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What will happen in North Rhine-Westphalia’s real estate market? Will prices go up or down? Is Düsseldorf 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 North Rhine-Westphalia, 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.
1) Rental yields in Aachen will rise as university students drive consistent demand
Rental yields in student-heavy cities like Aachen are expected to keep rising due to consistent demand from university students. One of the main reasons is the increasing student enrollment numbers. For example, in the winter semester of 2024/25, RWTH Aachen University had 44,892 students, including 15,270 international students from 137 different countries. This significant increase in enrollment numbers indicates a growing demand for housing in the area.
Another factor contributing to rising rental yields is the low vacancy rates in student-heavy neighborhoods. In 2023, Aachen experienced a 6.3% rental growth, which contributed to these low vacancy rates. This trend is driven by acute supply shortages in key European cities, including Aachen, which have pushed rental growth upwards.
Additionally, the consistent demand for short-term leases from international students plays a crucial role. With 34% of RWTH Aachen University's students being international, there is a steady demand for short-term leases, further driving up rental yields. This international diversity ensures a continuous influx of students seeking accommodation.
Sources: RWTH Aachen University, AEW Research, AEW Residential Report
2) Rents in Düsseldorf will rise as it remains a key business and cultural center
Rents in Düsseldorf are climbing steadily, and this trend shows no signs of slowing down.
In the past year, the median rent in Düsseldorf jumped by 3.8%, with smaller apartments seeing a notable increase of 15.2% to €15.55/m²/month. This surge highlights a strong demand for compact living spaces, especially among young professionals and singles who prefer the vibrant city life.
Düsseldorf's reputation as a business hub is evident in its thriving office market. Even with a slight dip in office space take-up in 2024, the demand remains robust. Prime office rents have risen by 3.6% to €43.50/sq.m./month, indicating that companies still find value in setting up shop here. This business activity draws more workers to the city, further boosting the housing demand.
The city's cultural scene is another magnet for residents. With its array of museums, theaters, and festivals, Düsseldorf offers a lifestyle that many are willing to pay extra for. This cultural allure, coupled with limited new housing developments, often means demand outpaces supply, pushing rents even higher.
Adding to the mix is the influx of international workers and expatriates, which swells the population and increases housing demand. As property prices soar, homeownership becomes a distant dream for many, leading more people to rent and driving rental prices up. The economic growth in North Rhine-Westphalia, fueled by a strong base of blue-chip companies, also plays a part in attracting businesses and residents to the area.
Sources: Global Property Guide, JLL Düsseldorf Office Market Dynamics, Residential City Profile Düsseldorf
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) International buyers will target properties in cities with strong cultural and economic links to their home countries
International buyers often focus on properties in cities with strong cultural and economic ties to their home countries because these connections provide a sense of familiarity and community. For example, North Rhine-Westphalia has a significant Japanese community, with nearly 15,000 nationals residing there as of 2019. This presence is supported by Japanese schools, restaurants, and grocery stores, creating a welcoming environment for Japanese expats.
The region's strong economy, particularly in sectors like chemicals, attracts investors from countries with established trade relationships. Japanese companies have set up businesses in North Rhine-Westphalia, focusing on advanced technologies and medical systems. This economic activity is bolstered by cultural exchange programs and the support of the Japanese Consulate General in Düsseldorf, which helps Japanese companies establish themselves in the area.
Moreover, North Rhine-Westphalia's role as a major logistics and chemical hub, with significant trade relationships, makes it an attractive destination for international buyers. The region's dynamic economy and favorable business environment continue to draw foreign direct investment, particularly from countries with strong economic ties. This trend is further supported by government initiatives promoting cultural and economic connections.
Sources: Ties that bind: North Rhine-Westphalia and Japan forge into the future built on a solid past, Foreign Trade | Wirtschaft NRW, North Rhine-Westphalia (Nordrhein-Westfalen) - IamExpat in Germany
4) Rental yields in high-demand urban areas will rise as rents grow faster than property values
In recent years, particularly in 2023 and 2024, rental prices in high-demand urban areas like Düsseldorf and Cologne have risen significantly. For example, new-build rents in Cologne increased by 21% compared to 2022, and Berlin saw a 27% increase in new lease rents since November 2022. This trend indicates a strong upward momentum in rental prices.
