Transaction volume at year-start reaches nearly nine billion euros, slightly above prior year
Inflation has returned, bringing with it the “specter” haunting real estate investors: rising financing costs. All indicators point to eurozone and German inflation rates climbing from 1.9 percent to above 2.5 percent in March. The conflict in Iran and the broader Middle East is progressively impacting consumer living costs and leaving its mark on balance sheets, particularly among energy-intensive industrial enterprises. Attention now turns to the European Central Bank (ECB) and its response, especially given criticism of its allegedly hesitant stance during the previous price surge following the Ukraine war. In March, the ECB held rates steady; the next rate decision is scheduled for late April. Credit and bond markets have already begun reacting: swap rates and government bond yields have risen substantially.
Despite these persistent geopolitical risks and elevated financing costs, Germany’s real estate investment market presented a moderately positive picture in Q1 2026. Nationwide transaction volume reached 8.9 billion euros at year-start, twelve percent above the prior-year figure. Market sentiment in Germany’s property investment sector developed very positively in Q4 2025 and early 2026. Several factors explain this: first, few market participants still speculate on further rate declines; second, debt capital availability has continued increasing.
However, the current escalating geopolitical situation, coupled with the energy crisis and rising rate expectations, has dampened this momentum. The consequences are reverberating throughout the global economy, with their full magnitude still unclear. Nevertheless, deals yielding significantly above debt capital costs will remain viable even if rates rise moderately. The question becomes one of price rather than transaction feasibility. In the near term, though, some market participants have adopted a wait-and-see approach in recent weeks, seeking to avoid perceived risks.