High-profile US investors are now reportedly entering the German market for terraced and single-family homes. This shift follows previous activity, such as when Goldman Sachs last year acquired a package of 491 row houses alongside a Canadian pension fund. Now, the US asset manager PGIM is also considering entering this segment. According to Sebastiano Ferrante, PGIM’s European head, the company is currently analyzing the market for newly built German row houses.
Significantly, PGIM plans to focus on rental income rather than resale. Ferrante points to opportunities in the outskirts of major cities, where terraced houses can be constructed in a standardized manner for approximately €1,900 to €2,000 per square meter. These homes could then be leased out for €17 to €18 per square meter. He adds that the resulting total monthly rent, estimated between €1,700 and €1,800, would remain affordable for families.
This move is viewed as a notable development in the German real estate market, given the historical relative absence of institutional investors in the single-family home sector. The current market context is characterized by a weak transaction market. Developers typically require pre-sales for financing, and large investors are now partly guaranteeing these pre-sales-in exchange for more favorable entry prices.
