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What will happen in Munich’s real estate market? Will prices go up or down? Is Munich still a hotspot for foreign investors? How is Germany’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with notaries, real estate agents, and clients who buy properties in Munich, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Energy-efficient building development will grow due to new environmental regulations
New environmental regulations are set to encourage the development of energy-efficient buildings, particularly in places like Munich. In 2024, Germany introduced the Buildings Energy Act (GEG), which requires new heating systems in buildings to be powered by at least 65% renewable energy. This move effectively bans fossil-based heating systems, pushing for more energy-efficient solutions.
Additionally, the German government has revised its Federal Funding Guidelines for Efficient Buildings (BEG). This revision supports the implementation of energy-efficient measures, such as replacing older gas heating systems with modern heat pumps. These incentives make it financially attractive for developers to invest in energy-efficient technologies.
Moreover, there has been a significant rise in energy-efficient building certifications in Munich. Over the past five years, certified office space in the region has increased by 122%. This growth indicates a strong demand for sustainable and energy-efficient properties, driven by tenant and investor preferences for environmentally friendly and healthy working environments.
Sources: AOShearman, JLL, Heuking
2) Foreign investors will prioritize sustainable and energy-efficient properties
In recent years, we've seen a noticeable shift in foreign investment towards sustainable and energy-efficient properties, especially in places like Munich. This trend is largely driven by increasing concerns about environmental sustainability and the need to meet decarbonization requirements. According to the PwC Emerging Trends in Real Estate 2025 report, more than two-thirds of respondents are now prioritizing sustainable investments, reflecting a growing awareness of the environmental impact of real estate.
Munich has been at the forefront of this movement, with stringent energy efficiency standards and regulations. The German Heating Law, for instance, mandates that by 2030, heating networks must incorporate a significant percentage of renewable energy, aiming for complete decarbonization by 2045. Additionally, Munich's climate protection targets are ambitious, aiming for a 50% reduction in carbon emissions per capita by 2030. These regulations set a high bar for energy efficiency, making sustainable properties more attractive to investors.
Moreover, the media's focus on sustainable living and real estate has amplified interest in eco-friendly properties. This is further supported by government incentives, such as the 500 million euros allocated for municipalities to transition to renewable energy. These factors, combined with the long-term cost savings associated with energy-efficient properties, make sustainable real estate a compelling choice for foreign investors.
Sources: PwC, Energy Cities, Energy Cities
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Germany versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
3) Demand for affordable rentals will rise as more international students arrive
Munich is seeing a surge in international students, especially at its universities.
Take Ludwig-Maximilians-Universität (LMU) for example, where international student numbers jumped from 10,379 to 11,178 in just one year. This influx is reshaping the local housing market.
Local real estate agencies are buzzing about the increased demand for student housing. The MLP Studentenwohnreport shows that rents in Munich climbed by 5.1% in 2023, a clear sign of this growing need.
But here's the catch: affordable rental units are becoming scarce. The same report highlights a 20% drop in the student housing market in 2023, worsened by a slowdown in new construction.
For students, this means a 30 square meter flat now costs over €800 a month, which is way above the maximum student housing allowance of €380. It's a tough market out there.
With fewer affordable options, students are feeling the pinch, and the demand for budget-friendly rentals is only going to grow.
Sources: LMU Munich, University World News, The PIE News
4) Rental yields in central Munich will rise as demand for city-center living stays strong
Rental yields in central Munich are set to rise as demand for city-center living remains strong.
In late 2023, newly built houses in Munich sold for 5.2% more than the previous year, pushing property prices up. This increase in property values often leads to higher rental yields, making it a promising time for investors.
Munich's population is on the rise, with the metro area reaching 1,585,000 people in 2024, a 0.57% increase from 2023. This growing population fuels the demand for housing, especially in the bustling city center where everyone wants to be.
City-center apartments are in high demand, and vacancy rates are low, which is great news for rental yields. The office market is also thriving, with rents climbing and properties being snapped up quickly, leaving little available space.
