The German housing market during the COVID-19 crisis – why is it so resilient and how can international investors profit now and in the future?


All across Europe local real estate markets are in turmoil. Prices are dropping as the demand reaches new lows, especially concerning retail properties, logistics, office, and hotel real estate. The RCA’s European Capital Trends for Q3 2020 show a 43% price drop. Even the German market – a traditionally stable one – is reeling from the consequences of the pandemic, with one notable exception: the German housing market. Statistics show a 6,8% rise for housing real estate and 5,2% for apartment buildings.

Why is the German housing market so resilient and how can international investors profit from this trend? To learn more about the situation in Germany we asked Birger Dehne, Germanys biggest private housing portfolio holder, for comment.

The German housing market and the COVID-19 pandemic – why it prospers while other market segments struggle

Investing in high class city-center housing, office, hotel, logistics and retail properties has long been the norm for international and national investors in Germany alike. These asset classes have performed well for a long time, but now the pandemic has brought the market to a screeching halt. As travel is regulated, restaurants and stores go out of business and home office solutions have companies reconsidering the cost of big, central office spaces, the demand is low and the prices plummet. Birger Dehne has made his fortune in the German housing market, more precisely by acquiring property in B, C and D classes. In his 20 years of active investment he has trusted this asset class over all others – and, as it turns out once more, for good reason.

“The German housing market has been changing for many years and the COVID-19 crisis is not the reason for the latest trends but acts as an accelerator.”, Dehne explains. “The move away from the city centers towards the suburbs and rural areas has been happening for a while now. Online shopping, social media, working from home – these are all processes that were plain to see and frankly I don’t understand why institutional investors did not react sooner. The writing has been on the wall for a long time. The asset classes that are struggling during the pandemic have been losing attractiveness gradually during the last years, while the housing market in B, C and D classes has been thriving.”.

A new way of living – and new opportunities for investors

While rents in city centers have become too steep for many, the prospect of a bigger and more affordable flat on the greener and quieter outskirts of town is making Germans reconsider their living situation. For many the COVID-19 crisis has made working from home the norm rather than the exception, lockdowns and travel restrictions are changing the way people use and see their homes. Since the German government has been able to stave off the mass layoffs seen in other European countries and is keeping its economy more stable than most, many people are still able to afford a move, keeping the demand from plummeting like it does in many other countries.

Seeing as the demand has surpassed the actual availability of housing in Germany for a long time and will in the future, this trend is not likely to change. Dehne comments: “The demand for affordable living space has been high for years and will only rise. Since many housing construction projects have been stopped or delayed by the pandemic, people have to concentrate on the real estate that is available right now.”. And the expert also has a tip for investors: “I would advise investors to keep an eye out for housing property that matches the current demand: affordable, spacious, outside the city-centers and in the B, C and D classes. These properties are hard to come by now, but if you can find an investment opportunity it will pay off.”.


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