Meanwhile, property values in these areas have not kept pace with the rapid increase in rental prices. In North Rhine-Westphalia, while rents rose by 5.4% in the top cities, property values showed a slower growth rate. This disparity between rental price growth and property value growth is a key factor in increasing yield returns for property investors.
The demand for rental properties continues to rise due to urbanization and population growth, particularly in regions like the Rhine-Ruhr area. The influx of young professionals and students further fuels this demand, as they often prefer renting over buying. This sustained demand, coupled with a housing shortage, drives rental prices even higher.
Sources: BNP Paribas Real Estate, Deutsche Wealth, Refire Online
5) Property prices in North Rhine-Westphalia will keep rising because of strong economic fundamentals
Residential property prices in North Rhine-Westphalia are climbing, and this trend is set to continue thanks to strong economic fundamentals.
One big reason for this is the region's impressive employment growth. With a low unemployment rate of 3.5% in 2023, the job market is thriving, making the area more attractive to newcomers. Cities like Düsseldorf and Cologne are buzzing with economic activity and population growth, which naturally boosts the demand for housing.
These cities aren't just growing; they're thriving. The high GDP levels in the region mean that household incomes are on the rise, giving residents more purchasing power to invest in property. But it's not just about the money; it's about the lifestyle and opportunities these cities offer.
However, there's a catch: the housing supply is limited compared to the demand. Even though local governments are trying to issue more building permits, it takes time to catch up. Meanwhile, infrastructure projects and urban regeneration in places like Düsseldorf and Aachen are making the region even more appealing, drawing in more investors and residents.
Foreign investment is another piece of the puzzle. The strong economy and vibrant cities in North Rhine-Westphalia are magnets for both local and international investors, which in turn drives up property prices. Historical data shows a steady increase in property values, and media reports often highlight the region as a prime spot for living and investing.
All these factors combined paint a picture of a region with strong economic fundamentals that support the ongoing rise in property prices. The mix of a robust job market, rising incomes, limited housing supply, and increased investment creates a perfect storm for continued growth in the real estate market.
Sources: Properstar, IZ, Hatamatata, Cushman & Wakefield
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6) Rents in smaller towns will stay steady as affordability meets demand
Rents in smaller towns in North Rhine-Westphalia have remained stable due to a balanced approach to affordability and demand. The population growth in these towns has been steady, not excessive, which helps maintain a stable demand for housing. This steady growth ensures that the demand for housing does not outpace the supply, keeping rents from skyrocketing.
The construction backlog in North Rhine-Westphalia has decreased, indicating that the supply of new housing is keeping up with demand. In 2024, the construction backlog was reduced by 5% compared to 2022, which shows that more housing is being built to meet the needs of the population. This balance between supply and demand helps keep rental prices stable.
Rental prices in smaller towns have shown stability over recent years. While larger cities like Munich experience high rents, smaller towns maintain more moderate rental prices. For example, in 2022, 85% of households in Germany paid a cold rent of less than EUR 10 per sqm, with an average rent of EUR 7.28 per sqm. This indicates that smaller towns offer more affordable rental options, which attracts residents looking for cost-effective living arrangements.
Sources: DZ HYP - The German residential real estate market 2024 | 2025, ESPON - Small and medium-sized towns and cities in Germany, JLL - Housing Market Overview - H1 2024
7) Rental prices in Cologne will rise steadily as more young professionals move in
Cologne is seeing a steady rise in rental prices, and this trend is expected to continue.
One big reason for this is the growing number of households, fueled by immigration and more people choosing to live alone. The city is also attracting international students and expatriates, adding to the demand for housing. Young professionals are flocking to Cologne, drawn by its vibrant cultural and economic scene. With a higher concentration of startups and tech companies, the city offers numerous job opportunities, making it an attractive destination.
