WHILE SOME SEE RISKS, OTHERS SECURE OPPORTUNITIES
The German residential real estate market is currently being interpreted in widely differing ways.
On one side stand many domestic investors who perceive primarily risks: regulation, political uncertainty, rising requirements, and a persistently strained situation regarding construction costs.
On the other side stand international capital providers who view this same market from a distinctly more strategic perspective. And it is precisely this discrepancy that makes the current phase so interesting. For while many German market participants focus on the political debate, international investors are primarily asking themselves a different question:
What happens when a growing demand for housing permanently collides with an insufficient supply?
The answer is clear. Germany is building too little. Berlin is building too little.
And demand does not simply vanish just because the public debate grows louder.
A look at the figures makes this abundantly clear: According to various studies, Germany requires approximately 320,000 new apartments annually through 2030. However, in 2024, only around 215,000 apartments were approved.
In Berlin, this disparity is even more pronounced:
In 2024, only 9,772 apartments were approved—a decline of 38.5% compared to the previous year. At the same time, the capital city continues to grow. By the end of 2025, approximately 3.91 million people were registered as having their primary residence in Berlin.
For many international investors, this is not a matter of short-term market timing, but rather a structural equation:
Increased Demand + Reduced Supply = Long-Term Pressure on Housing
This is why we are once again seeing an influx of foreign capital into the market. This capital often enters quietly, is not always immediately visible, and rarely arrives without a local connection. Instead, entry is frequently achieved through joint ventures, club deals, or platform structures established in collaboration with experienced local operating partners.
In my view, this is precisely the crucial point:
International investors do not invest blindly into a regulated market. Instead, they acquire the necessary know-how, market access, and implementation expertise. In this context, regulation is not the “deal-breaker” it is often portrayed to be in Germany. Many international metropolises have regulated housing markets. For capital providers, the decisive factor is not so much whether rules exist, but rather whether those rules are understandable, predictable, and—crucially—priceable over the long term.
Berlin continues to play a unique role in this regard:
High demand. Sustained population growth. A structurally limited supply.
And—by European standards—entry-level prices that remain attractive.
Thus, while one segment of the German market is still focused primarily on risks, international investors are already back to analyzing the fundamentals.
And these fundamentals tell a very different story than many of the headlines.
My conclusion:
The market has not come to a standstill. It is merely that perceptions have diverged significantly. Those who focus exclusively on the political rhetoric see uncertainty; those who look at supply, demand, and long-term capital flows can already discern renewed momentum.
Delano Kyles · CEO & Managing Partner