- Business
German real estate market 2025: stabilisation despite cash flow stress
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The German real estate market has turbulent times behind it. After a phase of marked decline in previous years, it is now showing signs of stabilisation and moderate recovery. Current data points to a slight price increase across 2024 as a whole, and a further, if manageable, rise is expected for 2025. This positive development is expected in particular for properties in sought-after locations and for energy-efficient buildings.
This analysis is part of the current market study by COMMITLY on the subject of “Liquidity challenges for real estate investors 2025”. You can get the full market study free of charge here:
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Although the real estate boom of recent years may be over, persistently high demand that exceeds supply points to remarkable resilience in the residential property market. Prices remain strong, particularly in metropolitan regions. In the commercial real estate market there are first signs of recovery in areas such as logistics and retail, while the office market is facing challenges such as increasing vacancy rates.
Despite this stabilisation and the expected moderate price increases, landlords and investors in the German real estate sector are facing considerable challenges, especially with regard to cash flow. The profitability of real estate investments is largely determined by a few central factors.
The central cash flow challenges at a glance
Rising financing costs
Although the European Central Bank (ECB) has cut key interest rates, the cost of property financing jumped at the beginning of March 2025. Interest rates for ten-year loans currently stand at around 3.11 % (as of January 2025). This marked increase compared with historic lows significantly impairs profitability, especially in projects with a high share of debt. Rising financing costs directly reduce cash flow.
Rising operating expenses
Maintenance costs for residential property rose by 68 % between 2010 and 2022. General operating costs (ancillary costs) for tenants have gone up as well. In large cities such as Berlin in particular, operating costs for offices have risen by 47 % since 2018. These inflationary tendencies and specific market factors reduce net operating income and therefore the cash flow from real estate investments.
The influence of the tax framework
The net rent forms the basis for income tax on rental income. Landlords can claim deductible expenses (income-related expenses), but the speculation tax on a sale within ten years and the ongoing property tax are a burden. Possible future reforms of real estate taxation could also affect profitability. Targeted tax optimisation is therefore decisive.
Tenants’ payment behaviour
More than half of the German population lives in rented accommodation, and a considerable share is burdened by high housing costs. In 2022 the average rent burden ratio was 27.8 % of income. A high proportion of tenants with affordability problems can lead to an increased risk of rent arrears. Rent arrears can in turn cause liquidity problems for landlords directly. Dealing promptly with potential rent arrears is essential.
These challenges – from rising costs through to rent defaults – put pressure on the cash flow of real estate investments and call for proactive management.
Why strategic cash flow planning matters more than ever
To succeed in this environment, strategies for cash flow optimisation and a precise knowledge of the relevant performance indicators are essential. Solid cash flow management helps real estate companies secure financial stability and minimise risks. It is about always having sufficient funds available to cover ongoing expenses.
Given the complexity and volatile nature of real estate management, forward-looking cash flow planning is fundamental. Reliable information about bank balances and future cash inflows and outflows is indispensable for that.
Liquidity under control – with COMMITLY
The real estate industry is under enormous pressure. High construction costs, volatile markets and financing uncertainties make a clear view of liquidity decisive. Anyone who actively manages their solvency gains room for manoeuvre.
COMMITLY is the smart solution for digital liquidity management, developed by entrepreneurs for entrepreneurs. It combines bank accounts, payment plans and budgets on one platform for maximum transparency and planning certainty.
With COMMITLY you get:
- Daily synchronisation of your bank accounts for an up-to-date liquidity status per property, company or project.
- Rolling cash flow planning on a monthly, weekly or daily basis.
- The ability to keep an eye on several companies and projects – ideal for complex real estate structures.
- Scenario planning features to simulate different market developments.
- The creation of Forecast reports, static plans and variance analyses that are also relevant for communication with banks.
Professional cash flow management, supported by suitable software, creates the transparency needed to spot bottlenecks early and take well-founded decisions.
Find out how strategic cash flow planning works in practice in the real estate industry.
Anyone who wants to manage real estate projects successfully today needs more than gut feeling. With COMMITLY, cash flow planning becomes a strategic advantage.
