NRW Market Report Q3 2026: Rising rates, stable demand for residential property

1. The quarter at a glance: the rate turn has arrived

The third quarter of 2026 was defined by rising interest rates. After a first rise in June and a pause in July, the European Central Bank raised its key rates by another 0.25 percentage points on 10 September. The deposit rate has stood at 2.50% since 16 September. In June the ECB justified the change of course with the inflationary pressure caused by the war in the Middle East. The next rate decision is due on 29 October.

Mortgage rates reflect the rise in capital market rates only with a delay. At the end of September, broker Interhyp already quoted 4.23% for a ten-year fixed rate. Lender sentiment has also deteriorated: JLL’s real estate financing index DIFI fell by 6.1 to −14.0 points in the third quarter.

2. German investment market: the recovery is losing momentum

After nine months the German investment market is roughly at last year’s level, but the third quarter was considerably weaker. JLL puts it at around €6.3bn after €8.6bn in the same quarter last year, a drop of just over a quarter. For the full year, JLL expects €35bn to €37bn, BNP Paribas Real Estate around €32bn.

Higher financing costs are reflected in yields. According to BNP Paribas Real Estate, net prime yields rose by 10 to 20 basis points across almost all asset classes in the third quarter. For the seven largest cities, JLL reports prime yields of 4.59% for office, 4.69% for logistics and 3.61% for apartment buildings.

3. Residential investment: many smaller deals, rising yields

In every statistic, the third quarter was the weakest of the year. The structure is striking: Savills counts around 170 transactions, 20% more than a year earlier, while large deals are becoming rarer. According to BNP Paribas Real Estate, only 35% of volume came from deals above €100m, against a ten-year average of 52%. JLL reports that 61.3% of capital went into B and C cities.

At the same time, yields are rising again. Savills speaks of the first rise in prime yields in three years; BNP Paribas Real Estate reports an increase of 10 basis points in all major cities and 15 in Berlin.

4. NRW cities: Düsseldorf gains, Cologne weakens

Düsseldorf is among the winners of the year. According to BNP Paribas Real Estate, commercial investment volume rose by 26% to €963m after nine months; Cushman & Wakefield reports €1.02bn (+48%). This is driven mainly by the office segment. Office take-up reached 198,000 m², 28% more than a year earlier. Uniper’s lease of around 37,000 m² was the largest letting in 14 years.

Cologne, by contrast, is weaker. According to BNP Paribas Real Estate, investment volume fell by 10% to €661m and office take-up by 39.5% to 107,000 m². No third-quarter investment figures are yet available for the Ruhr area. In the first half, commercial volume almost doubled to around €756m according to the Ruhr real estate market report. In residential, the trade press reported in September the sale of a portfolio of around 650 flats in the Ruhr area to an international investor and of a portfolio of 81 flats in Gelsenkirchen.

Both buyers are property companies which, according to the reports, plan to add further value. In Flingern the reports point to rents below the local level; in Gerresheim to rental upside once a rent restriction expires and a possible split into condominiums.

5. Rents and prices: rental growth is slowing

Rents are still rising, but more slowly. According to ImmoScout24, the asking rent for existing flats in Düsseldorf was €12.89/m² in the third quarter, 2.3% above the previous year but 0.2% below the previous quarter. For new-build it was €18.53/m² (+3.2% year on year). Asking prices for existing flats in Düsseldorf rose by 1.0% quarter on quarter to €4,611/m². The two portals use different methods, so their figures are not directly comparable.

In the Ruhr area the picture for purchase prices is mixed: according to immowelt, asking prices for existing flats rose by 3.5% in Essen in the third quarter, while they fell by 1.0% and 1.9% in Dortmund and Duisburg. Nationally, the Kiel GREIX property price index shows a notable pattern for the second quarter: condominiums were 0.4% above the previous year, apartment buildings 3.5% below.

6. Construction: new building keeps falling

While building permits nationwide rose by 12.9% from January to July, and by as much as 15.1% for apartment buildings, NRW is falling behind. The number of homes permitted in new apartment buildings in the first half was the lowest since 2013. In Essen the total rose only because of conversions in existing buildings; for new apartment buildings Essen was also clearly down.

7. Outlook: our expectations for the fourth quarter