Urban development projects like "Cologne Perspectives 2030+" are also making a difference. These initiatives aim to improve the city's livability by investing in public transportation and infrastructure. Such enhancements make Cologne an even more appealing place to live and work, further driving up the demand for housing. Surveys show that young professionals prefer urban living, which aligns with the increasing rental demand in cities like Cologne.
This preference is influenced by the availability of amenities, cultural activities, and job opportunities. Additionally, there's a noticeable trend of young people opting to rent rather than buy, contributing to the steady rise in rental prices. The city's efforts to enhance its infrastructure and public services are making it a hotspot for young talent. As more young professionals move in, the demand for rental properties continues to grow.
Cologne's appeal is not just about jobs; it's also about lifestyle. The city offers a rich tapestry of cultural events, nightlife, and dining options that attract a younger crowd. This influx of young professionals is not just a temporary trend; it's reshaping the city's housing market. With more people choosing to rent, rental prices are likely to keep climbing.
Sources: Urbanista, DZ Hyp Residential Market Report, JLL Germany
8) Virtual reality tours will transform property viewings, simplifying investments for remote buyers
Virtual reality tours are changing how we view properties, especially for those buying from afar.
In recent years, the real estate market has seen a boom in VR technology, with its value expected to hit $2.6 billion by 2025. This surge is largely because 90% of potential buyers are more inclined to purchase if a virtual tour is available. It's a game-changer for those who can't visit in person.
Remote buying is on the rise. A Redfin survey found that 63% of people made offers on homes they hadn't physically seen. This shows a growing trust in virtual tours. In fact, 67% of buyers want a virtual tour when checking out a listing, proving how crucial this tech has become.
Homeowners are also catching on. Nearly a quarter prefer agents who offer virtual tours and videos on their sites. This trend highlights the demand for VR technology in real estate, making it a must-have for modern agents.
Thanks to tech advancements, VR tours are now more accessible and budget-friendly. With AI and predictive analytics, these tours are not just about viewing; they help predict trends and streamline tasks, making remote property tours more efficient.
Now, buyers can have face-to-face interactions with agents from anywhere, simplifying the investment process. This ease of access is making it easier for remote buyers to invest without the hassle of travel.
Sources: PhotoUp, Momentum Virtual Tours, EZ Real Estate Tools
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) Foreign investment in eco-friendly housing projects will increase in the region
In recent years, North Rhine-Westphalia (NRW) has become a magnet for foreign investment, especially in sectors like renewable energies and sustainable technologies. In 2023, 283 foreign companies set up or expanded their operations in NRW, creating thousands of jobs. This trend is expected to continue, with a particular focus on eco-friendly housing projects.
The global demand for eco-friendly housing has been on the rise, driven by increasing awareness of climate change and a growing consumer preference for sustainable living. Surveys have shown that more people are interested in eco-friendly homes, which aligns with the focus on renewable energies in NRW.
Germany has also been proactive in supporting sustainable construction through government incentives. The country has extended its green building subsidies through 2025, with significant funds allocated for energy-efficient renovations and new constructions. These incentives make it financially attractive for foreign investors to invest in eco-friendly housing projects in NRW.
Sources: NRW Global Business, Amwal Al Ghad, Construction Briefing
10) Demand for rentals near universities will grow as more international students arrive
The influx of international students will increase demand for rental properties near universities because more students are coming to study in Germany. In the 2023/24 winter semester, nearly 380,000 international students were enrolled at German universities, marking a 3% increase from the previous year. This includes a significant rise in first-year international students, with nearly 114,700 beginning their studies in Germany in the 2022 academic year.
The demand for student housing is already high in university cities like Cologne, Düsseldorf, and Bonn. The number of students in Germany increased from 1.9 million to 2.9 million between 2002 and 2022, but the social infrastructure, especially housing, has not grown at the same rate. This means there are more students than available housing, making it harder to find a place to live.