With such a tight market, the scarcity of available properties is a key factor driving up rental yields. People are eager to live in the heart of Munich, and this demand is unlikely to wane anytime soon.
Investors looking at Munich can expect strong returns as the city's appeal continues to grow, supported by a robust economy and vibrant cultural scene.
Sources: Finexity, Statista, Macrotrends
5) Affordable housing projects will stabilize prices in some areas, stopping sharp rises
In recent years, Munich has seen a significant push towards developing affordable housing projects, particularly in areas like the Freiham neighborhood. This initiative involves the construction of around 11,000 apartments, with a substantial portion being subsidized housing units. Such developments are crucial in addressing the city's housing shortage and are expected to help stabilize property prices by increasing the supply of affordable housing options.
Historically, the introduction of affordable housing in areas facing a housing shortage has shown to stabilize property prices. For instance, the Freiham project, which plans to accommodate over 25,000 residents, is designed to provide affordable housing options. This approach helps prevent sharp increases in property prices by meeting the high demand for affordable housing, which was evident from the high rental costs in Munich in the past.
Moreover, case studies from other cities like Berlin have demonstrated that strategic use of publicly owned land for high-density mixed-income housing can effectively reduce housing costs and stabilize property prices. These examples highlight the potential impact of similar strategies in Munich, where government-led projects can significantly influence the housing market by providing a steady supply of affordable units.
Experts have also pointed out that government investment in affordable housing can have a more substantial impact on the housing supply compared to fragmented contributions from private developers. This insight supports the idea that affordable housing projects, like those in Freiham, are essential for stabilizing property prices in Munich by addressing the housing shortage and meeting the growing demand for affordable options.
Sources: Allplan, SSRN, GMFUS, DW
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6) Property values in Westend will rise significantly as it becomes popular with young professionals
The Westend area in Munich is becoming a hotspot for young professionals, leading to a significant rise in property values.
In recent years, rental prices in Westend have hit a new high of 7,540 euros/m², showing strong demand for housing. This urban area is buzzing with energy, attracting those who want to be in the heart of the action.
Munich's booming economy, especially in finance and tech, is a magnet for young talent. With giants like BMW, Siemens, and Allianz calling Munich home, the city is a hub for career-driven individuals. Westend's new infrastructure and lively cultural scene, not to mention its closeness to Oktoberfest, make it a prime spot for this crowd.
Westend's location is unbeatable for those who need to commute, thanks to its proximity to major business districts and excellent public transport. Tech companies and startups are setting up shop nearby, which is sure to attract even more young professionals.
For anyone considering buying property, Westend offers a vibrant lifestyle with the promise of future growth. The area's appeal is only set to increase as more amenities and infrastructure developments are completed.
With its mix of career opportunities, cultural attractions, and convenient location, Westend is quickly becoming the go-to neighborhood for young professionals looking to settle in Munich.
Sources: JLL Germany, Finexity, N26
7) Munich rents will keep rising because of a persistent housing shortage
Rents in Munich are on the rise due to a persistent housing shortage.
With the city's population expected to grow, Munich could see 1.8 million residents by 2040. This surge means a big demand for housing, with a need for 165,000 more apartments by then. But here's the catch: the city is only building about 6,500 apartments each year, which is far from the 10,000 needed annually to meet this demand.
Adding to the challenge, the cost of building materials is climbing. For instance, construction cement prices jumped by 41% between 2022 and 2023. This makes new projects less appealing for developers, slowing down the pace of construction even more.
Munich's unique demographics also play a role. The city has a lot of single residents, with over half the population living alone. This trend increases the demand for smaller apartments, putting even more pressure on the housing market.
Sources: The Munich Eye, DZ HYP Residential Market Report
8) Rent increases will stabilize in some districts due to rent control measures
Rent control measures can stabilize rent increases in certain districts by making housing more affordable.
