Source: Heuer Dialog, Author: Alexander Sell
Victor Stoltenburg of Deka Immobilien, Robin Binder of NAO Co-Investment, Sonja Knorr of Scope Fund Analysis, Mario Schüttauf of Commerz Real and Ulrich Schüppler, the moderator from IZ Immobilien Zeitung
At first glance, Germany's open-ended real estate funds appear to be fighting a distribution battle. In reality, they are fighting a balance-sheet one. What is unfolding is not simply a retail confidence wobble. It is a structural test of how a daily-liquid product behaves in a market where property itself has become illiquid.
The numbers are now undeniable. According to BVI data, the sector recorded net outflows of €7.7bn in 2025, accelerating the €5.9bn decline seen in 2024. December may have been one of the worst months on record, with net withdrawals between €850m and €900m. January offered only modest relief. Gross outflows across the two months likely exceeded €2bn.
Morningstar’s breakdown shows that even the heavyweights are not spared. Grundbesitz Europa (DWS), UniImmo Europa (Union Investment) and Hausinvest (Commerz Real) each suffered redemptions exceeding €1bn in 2025. In January, Union funds again topped the negative ranking. Of the ten largest funds, only Deka’s products avoided net outflows last year.
This is sustained pressure, not a peripheral tremor.
The strain was the explicit subject of a panel at Heuer Dialog’s 36th annual edition of Quo Vadis 2026 in Berlin titled “Real estate funds under adjustment pressure in an environment of new product categories.” The framing was deliberate. Liquidity stress is no longer cyclical noise; it is colliding with structural change in how private capital accesses real assets.
At the conference, Sonja Knorr of Scope Fund Analysis described the consequences with clarity. Funds are being pushed into sales in a still-congested transaction market while trying to preserve portfolio quality for remaining investors. Smaller, less diversified vehicles face particular strain. Liquidity must be created to honour redemptions announced 12 months earlier, while inflows remain anaemic.
If more liquidity is held to manage withdrawals, the investment ratio falls. Lower invested capital means lower income. Weak returns then deter new inflows, reinforcing the cycle. Average sector returns hover around minus 1.2%, with individual funds ranging from minus 18% to plus 3%.
Mario Schüttauf of Commerz Real offered a biological metaphor: “Open-ended funds breathe in and breathe out.” The mechanism is natural. But this exhale has been unusually long and forceful.
Liquidity pressure becomes market pressure
The question is not whether open-ended funds survive. It is what redemption pressure does to the underlying property market.
Knorr warned that funds must become “much more active on the sales side” under difficult conditions. In practice, this means divestments in a market where pricing has already adjusted and buyers remain selective.
Larger funds can rotate assets without destabilising portfolios. Smaller funds, as recent closures and suspensions show, cannot.
Victor Stoltenburg of Deka Immobilien acknowledged the pressure. Markets have repriced since the interest-rate shock of 2022. Cashflows remain broadly intact, but valuation effects are negative and returns no longer outpace fixed income as they once did.
Deka has bucked the trend, issuing over €1bn of new shares in 2025 and recording a modest net sales increase. Yet roughly €1bn also flowed out across its open-ended vehicles. The success is relative.
What matters is that open-ended funds are not opportunistic buyers in this cycle. They are selective holders and, in many cases, net sellers. Where sales occur, they are driven by liquidity management rather than strategic repositioning. That distinction shapes pricing.
If divestments cluster in certain geographies or use types, local price signals may be distorted. Funds may also hesitate to sell operationally weaker but valuation-sensitive assets, preferring to dispose of more liquid core holdings. Portfolio quality can erode quietly, without headline write-downs.
As long as funds remain net sellers, core pricing faces persistent downward pressure. This is not volatility. It is repricing.
Regulatory friction and product evolution
Liquidity stress is compounded by a legal dispute over risk classification. Traditionally, open-ended real estate funds sit in low risk classes under the European PRIIPs framework. Following the ZBI litigation, German courts questioned whether that classification reflects valuation frequency and product structure. The matter now rests with the European Court of Justice.
If funds were reclassified into higher risk categories, distribution would become more complex and potentially more constrained. Knorr noted that uncertainty alone has rendered some products “hardly marketable.”
Stoltenburg hopes for clarification from European authorities. Few in the industry believe open-ended funds belong in the highest risk tier. Yet regulatory ambiguity itself intensifies withdrawal pressure.
At the same time, product architecture is evolving. Legislative changes allow open-ended funds to allocate up to 15% to renewable energy investments. Commerz Real plans to use that flexibility, and Hausinvest is participating in data infrastructure projects, including acting as landlord for Telekom’s new AI facility in Munich.
Parallel to this, the European Long-Term Investment Fund (ELTIF) regime is gaining traction as a structured framework for private market access. Unlike daily-liquidity products, ELTIFs embed defined liquidity tools, including gating mechanisms that treat investors equally during elevated redemptions. The contrast is instructive. The debate is no longer only about performance, but about product design.
From stabiliser to seller
Open-ended funds remain a key transmission channel between retail savings and institutional property. When that channel tightens, transaction dynamics shift.
The panellists expect continued pressure rather than a swift turnaround. Outflows may moderate, but liquidity buffers will remain elevated. Asset sales will continue. Transaction volumes are unlikely to rebound sharply while funds operate in liquidity-management mode.
For more than a decade, open-ended funds were a stabilising force in Germany’s property market. Steady retail inflows underpinned core pricing and absorbed volume. That stabiliser is weaker.
When funds become net sellers rather than net buyers, repricing ceases to be cyclical. It becomes structural.
Open-ended funds are not collapsing. They are recalibrating. But in doing so, they are shaping liquidity, pricing signals and the pace of recovery. Until inflows return at scale, the adjustment phase is not over.