Briefing: positive momentum as Germany turns the page

New Government, new strategy, new path forward: Germany is turning the page in many ways this year and prospects are positive, experts agreed at Real Asset Media’s Invest in German Real Estate briefing, which took place this week at BGY’s headquarters in London.

“The fundamentals are extremely positive and the German market offers a lot of opportunities in many attractive locations,” said Rainer Nonnengässer, managing director, OmniLiv. “Prices have dropped significantly and it is possible to make opportunistic returns.”

The new chancellor, Friedrich Merz, chosen to lead the new government following the February elections, has announced that “Germany is back”. The Bundestag has approved a €500 billion infrastructure fund, which local media dubbed “a fiscal bazooka” as it has the potential to be a catalyst for economic growth.

“I am optimistic because the new chancellor understands business and the big infrastructure and defence programmes running for the next four years will make a big difference”, said Gereon Kohlgrüber, managing director & head of investments Germany, AEW. “Now what we need is investment, but I am positive on the outlook for the real estate market.”

Transactions are increasing again, even if at a slow pace, and investors, both domestic and international, are beginning to see Germany as a safe haven once more.

“German institutional investors are buying German real estate again, deploying capital they had put aside because they have realised that now is the right time,” said Caroline Gronack, managing director, Apleona Invest. “We also see international investors, including family offices, showing a renewed interest in the market.”

Germany could also benefit from the fact that investors are turning away from the US market to distance themselves from the turmoil caused by the tariffs and other changes brought about by the Trump administration.

“Investors want stability and they don’t like the confusion the US is causing in the market,” said Kohlgrüber. “Germany with its new government now offers stability, and that is a positive.”

However, Germany is also an exporter and the tariffs could have a negative impact on its recovering economy.

“The tariffs are clearly a threat and it might be a long time before the positive impact of the infrastructure fund is felt,” said Oliver Kummerfeldt, head of European real estate research, Schroders Capital. “But sentiment has improved a lot and many parts of the real estate market are attractive because they offer value.”

Extensive repricing has taken place, but there may be more to come. Corporate defaults are expected to be higher than during Covid, as during the pandemic there was a lot of government support.

“We expect more corporates to be in distress in the next few years,” said Gronack. “They will need liquidity so they will have to sell their real estate.”