In Germany, the 2015 rent control law showed positive effects on rent stabilization, as highlighted in a study from the *Journal of Urban Economics*. This study found that rent control effectively reduced rents for regulated units, aligning with the goal of making housing more affordable for tenants.
Local reports, like the Rent Survey Munich project, offer insights into how much tenants in Munich pay and identify neighborhoods where rent control is most needed. These reports help pinpoint areas where rent control can prevent displacement and increase tenant satisfaction.
Government statistics reveal a 2% increase in existing rents in Germany for 2023, with forecasts suggesting further hikes. This trend underscores the need for more stringent rent control policies to stabilize rent increases in specific districts.
Comparative analysis shows that in Berlin, the introduction of the rent cap led to a significant drop in rents for regulated apartments. This provides clear evidence of the effectiveness of rent control measures.
International examples, especially from Berlin, support the idea that rent control can positively affect housing affordability and stabilize rents.
Sources: Statistical Research Projects, Max for Rockville, Congress Files, Deutsche Wealth
We have made this infographic to give you a quick and clear snapshot of the property market in Germany. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
9) Investor strategies will change in some areas due to stricter rent control policies
Stricter rent control policies are shaking up investor strategies in certain areas.
In Germany, back in 2023, rent control was a hot topic. It successfully made housing more affordable by reducing rents for regulated units. But here's the catch: it split the market into two parts—regulated and unregulated. This split caused rents to rise in the unregulated segment because everyone wanted a piece of the affordable pie.
Fast forward to 2024, and the German government decided to extend these rent control measures until 2029. This move stirred up a lot of uncertainty among investors. With political debates and delays, investors started to feel uneasy. They began to steer clear of areas with strict rent control, especially since there were talks about changing the rules for new constructions, potentially affecting properties rented after October 1, 2019.
Investors are now keeping a close eye on rental yield trends. In areas with rent control, rental yields might not be as attractive because rent increases are regulated. This is a big deal for investors, as seen in the German residential real estate market report. Plus, property values are swayed by these policies, with low vacancy rates and long waiting times for apartments in cities like Hamburg making a noticeable impact.
In Hamburg, for instance, the demand for apartments is so high that it affects property values and investor interest. The rent control policies have led to high waiting times for apartments, which is something investors are wary of.
So, if you're thinking about buying property in Germany, it's crucial to understand how these rent control policies might affect your investment. The landscape is changing, and investors are adapting their strategies accordingly.
Sources: Government Extends Rent Control Measures Until 2029, DZ HYP - The German residential real estate market 2024 | 2025, Rent Control and Rent Stabilization: Lessons from Germany
10) Tech-savvy buyers will be drawn to new developments as smart home technology becomes standard
Smart home technology has become a key feature in new property developments, especially appealing to tech-savvy buyers. In the past, specifically in 2023 and 2024, the smart home market in Germany was valued at USD 3.42 billion and was projected to grow significantly. By 2025, it was expected to reach USD 9.71 billion, showing a strong upward trend in adoption rates.
One of the main reasons for this growth is the increasing consumer demand for energy-efficient and automated home solutions. German consumers have shown a strong preference for smart home devices that offer quality, reliability, and security. These devices not only enhance convenience but also contribute to energy conservation, helping households reduce utility costs.
Moreover, surveys have indicated a high level of interest among buyers for tech-integrated living spaces. By 2024, approximately 46% of households in Germany had adopted smart home applications, with a significant portion of the population open to AI-controlled tools. This trend reflects a broader shift towards more connected and efficient living environments.
Real estate developers have recognized this demand and are increasingly partnering with tech companies to integrate smart home technology into new developments. This collaboration ensures that properties are equipped with the latest smart home devices, making them more attractive to tech-savvy buyers.
