Financing pressure dominates real estate stock market – sentiment drops to 24.6 points

KIRCHHOFF Sentiment Indicator for Real Estate Stocks H2 2025

Financing pressure dominates real estate stock market – sentiment drops to 24.6 points

• Sentiment index falls significantly to 24.6 points, reflecting tense market conditions (H1 2025: 53.3 points).
• Residential real estate remains the asset class with the most attractive risk/reward profile.
• Real estate stocks continue to lag behind the overall market – DAX with significantly better medium and long-term performance.
• Valuation discounts remains high – asset values not yet priced in for residential and commercial real estate.
• The financing environment is considered the biggest short-term and long-term challenge.

Hamburg, December 12, 2025 – Hamburg-based communications and strategy consultancy for financial communications and ESG, Kirchhoff Consult, has published the thirteenth edition of the "Kirchhoff Sentiment Indicator for Real Estate Stocks". Overall sentiment has deteriorated significantly compared to the first half of the year: the sentiment index drops sharply to 24.6 points (H1 2025: 53.3 points), reflecting the tense market environment. At the same time, there are still cautiously optimistic expectations regarding the further development of real estate values—particularly from a medium-term perspective.

Jens Hecht, Managing Partner at Kirchhoff Consult, comments: "The current market environment is split in two: on the one hand, subdued transaction activity and high financing costs are weighing noticeably on sentiment. On the other hand, many real estate stocks are trading well below their net asset values – a level that already largely prices in the risks. However, the weaker sentiment now also evident among residential real estate companies shows how broadly the headwinds are felt. This is precisely why attention is shifting more strongly to the medium-term outlook: once conditions normalize, the existing valuation gap is likely to increasingly translate into opportunities.”

Subdued stock market sentiment: real estate stocks weak in the short term, slightly positive in the medium term
Over the past six months, the shares of the ten largest companies have lost an average of just under 8%, and around 12% over a twelve-month period. This means that they are clearly underperforming the DAX40, which has gained significantly over the same period. Commercial and residential real estate shares have recently shown a similarly negative performance.

Over a longer horizon, the picture looks somewhat more stable: over three years, real estate stocks have delivered an average gain of 7.5%, even though they continue to lag well behind the overall market. Both asset classes are primarily weighed down by high financing costs, despite strong demand for housing and rising rents. In addition, the shares are trading on average around 46.8% below their net asset value (NAV), which makes capital increases more difficult, but at the same time signals significant catch-up potential.

Despite headwinds, residential real estate remains the clear favourite
Analyst sentiment remains more positive for residential real estate at 41 points than for commercial real estate (36.9 points), but has declined significantly compared to the previous half-year (H1 2025: 69.7 points). As a result, the gap between the two asset classes has narrowed considerably. In the long-term share price comparison over the past three years, residential real estate has nevertheless outperformed, delivering an above-average return of +23.8% versus the sector average (+7.5%). The key driver continues to be persistently strong demand for housing. In addition, analysts covering real estate equities see residential real estate as offering the most attractive risk–reward profile, primarily due to resilient market demand.

Commercial real estate stable, but with significant risk areas
Sentiment for commercial real estate remains in positive territory (36.9 points). Within the segment, however, several asset classes are viewed as significantly more uncertain—particularly office and retail properties. The ongoing uncertainties in these areas are still mainly driven by profound changes in the working environment, persistent oversupply in secondary and tertiary locations (B and C sites), and challenging letting and marketing prospects. In addition, increasing ESG requirements and declining space efficiency are adding further pressure, noticeably weighing on investment decisions and valuation expectations.

Financing environment remains the biggest challenge in the short and long term
The analysts surveyed see the financing environment as by far the biggest current burden – and at the same time as the most important medium-term hurdle for the industry. High financing costs and difficult access to equity capital are putting residential and commercial real estate under noticeable pressure. As further current brake factors, 71% of those surveyed cite the demand situation and 57% cite regulation. Looking ahead to the coming years, financing and regulation will continue to gain in importance (71% each), and the experts surveyed also expect ESG requirements to become significantly more critical in three years' time. By contrast, most analysts no longer consider the demand situation to be critically important in the medium term.

Further information
The study can be found here (German only).

METHODOLOGY OF THE SURVEY
The “Kirchhoff Sentiment Indicator for Real Estate Stocks” from Kirchhoff Consult is the sentiment indicator for the German real estate market. Kirchhoff Consult regularly asks the most important real estate analysts how they expect the real estate stock market to develop over the next three or twelve months. The survey also asks separately about the performance of commercial and residential real estate stocks. The analysts can answer on a scale from +2 (strong rise, over +15 per cent) to -2 (strong fall, below -15 per cent). A value of “0” means that no or only very minor changes (+/-5 per cent) are expected. The evaluation reflects the average of all assessments.
As part of the analysis for the “Kirchhoff Sentiment Indicator for Real Estate Stocks” for the second half of 2025, seven of the real estate analysts surveyed gave their assessment.


ABOUT KIRCHHOFF
With around 70 employees, Kirchhoff Consult is a leading communications and strategy consultancy for financial communications and ESG in German-speaking countries. For over 30 years, Kirchhoff has been advising clients on all aspects of financial and corporate communications, business and sustainability reports, IPOs, investor relations, and ESG and sustainability communications. 'Designing Sustainable Value': Kirchhoff combines content expertise with excellent design to create sustainable value.

Kirchhoff Consult is a member of TEAM FARNER, a European alliance of partner-led agencies. Their common goal is to establish the European market leader in integrated communications consulting.

PRESS CONTACT
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jan.hutterer@kirchhoff.de