The German residential investment market registered a total investment volume of approximately EUR 4.4 billion for residential portfolios of 30 units or more in the first half of 2026. This result is only marginally below the previous year's level. The market structure has diversified significantly compared to the previous year. While 2025 was characterised by a few large-volume portfolio transactions, the number of individual deals increased during the current reporting period. Although the financing environment recently proved to be more volatile, the fundamental market conditions continue to favour the residential market and confirm the persistently high demand for resilient residential investments. This is according to an analysis by BNP Paribas Real Estate.
Christoph Meszelinsky, Managing Director and Head of Residential Investment at BNP Paribas Real Estate GmbH, comments that the noticeable improvement in investor sentiment led to a moderate revival of market activity in the second quarter. While the proportion of large-volume, nationwide portfolio transactions, which are necessary for significant recovery, remained low, it increased compared to the first quarter. The second quarter also illustrates the return of larger nationwide existing portfolio deals, whereas in the first quarter, new-build and forward deals in the segment above EUR 100 million, such as the Deiker Höfe and a part of the Holstenareal, were predominantly registered. In the second quarter, four larger existing portfolios outside the A-cities were realised, which underlines the return of larger value-add transactions. The residential investment market continues to benefit from strong user market prospects and high investor demand, irrespective of economic weakness and geopolitical risks. An extensive deal pipeline will stimulate market activity in the coming months.
Large-volume transactions over EUR 100 million contribute only 34 per cent to the total result, the lowest in ten years, but have shown a recent upward trend. Medium-sized deals up to EUR 50 million dominate the market, accounting for 47 per cent of the investment volume, a significantly higher share than the long-term average of 33 per cent. The broad transaction base underlines the reduced dependence on individual large deals and a stable market condition. Existing portfolios are over-represented with 47 per cent, compared to the long-term average of 44 per cent. Forward deals reach 21 per cent, but lag behind previous years – primarily due to a more volatile financing environment and a limited supply of suitable products. Persistently high demand for ESG-compliant residential properties means that new-build and virtually new existing properties achieve an above-average market share of 18 per cent, compared to a ten-year average of 5 per cent. In this sub-asset class, the highest transaction volume ever registered in a first half-year was achieved, totalling over EUR 770 million.
The investment volume in the first half-year is more broadly distributed among the various buyer groups. Investment and asset managers make the largest contribution with a market share of 31 per cent, reaching their highest level since 2021/2022 with approximately EUR 1.3 billion. Real estate companies follow with 17 per cent or around EUR 740 million. Equity/real estate funds and the public sector each contribute significantly to the total volume with approximately 14 per cent.
The A-locations contribute more than EUR 1.6 billion to the total result, exceeding the previous year, although their market share of 38 per cent is below the long-term average of 46 per cent. Berlin ranks first with almost EUR 600 million, followed by Düsseldorf and Hamburg with around EUR 325 million and EUR 320 million, respectively. Some B-locations show increased market dynamics, for example, Leipzig and Dresden with transaction volumes in the mid-three-digit million range, significantly influenced by large-volume portfolio transactions.
In the second quarter, a moderate movement in net prime yields for new-build properties was observed, representing the first noticeable change since the end of 2024. The increase is between 5 and 10 basis points depending on the location. Munich and Berlin are the most expensive locations at 3.50 per cent (+5 BP). They are followed by Frankfurt (3.55 per cent; +5 BP), Hamburg (3.65 per cent; +5 BP), Stuttgart (3.70 per cent; +10 BP), Düsseldorf (3.75 per cent; +10 BP) and Cologne (3.90 per cent; +10 BP).
