Investment market
The positive economic development of the last 10 years has generated sustained demand for real estate in all submarkets. This has consolidated and expanded Hannover's position as the most important location after the seven major A-cities in Germany. Hannover offers attractive investment opportunities and attracts both national and international investors looking to invest in locations with stable values.
However, fluctuating conditions on the national and international markets are currently making reliable forecasts difficult. Depending on the sector, this is currently leading to cautious investment and lower take-up.
Market sentiment and trends
The long upswing on the German investment market since 2010 initially led to falling yields and rising investment volumes in the Hannover Region. However, with the abrupt turnaround in interest rates at the beginning of 2022, the investment market in Germany slumped significantly. Further crises and uncertainties in connection with the EU taxonomy increased investor restraint.
The Hanover investment market has stabilized at a level of just over €400 million in the last two years following the sharp slump in 2020 to 2022. The focus in 2024 was once again on the industrial and manufacturing segment. The turnover volume was dominated by several large transactions of over €50 million.
Investment year 2024 again weak
Investment figures in the Hannover Region had already fallen significantly at the start of the coronavirus pandemic in 2020 and initially stabilized at around €500 million per year in 2021/2022.
The year 2024 did not bring a turnaround on the investment market in Hannover. Although the result from 2023 was narrowly surpassed, the total investment volume of €413 million (excluding off-market transactions) for commercial real estate in 2024 was still around €250 million lower than the average of the last five years. It should be added that the Hannover Region is thus in line with the national trend, where the hoped-for upturn in the investment market also failed to materialize in 2024.
Increase in the number of transactions
While two major deals alone were responsible for around 50 % of the transaction volume in 2023, the volume in 2024 is once again spread across a larger number of transactions. Nevertheless, > 60% of the investment volume is accounted for by a small number of transactions in the €50-100 million range. At around 49%, the logistics real estate market once again accounted for the highest share of the total volume, although the overall picture is more diversified than in the previous year, when logistics properties accounted for around three quarters of the investment volume.
Transaction activity is currently characterized by stable demand. In the first half of 2025, transactions with an investment volume of around €160 million were recorded in Hannover. Initial transactions at the start of the second half of the year point to a comparatively strong second half.
Yields will continue to rise moderately in 2025
In 2024, yields for logistics and industrial properties rose the most compared to the previous year at 40 basis points. The increase for office properties was only slightly lower at 30 basis points. Retail properties recorded a moderate increase of 10 basis points, while yields for hotel properties remained stable.
Prime yields are expected to continue to rise over the course of 2025 - albeit at a slightly lower level than in the previous year. Demand for logistics and industrial properties in particular is stabilizing, with a forecast increase of only around 10 basis points.
In the office segment, an increase of around 30 basis points is expected by the end of the year due to continued very subdued demand. Yields on retail properties are expected to rise by around 10 basis points, while hotel yields will remain stable.
Outlook: Cautious optimism is permitted
Developments at the end of 2024 and the start of 2025 allow cautious optimism for the investment market for commercial real estate in the Hannover Region. After a phase of uncertainty, pricing now appears to be becoming more stable. It is expected that investors will once again have a more reliable basis for their decisions.
The more stable market conditions are creating favorable entry opportunities for investors. It is noticeable that international investors are also increasingly taking the opportunity to enter the market. This development could lead to a further revival of the market in the long term and further strengthen the attractiveness of the Hannover Region as an investment location.
The availability of liquidity remains a decisive factor. Investors who are less reliant on debt financing currently have particularly favorable opportunities to act opportunistically on the market. They can react flexibly to attractive properties and thus secure competitive advantages.
Overall, the investment market for commercial real estate in Germany and also in the Hannover Region is currently somewhat more stable. However, the overall economic outlook continues to cloud the mood. New records are therefore not to be expected. Nevertheless, the signs are currently pointing to a slight recovery, giving rise to hopes that 2025 will be a stronger year for investment than the two previous years.
Sustainability and energy efficiency determine the market
However, the pressure to invest remains high for many investors. In the office and logistics submarkets, the prospects of rising rents for prime properties have recently improved further. Market participants in Hannover expect opportunistic and value-add-oriented investors to become increasingly active in order to adapt outdated existing properties to current and future social, ecological and economic challenges through revitalization and realignment (manage to ESG) .
The topics of sustainability and energy efficiency are becoming increasingly important in the commercial investment and project development market. None of the current projects can ignore the issue of sustainability; all of them therefore meet the investment demand and the requirements of the companies using them perfectly.
Rents for properties with quality or location deficits are coming under increasing pressure. In the office and logistics submarkets, rent increases for top properties are still possible, but these are almost exclusively limited to new buildings in very good locations.
At the same time, this is leading to a further spread in yield levels within the asset classes.
The keyword here is planning security: the renewed discussions surrounding the Building Energy Act and the implementation of the European Union's energy efficiency requirements for buildings have unsettled prospective investors looking to invest in existing properties in particular.