Real Estate Investment

Key Takeaways

• Multi-family houses achieve net returns between 2.8% in Munich and 5.0% in Schauenburg/Kassel (as of April 2026)
• 95% of market participants view refinancing as a defining factor for 2026; 91% expect growing significance of Private Debt
• Ten-year loans cost between 3.1% and 3.7% interest in the first half of 2026 (Klein analysis, January 2026)
• Square-meter prices in Munich exceed the €8,000 mark, while comparable properties in other regions are significantly cheaper
• The ECB communicates more transparently, providing market participants with better guidance for investment decisions
• Positive capital investment requires rental income that achieves a clear surplus after deducting interest, taxes and reserves

Framework Conditions: Stabilization Despite Headwinds

The German real estate market shows moderate condition in April 2026. According to Colliers, the framework conditions in the investment market stabilized further in 2025, with a perspective on a slow economic recovery process. The ECB's more transparent monetary policy communication provides market participants with clearer guidance for their investment decisions.

Nevertheless, structural burdens are weighing on the market. Rising interest rates, high energy prices and economic uncertainty are dampening momentum, according to Wirtschaftswoche. These factors lead to more differentiated valuations of individual real estate locations and property types.

Financing Landscape: Refinancing and Private Debt Dominate

Refinancing significantly shapes the market in 2026 as well. According to an EY survey, 95 percent of market participants recognize this. In parallel, private debt capital (Private Debt) is gaining importance – a financing instrument in which institutional investors outside the traditional banking market provide loans. 91 percent of respondents expect growing relevance here.

Interest rate development remains central for investors. For the first half of 2026, the Klein analysis expects an interest rate range between 3.1 and 3.7 percent for ten-year loans. This bandwidth is significantly above the low-interest levels of previous years and fundamentally changes the profitability calculation for new investments.

Multi-Family Houses: Returns Between 2.8 and 5.0 Percent

A well-positioned multi-family house with moderate existing rents in a growing city is considered one of the most attractive investment forms in the German real estate market according to Baur Immobilien. Current net returns – that is, rental income after deduction of operating costs in relation to purchase price – range between 2.8 percent in Munich and 5.0 percent in Schauenburg near Kassel.

This range illustrates the enormous impact of location choice. Munich offers lower returns but promises stable appreciation and low vacancy risks. Smaller cities like Schauenburg enable higher cash flow returns, but require more careful examination of local economic structure and tenant demand.

According to Evernest, what is decisive for positive capital investment is that rental income achieves a clear surplus after deducting interest, taxes and reserves. Only then does the capital work effectively for the investor. With interest rates between 3.1 and 3.7 percent and net returns in the mid-single-digit range, this margin noticeably shrinks.

Regional Price Differentials: Munich Versus Periphery

The purchase decision should take into account the enormous regional differences that significantly affect both the square-meter price and long-term appreciation potential. In Munich, square-meter prices beyond the €8,000 mark are long since commonplace, while comparable properties in other federal states are considerably cheaper.

This price gap opens up different investment strategies. Investors focused on capital preservation and long-term appreciation tend toward metropolises with high economic power. Cash flow-oriented investors find more attractive returns with manageable risk in secondary cities with stable infrastructure and moderate price levels.

The location choice should include economic structure, population development and transport connections. According to Evernest, regions with stable economies and good infrastructure offer the best conditions for sustainable rental income and value retention.

Outlook: Selectivity as Key to Success

The real estate market in 2026 requires more selective approach than in the low-interest years. The combination of increased financing costs and moderate returns leaves little room for misjudgments. Professional market analysis and realistic calculations are gaining importance.

However, the stabilized framework conditions and more transparent ECB communication provide solid foundations for investment decisions. Those who carefully align location, property type and financing structure will find opportunities with attractive return-risk profiles even in the current environment.