TOP 7 INVESTMENT MARKETS 1Q2025: Despite isolated big-ticket transactions, total trading is down year on year

At the close of the 1st quarter of 2025 the volume of investments in commercial properties located in Germany’s top 7 cities totalled some €2.1bn. The figure represents a year on year decrease of around 14 % and is almost identical to the result in 2023. This is based on the latest figures compiled by German Property Partners (GPP). 

• In some cities big-ticket trades fuelled the growth of total trading volumes, so that a variety of trends emerged in the top 7: in Cologne, the sale of the Pullmann Hotel pushed the result to €150m, growth of 200 %. In Berlin, where the greatest volume of trading took place, the sale of Upper West boosted trade by 45 % to €870m.  In Hamburg the city repurchased the “Pflegen & Wohnen” care facilities, generating a 19 % increase to €440m. Other cities posted decreased results, whereby Munich, dropping by 61 %, posted the biggest decline, chiefly because in the same quarter of 2024 two very large transactions had been finalized.
• Taking all top 7 markets together, international investors played only a minor role with a mere 12 % of total trading, similar to their share a year before (1Q2024: 15 %). Due to the low overall volume and the small number of transactions, foreign investors were nevertheless very prominent in certain cities. 
• Mixed-use properties accounted for the lion’s share of trading (32 %), followed by office blocks (28 %). In Hamburg, thanks to the Pflegen & Wohnen transaction, portfolio trades accounted for 86 % of the total, whereas in other cities they played only a minor role. Portfolios made up 13 % of trading in Cologne and 6 % in Munich. No portfolio transactions were noted in Berlin, Düsseldorf, Frankfurt or Stuttgart.
• Due to the shortage of evidence from the markets, yields remained as they were before, apart from tiny fluctuations. The prime yield on office buildings in Germany’s top 7 cities was 4.43 % (-0.04 pp), on industrial and logistics buildings it was 4.47 % (+0.01 pp).

Looking ahead to the rest of the year, GPP spokesperson Björn Holzwarth says, “The latest rise in long-term mortgage rates and the huge growth in yields on German “Bunds” point to a less favourable environment for property funding and could have a negative impact on sales activity. At the same time, a liquidity squeeze continues to force many owners to put real estate on the market. However, the financial package agreed by parliament has lessened the risk of yield compression, a fact that could encourage some actors, especially institutional investors, to rethink their sales strategies. Nevertheless, the market remains hard to read due to the uncertainties surrounding the financial package. Overall, we expect to see trading revive slightly over the course of the year.”

German Property Partners (GPP) consists of Grossmann & Berger Immobilien, Anteon Immobilien, GREIF & CONTZEN Immobilien, blackolive and E & G Immobilien.