Sources: Germany Smart Home Market Value Analysis, Germany Smart Home Market Size, Smart Home Market in Germany: Trends, Growth, and Future Outlook
11) Interest in Perlach properties will grow due to new commercial projects and job opportunities
Properties in the Perlach district are becoming more attractive due to several key developments and opportunities. In recent years, the area has seen significant commercial growth, such as the Perlach Plaza, which is a mixed-use development that includes residential units, student apartments, a hotel, retail spaces, and a park. This development has been fully let, with 98% of the commercial space occupied, indicating a strong demand for both living and working spaces in the area.
Additionally, the Fritz-Schäffer-Straße office district is being transformed into a sustainable, high-tech campus, which is expected to attract more businesses and employees. The Campus Perlach, offering around 200,000 m² of office and lab space, is already home to major companies like Siemens, further boosting the district's appeal as a business hub. These developments are complemented by the establishment of new business hubs, such as the MUC.EAST office and retail building, which is part of an agreement with the City of Munich.
Moreover, the presence of tech companies like Meta and other renowned firms in the neue balan project and Weisses Quartier highlights the growing tech sector in Perlach. This influx of companies is likely to create more job opportunities, drawing more people to the area. The district's connectivity to the subway system also enhances its accessibility, making it an attractive location for both businesses and residents.
Sources: Across Magazine, Julius Baer, Munich Business
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12) More UK buyers will look for properties in Munich due to Brexit
Brexit has led to a noticeable increase in UK buyers seeking properties in Munich. This trend is largely driven by the stable economy and attractive investment opportunities that Germany offers, as highlighted in Knight Frank's 2025 Outlook. Despite the political uncertainty that Brexit introduced, UK buyers remain active in the European real estate market, with Germany being a key focus.
In 2025, about 30% of residential real estate deals in Germany are expected to involve international buyers, including those from the UK. This is due to Germany's stable economy and attractive rental yields, making it a desirable location for investment. Munich, in particular, stands out for its strong economic significance and population inflows, which further enhance its appeal to UK investors.
Additionally, the trend of UK citizens investing in EU real estate has continued post-Brexit, as many see this as the new normal after years of uncertainty. Munich's low vacancy rates and strong rental demand make it an appealing choice for these investors. Furthermore, any changes in UK property laws or taxes post-Brexit that make EU investments more appealing could also drive interest in Munich.
Sources: Knight Frank, Varso Invest, PwC
13) Demand for homes in Schwabing will rise because of its lively culture and closeness to tech hubs
Schwabing is becoming a hot spot for people looking to live in a lively and culturally rich area. The neighborhood is known for its vibrant cultural scene, which is a big draw for many, especially those working in tech. In the past few years, major tech companies like Apple, Google, and Microsoft have set up offices nearby, making Schwabing an attractive place to live for tech professionals.
These tech companies have invested heavily in the area, with Apple alone investing a billion euros by 2024 to expand its European center for chip design. This influx of tech companies has led to higher rental prices, with apartments in Schwabing fetching some of the highest rents in Munich. This indicates strong demand from tech professionals who prefer to live close to their workplaces and enjoy the cultural offerings of the neighborhood.
Moreover, media coverage often highlights Schwabing as a desirable place to live, especially for those in the tech industry. The neighborhood's reputation as a hub for innovation and culture makes it appealing to young professionals. Real estate reports also show low vacancy rates, suggesting that many people are eager to move to Schwabing, further driving up demand.
Sources: Mr. Lodge, Deutschland.de
14) Luxury property prices in Munich will rise moderately as international interest increases
Munich's luxury real estate market is buzzing with international interest.
High-net-worth individuals are flocking to Munich, drawn by its stellar reputation for quality of life and economic opportunities. This influx is making the city a hot spot for those seeking premium living spaces in Europe.
The market's tightness is evident with a residential vacancy rate below 2%, meaning there's a real scarcity of high-end properties. When you mix high demand with limited supply, prices are bound to climb.
Munich's economy is rock-solid, and its business environment is a magnet for foreign investors. The city shines in global rankings, like the Mercer Quality of Living Index, where it proudly holds the 7th position. This makes it a top choice for expats and luxury home seekers.