In North Rhine-Westphalia, the housing market for students shrank by more than 20% in 2023 compared to 2022. This trend is due to less construction activity and rising rent levels, which have made it difficult for students to find affordable housing. Rent levels in university towns rose by 5.1% in 2023 compared to the previous year, with significant increases in cities like Berlin and Leipzig.
Sources: Upgrad GSP, Architexturez, University World News
11) Tech-savvy buyers will be drawn to new developments as smart home technology becomes standard
Smart home technology is becoming a standard feature in new developments, especially in places like North Rhine-Westphalia, due to several compelling reasons. First, the adoption rates of smart home devices in Germany have been on the rise. Back in 2023, the market was valued at USD 3.42 billion, and it's expected to grow significantly, reaching USD 11.75 billion by 2030. This growth is driven by a strong adoption rate of 40% in Germany, leading Western Europe in this trend.
Another key factor is the increasing consumer demand for energy-efficient and automated home solutions. As disposable income in Germany rose from USD 615 billion to USD 628 billion in just a few months in 2023, more people could afford these technologies. Energy efficiency is a major selling point, as smart home solutions help reduce energy consumption, aligning with consumer preferences.
Moreover, surveys have shown that younger homebuyers, like Gen Z and Millennials, have a strong preference for smart home features. In fact, 62% of Gen Z renters considered smart home tech important when choosing where to live, and Millennials are willing to pay a premium for connectivity. This shift in buyer preferences is reshaping the real estate market.
Government incentives also play a role, with initiatives like the German Buildings Energy Act aiming for significant energy consumption reductions by 2045. This encourages the integration of smart technologies in new developments. Additionally, the presence of numerous smart home technology companies and startups in North Rhine-Westphalia, such as those in Düsseldorf, further supports this trend.
Sources: NextMSC, Mordor Intelligence, Today's Homeowner
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12) Demand for student housing will grow in cities with famous universities as foreign interest rises
Foreign interest in student accommodation is likely to increase, especially in cities with renowned universities, due to several key factors. In 2023 and 2024, there was a noticeable rise in the enrollment of international students in German universities, with a significant number choosing to study in North Rhine-Westphalia. This trend has continued to grow, with a 3% increase in international student numbers from the previous year.
The rising demand for student housing in university cities like Cologne, Bonn, and Düsseldorf is a direct result of this increase in international students. This demand has led to a shortage of available accommodation options, which in turn has driven up rental prices. The shortage of student housing in these major university cities makes it a highly profitable investment opportunity.
Moreover, the booming student housing market in Germany presents attractive investment opportunities for foreign investors. Real estate market analyses have shown that investing in student accommodation offers stable income and potential for portfolio growth. The continuous influx of students ensures a steady stream of tenants, making it a reliable investment option.
Sources: The PIE News, Mordor Intelligence, UpGrad GSP
13) Property values in Sauerland will rise as it becomes a popular spot for vacation homes
The Sauerland area is becoming a hotspot for vacation homes, and this is driving up property values in the region. One of the main reasons is the increased tourism statistics. The region has seen a surge in tourism, with projects like the "Smart tourism laboratory" enhancing its appeal by focusing on sustainability, which attracts more holidaymakers.
Another factor is the rising demand for vacation rentals. The vacation rental market in Germany, including Sauerland, is expected to grow significantly, reaching $5,524.9 million by 2030. This growth indicates a strong interest in vacation properties, which naturally drives up property values.
Infrastructure improvements are also playing a crucial role. Projects aimed at making the region more accessible, such as "The Sauerland - an outdoor region for everyone," are broadening the appeal of the area to a wider audience. This increased accessibility makes the region more attractive to potential buyers and investors.
Sources: Experience NRW, Grand View Research
14) Property prices in the Rhine-Ruhr area will rise steadily due to its strategic location and economic growth
The Rhine-Ruhr metropolitan region is poised for a steady increase in property prices, thanks to its strategic location and economic growth. In recent years, the area has shown resilience in property markets, even as other parts of Germany experienced declines. For example, commercial property transactions in the Ruhr Metropolis in 2023 amounted to just under €1.3 billion, indicating a moderate decline compared to other top locations in Germany.
