest rates and the general geopolitical situation. At the same time, the financing of existing properties remains guaranteed in many cases.
This constellation creates a market situation whose specifics cannot be measured solely by the number of transactions. What is striking is the comparatively large selection of suitable properties, while at the same time the number of competing potential buyers per individual property is reduced. This means that buyers who are currently able to make decisions have improved prospects for a successful acquisition.
Observations show that for individual properties, typically three serious, capable prospective buyers go through the process. This contrasts with earlier market phases, where four or five interested parties were common. Even with three financeable and transaction-certain parties, a transaction will close. This development significantly increases the individual probability of closing for each buyer. The macroeconomic number of sales cases is less important for the individual investor than the concrete competitive situation for the specific desired property. A small circle of competitors considerably improves the potential buyer's starting position.
The overall market is expected to record a stable number of transactions. A reduced number of interested parties per property does not imply a decline in total sales. Even with a smaller number of serious interested parties, sales intentions are realised. The number of deals is expected to remain constant throughout the year. However, the character of the market is changing: the previously high time and competitive pressure for attractive properties is decreasing. This allows buyers to conduct more thorough due diligence, position themselves better with regard to their terms, and make a focused selection of properties that precisely match their own acquisition strategy. This phase stands apart from earlier periods, when numerous bidders competed for every high-quality property.
The current situation rewards buyers who have clarified their financing and have a clear idea of their investment goals. Well-positioned multi-family homes remain in demand. However, market access has improved, and negotiations can now be conducted with fewer external disruptive influences. Some market participants are still waiting for a clearer development of the general conditions. If these buyers return to the market, competition for attractive properties will increase again. Jürgen Michael Schick, Managing Director of MICHAEL SCHICK IMMOBILIEN GmbH & Co. KG, commented that the current reluctance of some players constitutes a competitive advantage for others. Investors who are capable of acting should utilise the current market phase before competitive pressure rises again.