With such a stable economy and enviable lifestyle, Munich is not just a place to live but a smart investment. The city's allure is undeniable, and it's no wonder that international buyers are keen to secure a piece of it.
As more people discover Munich's charm, the luxury real estate market is set for a moderate price increase, driven by this growing global interest.
Sources: Expat Insider, Place Brand Observer
We made this infographic to show you how property prices in Germany compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
15) Suburban rental yields will drop a little as more people choose city living
In recent years, we've seen a noticeable shift in where people want to live, especially in cities like Munich. The population in urban areas has been steadily growing, with Munich's metro area population reaching 1,591,000 in 2025, marking a slight increase from the previous year. This growth indicates a rising preference for urban living.
One of the main reasons for this shift is the convenience and accessibility that urban areas offer. Public transportation options in cities are often more developed, making it easier for residents to get around without relying on cars. For instance, the nine-euro ticket initiative in 2022 led to a significant increase in public transportation usage, highlighting the appeal of urban mobility.
Additionally, there's been a surge in investment in urban infrastructure and amenities, such as smart city projects. Munich, being a leader in this sector, attracts residents who are drawn to innovation and modern conveniences. This trend is further supported by reports of declining demand for suburban rentals, as more people prefer the lifestyle and opportunities available in urban settings.
Sources: Finexity, Macrotrends, Technical University of Munich
16) Property prices in Munich's suburbs will dip slightly as city living becomes more popular
There's a noticeable shift towards city living in Munich as more people prefer the urban lifestyle.
Many are drawn to the city for its vibrant cultural and social scene, which is especially appealing to younger demographics. They enjoy the convenience of walkable neighborhoods and shorter commutes, which are becoming increasingly important. Munich's investment in urban infrastructure, like the upgraded S-Bahn and expanded U-Bahn, makes city living even more attractive.
In the city center, rental prices are higher, but people are willing to pay for the perks of urban life. The abundance of cultural events and social activities adds to the city's charm. Plus, the job market is thriving, especially in the tech and finance sectors, making it a hotspot for career-driven individuals.
Suburban areas, on the other hand, are seeing a slight decline in property prices. This is because the demand isn't keeping up with the city center. Even though suburban rental prices have risen, they haven't matched the pace of the city, indicating a growing preference for urban environments.
For those considering buying property, it's worth noting that the city's appeal is not just about lifestyle. The infrastructure improvements and job opportunities make it a smart investment. The trend towards city living is expected to continue, with more people choosing the convenience and excitement of urban life over suburban tranquility.
As Munich continues to develop its urban areas, the city center will likely remain a prime location for both living and investing. The ongoing enhancements in public transport and the concentration of job opportunities are key factors driving this shift.
Sources: Relocate.me, Rail Technology Magazine
17) Demand for home office spaces will grow as remote work becomes more popular
Remote work is reshaping housing needs, especially in cities like Munich.
Back in 2023, 23.4% of employed people in Germany were working from home, and this number is expected to rise by 2025. This shift is not just a statistic; it's changing what people look for in a home. Many workers, around 98%, want the option to work remotely at least part-time, which means homes with dedicated office spaces are in high demand.
In Germany, hybrid work models are becoming the norm, and people are prioritizing homes that offer flexibility and a better work-life balance. Real estate trends are catching up, with more properties featuring dedicated office spaces. In Munich, listings often highlight these features, showing a clear response to buyer preferences.
Real estate agents in Munich are noticing that buyers are specifically seeking homes with suitable workspaces. This isn't just a trend; it's a shift in how people view their living spaces. The rise in internet searches for home office design ideas in Munich further supports this, as residents look to create functional work environments at home.
Media coverage frequently highlights the impact of remote work on housing preferences, often featuring insights from real estate experts and homeowners. This coverage underscores the growing importance of home office spaces in residential properties.
Sources: Splashtop, Remote People, Van Nieuwerburgh, Statista
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility. Finally, please note that we are not affiliated to any of the sources provided. Our analysis remains then 100% impartial.