Positive Market Outlook: Annual Results of Acquisition Multiples 2024
The German residential investment market demonstrated its stability in the fourth quarter of 2024 with a transaction volume of €4.0 billion – the strongest quarter since the interest rate turnaround! Our latest analysis provides fascinating insights into this development.
German residential yields have peaked and started compressing locally!
Initial yields for German resi have experienced a marked correction over the last two and a half years. In 2024, yields have started to bottom out and there are first signs of a renewed pricing turnaround. How so?
A massive supply-and-demand mismatch is building pressure and is pushing residential rents across all market types – small and large cities, new-built and existing stock.
Despite the recent uptick in inflation, the interest rate environment has become much more favourable and the outlook for 2025 remains for further easing.
Investor interest is returning notably: Q4 2024 has seen more than 4 bn € of transactions. Lübke Kelber AG expects investor demand to remain high as many net-sellers of the last two years return to the market on the net-buyer side (notably Residential Property PLCs). At the same time, institutional investment managers return to the playing field after having stood at the side lines for the last 24 months.
In times of high (geo-political) uncertainty, investor demand is focussed on the low-risk end of the spectrum – (German) residential is a highly income secure asset class.
Combined, market fundamentals point to decent value growth in 2025 for residential property in Germany.
The map below indicates the current pricing level for multifamily for 111 markets in Germany.
