Hazelview Investments: German residential real estate – one of the four best investment ideas for this year

Global real estate investment trusts (REITs) are expected to see average earnings growth of 7.2 % this year. German residential real estate is considered one of the four best investment ideas for this year, according to Hazelview Investments’ latest global outlook report.

Global real estate investment trusts (REITs) are expected to see average earnings growth of 7.2 percent this year. The growth potential of REITs’ intrinsic value relative to their current price is strongest in Continental Europe at 33.4 percent, the highest of any region worldwide.

The German residential real estate sector is one of four real estate sectors and is considered to be optimally positioned to achieve above-average growth this year.

This is the forecast of Hazelview Investments, a global alternative investment manager focused on real estate, in its “2026 Global Public Real Estate Outlook” Report.

Global REIT performance varied greatly by region and sector in 2025

The importance of active management increased last year in light of global trade tensions and uncertain macroeconomic conditions because the performance of REITs varied considerably depending on the region and type of property, according to Hazelview’s analysis.

Results by region: Asia led the way in 2025 with returns of between just under 21 percent and almost 40 percent, while the US came in last with less than three percent (see chart 1). Continental Europe fell slightly short of expectations with growth of 7.6 percent. Germany and Sweden were among the biggest negative factors, with declines of 13.4 percent (in EUR) and 8.6 percent (in SEK), respectively.

Infograhic 1: Performance of global REITs by regions 2025 vs. 2024 (in local currency)

Source: Bloomberg LP. Global REITs represented by the FTSE EPRA NAREIT Developed Total Return Index. Regional returns represented by their respective FTSE EPRA NAREIT Total Return regional sub-indices. Data as of December 31, 2025. Returns presented in local currency.

Results by sector: As in the previous year, the healthcare sector (+36.1%) led the real estate sectors in 2025, followed by diversified REITs (+23.1%) and a return of office real estate (+21%). At the bottom of the scale were REITs from the life sciences sector (–46.1%). Residential real estate also fell well short of expectations in 2025, with REITs for multi-family and single-family homes losing 6.3% and 10.2%, respectively. German residential real estate companies also underperformed, although companies such as Vonovia achieved solid operating results.

Infograhic 2: Performance of global REITs by sectors 2025 vs. 2024 (in local currency)

Source: Bloomberg LP. Global REITs represented by the FTSE EPRA NAREIT Developed Total Return Index. Data as of December 31, 2025. Returns presented in local currency.

The best real estate ideas for 2026

“In the year ahead, REIT performance will be driven primarily by two factors,” says Claudia Reich Floyd, Head of Hazelview Investments’ European office. “These are attractive valuations, especially compared to broader equities, and declining supply in key property types.”

Hazelview concludes that the following sectors and regions are optimally positioned for above-average growth: industrial real estate in North America, Europe, and Japan; senior housing in North America; data centers in the US, Singapore, and Hong Kong; residential real estate in Germany and Australia.

The recommendation for German apartments is based, among other things, on figures from international real estate expert CBRE, according to which average rents in the 20 most important German residential real estate markets rose by more than five percent year-on-year from 2015 to the third quarter of 2025 (source: CBRE, Germany Residential Market, October 2025). “Looking at this year, we estimate rental growth in the German residential real estate market to be in the low-to-mid-single digit range,” says Reich Floyd.

About Hazelview Investments

Hazelview Investments Inc. is a global real estate investment company with more than 25 years of experience and over CAD 11 billion (approximately EUR 7.0 billion as of September 30, 2025) in assets under management. Our strategically integrated investment platform provides investors with centralized access to private and public market opportunities. With our in-house investment, development, and property management capabilities, we aim to deliver repeatable risk-adjusted returns to our clients. We offer institutional investors and advisors in strategic markets worldwide a diversified range of real estate investment solutions, including equity and debt strategies in public and private markets. These solutions are delivered through separately managed accounts and a variety of fund structures tailored to the investor’s jurisdiction, investment size, and strategy. Based on deep expertise, data-driven insights, and an ownership-oriented investment approach, we actively seek to create and enhance value for investors, partners, and communities.