New research from Swiss-based property group Empira reveals that multifamily investments in Germany rose in Q2, while new building permits fell, putting extra strain on an undersupplied market.
Total investment in German housing portfolios with 30 or more units amounted to around €2.5 bn in the second quarter, exceeding the figure for the previous year (around €1.5 bn) by over two-thirds.
Empira said 65% of all new apartments are in multifamily buildings, making the segment an attractive investment proposition.
‘This significant increase in investment activity can be interpreted as a sign of a market recovery and indicates that residential real estate is still an important stability anchor for institutional portfolios,’ said Steffen Metzner, the group’s head of research.
At the same time, new residential building permits fell again compared with last year, placing further pressure on demand.
In the first quarter, permits were granted for 44,137 residential units in 18,937 new residential buildings, representing year-on-year declines of 25% and 23% respectively, according to Empira.
Following shortfalls in new housing construction last year, this will exacerbate demand in many housing markets, the firm said.
Some 225,000 new housing units are expected to be completed for full-year 2024 and only 195,000 in 2025, far short of the government’s target of building 400,000 new homes a year. This follows the construction of 294,399 units in 2023 and 295,275 in 2022.
Germany’s top seven cities recorded an average increase in residential rents of 2.2% in the first quarter of 2024, with Berlin seeing the strongest rise (+7.8%).
Purchase prices fell, led by Hamburg (-8.1%), while Düsseldorf and Munich experienced a mild average decrease of -1.5%.
