Real Estate as an Investment: Is Now the Right Time to Get Started?

The real estate market has changed: financing has become more complex, capital more selective, and project execution more demanding. At the same time, demand for new housing remains high — many projects today fail not because of a lack of demand, but because of financing challenges.

This is exactly where a new dynamic is emerging: projects increasingly require additional capital components — opening up investment opportunities that were previously accessible mainly to institutional investors. So, does investing in real estate still make sense today? The answer is yes — but differently than before.

In this interview, Invesdor’s real estate experts — Anna Hoos, Stefan Ertl and Christopher Müller — explain how the market has changed, where new opportunities are emerging, and what investors should pay attention to today.

How do you assess the current development of the real estate market from an investor perspective?

Stefan Ertl: We are coming out of a highly complex market phase that has already had noticeable economic effects, especially within the banking sector. Banks are financing projects much more cautiously today than they did a few years ago and are covering smaller portions of total project costs. At the same time, demand for real estate remains strong across many sectors. This creates a financing gap, as project developers now need to provide more equity to move projects forward.

What developments are currently shaping the real estate market?

Christopher Müller: The real estate market moves in cycles — and we are currently in one of those cycles. However, the current downturn and adjustment phase has been accelerated by an exceptional combination of external shocks: COVID-19, the war in Ukraine, the energy crisis, inflation, and rising interest rates all impacted the market within a short period of time. Even so, the overall market behavior still reflects patterns we know from traditional real estate cycles.

What makes this phase different is the structural transformation emerging from it. Higher financing costs, persistently elevated construction costs, increasing regulatory requirements, and growing political pressure around housing are leading to a new market equilibrium. The market that emerges from this period will look fundamentally different from the one before the crisis.

At the same time, housing remains one of the most urgent topics. Demand for residential space continues to significantly exceed supply. In Germany alone, the government is currently missing its annual target of 400,000 new homes by approximately 100,000 to 150,000 units, while a broader housing shortage of more than one million homes is being discussed. Housing and infrastructure therefore remain structural pillars within a market that is currently repositioning itself.