One of the key factors driving this trend is the increased demand for housing in the region. Despite a general decline in property transactions, the Rhine-Ruhr area has seen a significant boost in logistics space, with almost 565,000 m² of new logistics space completed in 2023. This surge in logistics development points to ongoing economic activity and a strong demand for housing.
Moreover, the Rhine-Ruhr region is experiencing economic growth, which is a crucial driver for rising property prices. Strategic infrastructure projects, such as the Rhein-Ruhr-Express (RRX), are enhancing the region's economic attractiveness. This project, one of the most significant rail infrastructure developments in Western Germany, benefits 8 million people by improving connectivity and attracting more businesses and residents.
Sources: Ruhr Real Estate Market Report, RRX Project, Forecasting Urban Growth in the Ruhr
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 stay steady as demand matches supply
In recent years, suburban rental yields in North Rhine-Westphalia have remained stable due to a balance between demand and supply. This stability is largely driven by a consistent demand for suburban living spaces, as more people seek housing outside urban centers. The trend of urban-to-suburban migration has been a significant factor, with many residents moving to exurban areas, contributing to a steady population growth.
Moreover, the construction of new housing has been keeping pace with this population growth. In the first half of 2023, new builds accounted for over half of the take-up in the region, indicating that the supply of housing is matching the demand. This balance helps maintain stable rental prices and yields in suburban areas.
Additionally, the economic stability of North Rhine-Westphalia supports a steady rental market. Despite challenges in the industrial and logistics sectors, the overall economic environment remains strong, which is crucial for maintaining stable rental yields. Local government efforts to ensure housing affordability and availability further contribute to this balance.
Sources: Global Property Guide, Realogis Market Report, New Geography
16) Suburban property prices will rise moderately as families look for more space and greenery
In recent years, we've seen a noticeable shift in housing preferences, particularly in suburban areas. One of the main reasons for this is the rise in remote work, which became more common during the COVID-19 pandemic. As people started working from home, they began to look for larger homes that could accommodate home offices and provide more space for outdoor activities. This trend has continued, with families seeking more comfort and flexibility in their living arrangements.
Another factor driving the interest in suburban areas is the increased focus on outdoor spaces and gardens. In North Rhine-Westphalia, real estate listings have highlighted properties with greenery, which is a significant draw for buyers. Families are prioritizing these features, as they offer a more relaxed and spacious environment compared to urban living. Surveys in Germany have consistently shown that families prefer suburban living due to the availability of more space, better schools, and a more relaxed atmosphere.
Additionally, there has been a noticeable migration pattern from urban to suburban areas in the Rhine-Ruhr region. While urban centers have seen a decline in population, suburban areas have experienced growth, with the exurbs adding a significant number of residents over the years. This shift indicates a strong demand for suburban properties, which is likely to lead to moderate price increases as more families seek out these areas for their living needs.
Sources: Urban Reform Institute, Global Property Guide
17) Rural rental yields will drop slightly as more people move to cities
In recent years, particularly in 2023 and 2024, we've seen a noticeable shift in population dynamics in North Rhine-Westphalia. The population in major cities like Cologne, Düsseldorf, and Dortmund has grown by nearly 2% over the past five years, outpacing the national average. This trend is especially strong in university cities such as Münster, Bonn, and Wuppertal.
As more people, especially younger demographics, move to urban areas, rural regions are experiencing a decline in population. This migration is largely driven by the search for better economic opportunities and a higher quality of life found in urban centers. Consequently, rural areas are seeing an increase in the proportion of older residents, which further emphasizes the preference for urban living among younger people.
With the growing demand for housing in urban areas, rental yields in these cities have been on the rise. This is in stark contrast to rural areas, where higher vacancy rates for properties are becoming more common due to the population decline. The economic concentration in urban areas, with cities like Düsseldorf and Cologne driving growth, supports this trend.
Sources: Wikipedia, European Commission, Bulwiengesa Blog, DZ Hyp Residential Market Report, Cluster Collaboration Platform
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.