Lembergvector/Depositphotos.com
Between the end of 2023 and the end of 2026, residential projects totalling 30.1 million square metres of living space were scheduled for completion across Germany. Around 9.4 million square metres — equivalent to roughly 125,000 homes — will not be delivered. Felix Embacher, managing director of researchers Bulwiengesa, summed it up simply at a recent Development Monitor briefing: "We could have built Rostock. The projects existed, the developers existed. It just wasn't implemented."
That gap between planning and reality is the central finding of Bulwiengesa's Development Monitor for the first half of 2026. The overall pipeline — tracking just under 22,000 projects with a combined floor area of approximately 174 million square metres — has contracted by 2.7% since the end of 2025. Construction starts in Q2 2026 are running 65% below their peak, while residential construction starts remain 67% below their Q2 2022 high. Residential project volume has edged up by 2.9% to around 68 million square metres, but nearly half remains at the detailed planning stage and only around 15.5 million square metres is currently under construction. Residential dominates the discussion because of its political importance, but the pattern extends well beyond housing. Office project volume has fallen by 5.7%, logistics by 7.7% and senior housing by 8.4%, with only niche sectors such as data centres continuing to expand. A paper pipeline that does not convert into construction is not a recovery signal. It is a backlog.
Twenty-nine per cent of residential project volume is affected by delayed construction starts, while the proportion of delayed completions has risen from 23% in the second half of 2025 to 30% in the first half of this year. "The crucial question is whether these projects will make the transition from planning to construction," Embacher said. "This is precisely where the market has so far stalled." Today's missing construction starts, he warned, become tomorrow's missing completions.
The viability gap
The reasons go well beyond higher interest rates and construction costs. Throughout the discussion, the speakers repeatedly returned to the same conclusion: projects are failing because the economics no longer work once delays, changing subsidy regimes, financing costs and slower sales are taken into account.
Dirk Brückner, Partner and Head of Real Estate at law firm GSK Stockmann, illustrated the problem through Germany's energy-efficiency subsidy programmes. Private developers had planned projects and secured planning permission on the assumption that subsidies would underpin project viability. When funding was exhausted or redirected, many developments simply ceased to be financeable. Approvals existed; financing did not. The projects remained in the pipeline, but no longer made economic sense to build.
The consequence is visible in the developer rankings. Münchner Wohnen, owned by the City of Munich, is now the largest residential developer in Germany's A-cities. Municipal housing companies also feature prominently in Berlin, Hamburg and Frankfurt, while the federal government has become the largest office developer. This reflects the retreat of private capital rather than the expansion of public-sector development.
The arithmetic is stark. Only 4% of building permits come from public-sector applicants. Yet public-sector developers now account for much of the development activity in Germany's largest cities because they remain able to access funding that private developers increasingly cannot. Brückner was explicit: even with Münchner Wohnen at the top of the rankings, the public sector cannot compensate for the collapse in privately financed development. Private capital has to return. The public sector cannot replace it.
Andreas Beulich, Federal Managing Director of the BFW property developers' association, identified planning certainty as the missing ingredient. At development costs approaching €5,000 per square metre, he argued, housing outside the social sector has become increasingly difficult to deliver at returns capable of attracting private investment. "We're creating housing that has to be subsidised heavily downwards in rent," he said. "But we're not managing to provide relief for the affordable segment above social housing. That's the real challenge."
Holger Kuball, Head of Residential and Hotel Real Estate at DKB Deutsche Kreditbank, described how banks now assess projects. Financing remains available, he stressed, but only for projects capable of absorbing repeated changes to costs, construction timetables, sales rates and equity requirements without undermining their viability. "Financing is available," he said, "but it is not a given." The hurdle banks now apply to manage development risk has become significantly higher.
What would change things
There are signs that sentiment is improving, but none of the speakers believed this was yet feeding through into construction activity. Bulwiengesa's real estate climate index rose by 9.1% in July, led by logistics at 13%, while loan enquiries in the €10-50 million bracket are recovering after several quarters in which only the smallest loan categories showed any meaningful activity. These are genuine improvements from a very low base, but they do not yet alter the trajectory of construction starts.
Instead, the discussion repeatedly returned to implementation rather than innovation. The market does not need another round of new policy ideas. It needs delivery of measures that have already been debated for years — Building Type E, the Bauturbo, planning reform and stable subsidy frameworks — and, above all, enough consistency for developers to make investment decisions with confidence. As Beulich observed: "We need to know that something will hold for two or three years." Project development simply takes longer than policy cycles.
Germany does not lack development projects. It lacks the conditions that make them viable. "The projects exist," Embacher concluded. "The framework conditions need to change so that private capital can stand behind them again. That is the decisive lever." Until that happens, Germany's development pipeline will continue to overstate what Germany is actually going to build.