TOP 7 INVESTMENT MARKETS 2Q2025: Cautious about signing, but actively preparing deals

In Germany’s top 7 cities the volume of investment transactions in commercial real estate totalled €3.6bn in the first half of 2025, falling 22 % below the figure posted a year before. This was the lowest half-year result returned since 2009 (€3.3bn). Although there were instances of big-ticket or otherwise significant trades, they could not compensate for the ongoing caution of many major market players.

“In some markets we are seeing a bit more activity, but many processes are still very long drawn-out. Institutional investors remain noticeably cautious,” says Björn Holzwarth, spokesperson for German Property Partners (GPP).

• Despite the overall weakness of the market, some cities returned nominal growth year on year. In Cologne the volume of transactions totalled €300m (+50 %), in Hamburg €790m (+23 %). In both cities the result was heavily influenced by isolated big-ticket transactions in the 1st quarter - in particular the sale of the Pullman Hotel in Cologne and Hamburg’s buy-back of the “Pflegen & Wohnen” care home portfolio. In Berlin trades totalled €1.28bn, an increase of 8 %. The other cities fell well behind their results of a year ago. Some €727m was invested in Munich (-46 %), €245m in Düsseldorf (-51 %), €206m in Frankfurt (-61 %) and €60m in Stuttgart (-63 %). 
• Office properties comprised the most-traded asset in the top 7 cities (36 % of the total), followed by mixed-use real estate (25 %) and “other properties” (15 %) which consisted in large part of the care home portfolio transaction in Hamburg. The range of properties traded varied greatly from city to city, dominated by different asset classes in different cities.
• In the 1st half year portfolio trades accounted for 24 % of total transaction volume in the top 7 (Q2 2024: 6 %). In Hamburg portfolios made up 70 % of the total, largely due to the “Pflegen & Wohnen” transaction in the 1st quarter. Corresponding figures for Cologne are 40 % and for Frankfurt 25 %. In Munich (14 %) and Berlin (3 %) few portfolio trades were noted and in Düsseldorf and Stuttgart there were none at all.
• International investors were involved in 24 % of the top 7 trading volume, a level seen last year too. They were particularly active in Frankfurt (54 %) and Stuttgart (60 %); the volume of overall trading was, however, very low. In the other cities international investors accounted for between 13 % (Düsseldorf) and 33 % (Cologne).
• In view of the lack of core transactions, the current prime yields are partly based on market assumptions. In the first half of 2025 they remained unchanged. Office properties yielded 4.43 % (+ 0.01 pp), logistics real estate 4.49 % (-0.03 pp). No changes are expected in the immediate future.

Looking ahead to the rest of the year, Holzwarth says, “A slight revival is to be expected in the second half year. In several cities property sales are being prepared, some of which are in the higher price brackets. A great deal will depend on whether talks now under way actually result in transactions. To date, the lower base rate has hardly altered interest charges for long-term borrowing – the situation remains difficult, above all for the office property sector. Big-ticket sales will probably remain the exception.”

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