Thursday, 13 November 2025
Germany’s real estate market will remain characterised by selective investment activity in 2026, according to a new market outlook published by PTXRE. The consultancy estimates that the refinancing shortfall in the market will reach approximately €8.5 billion next year, with office assets accounting for nearly €5.1 billion of that figure. PTXRE attributes the pressure on refinancing to tightened lending standards and higher capital requirements as Basel IV and CRR III come into force, limiting banks’ risk appetite, particularly for non-core assets.
The company expects total transaction volume in 2026 to reach around €40 billion. Rather than new capital entering the market, PTXRE says most transactions are likely to be driven by reallocation and portfolio optimisation as institutional investors remain cautious in the core and core-plus segments. ESG regulation will play a decisive role in shaping market behaviour next year. Three regulatory changes – the Energy Performance of Buildings Directive, the Carbon Border Adjustment Mechanism, and expanded Corporate Sustainability Reporting Directive requirements – will place increasing pressure on investors and owners to quantify energy performance, adjust sourcing strategies and develop decarbonisation plans. PTXRE notes that assets falling short of ESG compliance requirements may face a growing need for repositioning or divestment.
Market dynamics are expected to vary significantly by sector. In the office market, demand will remain focused on centrally located properties with rental growth potential, while peripheral locations continue to experience downward pressure. In the residential sector, completions are expected to fall to roughly 175,000 units, well below the annual demand of more than 300,000 units, creating selective entry points in subsidised housing, compact formats and energy-efficient stock. Logistics and industrial facilities are projected to remain resilient, supported by structural demand linked to data infrastructure, security and supply chain requirements. Retail properties anchored by food and daily-needs operators continue to attract investor interest, while mixed-use redevelopment is gaining momentum in urban and secondary locations. The hotel sector is seeing improving performance driven by higher occupancy and renewed expansion strategies from international operators.
PTXRE concludes that 2026 will be defined by capital selectivity and regulatory adaptation. The consultancy expects the refinancing gap to gradually decline over the coming years and return to pre-rate-hike levels within five to six years.
