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Wooden houses in Schiltach, Germany, a town in the Black Forest
Germany’s holiday home market, long dominated by private owners and lifestyle buyers, is now drawing increasing interest from institutional investors seeking short-cycle income, diversification and ESG-driven repositioning. With overnight stays hitting 496 million in 2024—a new record—domestic tourism is proving both durable and revenue-rich. Post-2024 interest rate cuts have reinvigorated buyer appetite, pushing up prices in traditional hotspots and highlighting structural inefficiencies that institutional players may be poised to exploit.
At the top end, trophy assets continue to dominate headlines. A detached house on Sylt can command up to €18 million, with square metre prices reaching €22,000. On Norderney, the most expensive island for condominiums, recent top quotes stretch to €25,000/m². Around Lake Tegernsee and Lake Starnberg in Bavaria, lakeside properties are being marketed between €10,000 and €23,000/m², with single-family homes running into eight-figure sums. Garmisch-Partenkirchen and Lake Constance follow closely, driven by alpine cachet and scarcity of new development sites. Despite constrained supply, most experts expect prices in these locations to remain stable through 2025.
Engel & Völkers’ latest market analysis of 45 key German holiday destinations underlines the shift in demand from purely leisure-driven purchases to dual-use investment logic. Buyers are increasingly targeting properties suitable for part-time letting to offset financing costs, with preferences leaning strongly toward energy-efficient buildings in regional architectural styles. Thatched-roof houses in coastal villages, alpine chalets and wooden homes in the Black Forest are increasingly seen not only as aesthetically attractive but also more readily let in high season.
From second homes to institutional holdings
Institutional-grade entry points, however, remain few and far between. The German market’s structural weaknesses—fragmented ownership, limited pipeline of new stock, and localised restrictions on short-term rentals—have hindered its evolution into a mature investable segment. Unlike the Netherlands or France, Germany still lacks an integrated operator landscape capable of delivering scale, service and income predictability.
Dutch funds continue to lead the field in cross-border holiday property investment, leveraging vertically integrated park models and long-term rental structures, familiar to them from their home market. In Germany, promising initiatives are emerging, such as Arber Investment’s AIF-backed acquisition of 26 units in the Landal Resort Arberland in the Bavarian forest, with options for a further 50. These are still the exception. Most German holiday homes fall outside institutional acquisition criteria unless part of a branded, professionally managed concept.
Yet the structural case is strengthening. Holiday homes offer operational flexibility, leaner staffing requirements, and often outperform hotels in rural destinations. During the pandemic, they proved more resilient due to guest preferences for private, self-contained accommodation. With short-term rental yields often exceeding those of urban multifamily, several asset managers now view holiday properties as liquidity-enhancing additions to mixed portfolios—balancing lower-yield, high-value city resi with short-cycle income streams.
Pricing asymmetries also offer opportunity. Outside the core markets, entry points remain moderate. In regions like the Mecklenburg Lake District or Wilhelmshaven, holiday apartments start at €1,800/m². In Titisee-Neustadt in the Black Forest, homes begin at €450,000, with apartments priced from €2,300/m². These locations may lack Sylt’s cachet but present clearer upside for ESG-oriented refurbishment and rental optimisation.
Operators looking to institutionalise the sector must address two immediate constraints: municipal resistance to new second homes, and opaque permitting regimes that vary sharply between states. Several Bavarian towns have introduced quotas or bans on non-primary residences, while parts of Schleswig-Holstein and Lower Saxony have tightened rules on seasonal rentals. Any investor strategy must incorporate granular, local legal due diligence.
The professionalisation of the operator landscape—while still at an early stage—is helping to create a pipeline of investable product. Dutch-style holiday parks with bundled management and green credentials are increasingly seen as templates for future deployment in Germany. As the market matures, the most viable entry points for institutional capital are likely to be structured vehicles, branded platforms and ESG-compliant build-to-holiday-let developments. Portfolio theory, not lifestyle appeal, is increasingly shaping the investment logic.