The EY Real Estate Trend Barometer 2026 is the most important annual investor survey of the German real estate market. The result for 2026 is clear: 84 percent of investors surveyed name residential real estate as their preferred asset class — the highest figure since the survey began.
For comparison: in 2021, at the peak of the office real estate boom, this figure stood at 67 percent. The shift toward residential is not a short-term reaction to a market downturn, but a structural reassessment of risk and return.
In second place comes logistics with 57 percent — also a sign of the times: e-commerce and nearshoring are structurally driving demand for logistics space. Office real estate, on the other hand, is favored by only 38 percent of investors in 2026 — a dramatic decline from pre-COVID levels.
JLL Q1 2026: subdued activity — but selective, not pessimistic
The actual transaction data paints a more nuanced picture. JLL reports subdued transaction volume for Q1 2026 — no large transactions above 500 million euros, hardly any forward-deal closings for new-build projects, and reluctance around project-development investments.
But that doesn’t mean pessimism: it means selectivity. In 2026, institutional investors are scrutinising deals more closely. The transactions that do close are concentrated on:
Standing assets with stable rental income in prime locations
Residential portfolios with short remaining lease terms (rent upside potential)
Micro-apartment concepts and student housing in university towns
Care/nursing real estate as a demographically secured segment
Prime vs. B-locations: the decisive differentiation in 2026
The most important investment decision in 2026 is not a question of asset class, but of location. The market is running at two speeds:
Prime locations (top cities, best micro-locations)
Prices have fully offset or exceeded the downturn. Net initial yields of 3.0–3.8 percent for residential real estate are accepted because rental growth and value stability are seen as secure. Institutional investors pay premiums of 10–15 percent over the median.
B-locations and peripheral areas
Higher yields (4.5–6.5 percent net initial yield), but also higher risks: possible rent stagnation, higher vacancy risk in an economic downturn, weaker exit options on resale. Institutional investors largely avoid these segments; the private investment market remains active here.
For large-volume investments from 10 million euros upward, a prime-location focus is essential — liquidity and exit options are severely limited in B-locations.
Why residential beats office and retail in 2026
The persuasive case for residential over other asset classes rests on four structural advantages:
Demand resilience: Housing is not an optional good. Remote work, recession, digitalisation — nothing reduces the underlying demand for housing.
Short terms, high rental flexibility: Residential leases are open-ended, and rent adjustments upon tenant turnover are possible immediately. Office landlords, by contrast, commit for 5–10 years.
Manageable regulatory risk: Despite tenancy law reform, the core return from ordinary residential letting remains largely protected from a regulatory standpoint.
Outlook: what institutional investors will do next
The subdued Q1 2026 activity is expected to pick up in the second half of the year. Market observers anticipate a revival of the transaction market once the first ECB key-rate cuts have pushed forward rates down further and sellers have finally adjusted their price expectations to the new interest-rate environment.
The capital is there — European open-ended real estate funds, insurers and pension funds have earmarked significant allocations for German residential real estate. The 2026 market is waiting for the right entry points. Selective and data-driven — not opportunistic.
