German residential real estate investment market Q3 2025: market pause continues
- In the third quarter the transaction volume for residential real estate once again fell short of the € 1.5 billion mark.
- As in the past, there were only a few major transactions exceeding the € 100 million mark in volume.
- Outlook: many portfolios with differing risk profiles on the market – the investment market promises to pick up pace again
- Rental market remains buoyant – positive capital growth
Third quarter 2025 continues to see weak transaction volume
In the third quarter of 2025 the German residential real estate investment market remained in the doldrums. The transaction volume for residential properties and portfolios with more than 20 residential units stood at around € 1.3 billion, once again falling short of the € 1.5 billion mark. Major transactions of over € 100 million remained a rarity. The transaction volume is thus roughly neck and neck with that of the second quarter (€ 1.2 billion), once again failing to match that of the previous year (-25%). The volume to date in the course of the year (Q1 - Q3) totals € 4.9 billion, equating to 6,769 residential units sold. The average volume per transaction stood at € 24.1 million, with an average price of € 3,028 /m².
As in previous quarters, investment activity covered all risk classes. Core properties continued to be in demand, especially from institutional investment managers and family offices. In the case of value add and manage-to-green strategies, domestic and international private equity investors as well as specialist providers came to the fore as buyers.
Pipeline: pointing to recovery
Lübke Kelber expects investment activity in the coming six to twelve months to pick up significantly. This is due to a market environment that remains attractive and given the number of investible products.
"At present, there are a lot of residential real estate portfolios, including some very large ones, on the market. We can expect to see significantly higher transaction volumes again as early as the 4th quarter. But even over the long term, the pipeline indicates that the transaction environment will pick up pace significantly" as Mark Holz, Head of Strategy and Research, explains.
Not least, this development will be supported by the income side of investments. With market rents continuing to climb, the residential real estate market is in a phase in which capital values are on the rise. Lübke Kelber expects this to have an increasingly positive impact on investment demand.
Volatile environment likely to strengthen residential real estate investment market
Lübke Kelber expects global geopolitical and economic uncertainty and volatility to remain high in the coming months and years and to become a defining element in the capital market. In times of high economic and geopolitical uncertainty, capital allocations will tend to shift to safer investments, and de-risking will occur.
The German residential real estate market is fundamentally very well positioned in this context. After all, this market is highly transparent and liquid – also in a global context. The significant demand backlog in the rental market strengthens the rental and income side of the investment, thereby further reducing the investment risk. In spite of Germany’s economic weakness, the German residential real estate market is therefore likely to attract national and international capital over the medium term.
Methodology
Our transaction volume analysis factors in all properties in residential use comprising at least 20 residential units, whereby commercial uses play a subordinate role. Moreover, minority holdings and pure M&A transactions or entity deals are not considered. Special residential
formats, such as student housing or senior citizens homes are excluded from the analysis.
About Lübke Kelber
Founded as an owner-managed independent consultancy that remainsfirmly committed to entrepreneurial thinking and personal responsibility, Lübke Kelber AG is a strong corporation and the only business in the DACH region offering institutional and medium size investors a complete one-stop-shop for mid-cap real estate.
The foundation is formed by companywide synergies, most notably the specialized units for real estate transactions, digital sales processes as well as asset and property management. Drawing on 55 years of in-depth market experience, this medium-sized property specialist accompanies customers
through all market phases, drawing on over 55 years of market experience. Nationwide, 90 highly qualified experts are active at six locations (Frankfurt, Berlin, Dresden, Düsseldorf, Leipzig, Stuttgart) and realize a transaction volume of up to 1 billion euros a year. As a coinvestor we are involved in selected projects and offer our customers a platform for asset and property management, as well as investment management. Continuity, quality and transparent communication are at the core of our work – ensuring sustainable values and a documented track record of success.
More information is available at: Lübke-Kelber AG - Lübke Kelber AG