Last week, I met up with an old university friend over coffee in Frankfurt. We had both moved to Germany from Belgium at roughly the same time, a little over five years ago. The conversation moved from our lives to our cities, and then, as it always does, to the subject of housing.
She told me, with a touch of resignation: “Five years ago, it was clearly cheaper. Today, my rent makes up nearly a third of my salary.”
I shared the feeling. But I wanted to test it against the numbers and, more importantly, draw some conclusions for the way I manage my own money.
Rents in Germany’s major cities: one direction only
I looked at ImmoScout24’s data on the five largest German metropolitan areas to see how average rents had moved between 2022 and 2026.
| Average price per m² | Berlin | Hamburg | Frankfurt | Munich | Cologne |
|---|---|---|---|---|---|
| Q1 2022 | €10.5 | €11.3 | €12.4 | €16.9 | €10.8 |
| Q1 2023 | €11.6 | €11.8 | €12.9 | €17.7 | €11.4 |
| Q1 2024 | €12.2 | €12.0 | €13.5 | €18.5 | €11.9 |
| Q1 2025 | €12.7 | €12.7 | €14.3 | €19.4 | €12.5 |
| Q1 2026 | €13.1 | €13.6 | €15.0 | €20.4 | €13.1 |
| Change | +24.8% | +20.4% | +21.0% | +20.7% | +21.3% |
Source: ImmoScout24, average rents per m² for unfurnished housing, 2022-2026.
The picture is unambiguous. Berlin, where my friend lives, has seen rents climb 24.8% in four years. None of the major cities has been spared: every one of them shows growth between 20% and 25%. Munich, already at the top of the table in 2022, continues to climb. Cologne, often perceived as more affordable, in fact follows the same trajectory as Berlin. Whichever city you look at, between 2022 and 2026, rents have moved in only one direction: upward.
The silent erosion of savings
The direct cause is well known: too few homes are being built, too slowly, against a demand that simply isn’t easing in the cities. But behind this rent inflation, another force is at work in parallel, one that affects every household, tenant or owner: inflation itself. Its most damaging effect doesn’t fall on what we consume, but on the money that sits idle in a bank account.
A concrete illustration: €100,000 left in a current account in 2016 today buys you the equivalent of only €79,000, once cumulative German inflation over ten years is taken into account. What looked like a cautious approach has, in reality, meant a loss of more than 20% of purchasing power over the decade.
This is the double dynamic that weighs on households: the cost of living rises, and at the same time, the savings meant to protect against it lose value year after year.
Source: Statista – Average inflation rate Germany.
A shift in perspective
At the café, my friend asked me the question most people eventually ask:
“So, what are you actually doing about it?”
I answered with a question of my own:
“If rents are rising for tenants… who are they rising for, at the other end of the chain?”
Her answer came quickly: “For the landlords.”
Exactly. What most people experience as a constraint, the steady rise in rents, represents, for those who own rental property, a stream of income that grows at the same pace. The difficulty is well known: buying an apartment in Berlin, Frankfurt or Munich today requires several hundred thousand euros, a sizeable mortgage, and concentrates the entire risk on a single apartment, a single tenant, a single city.
There is, however, a third path, distinct both from being a tenant and from buying property directly.
Investing in real estate without buying an apartment
The principle is straightforward: rather than buying a property yourself, you subscribe to shares in a company that owns a portfolio of buildings, between 10 and 20 properties, mixing residential, office and retail, spread across several European countries. The rental income collected by the company is then passed on to investors, in proportion to the number of shares they hold.
The investor’s position is fundamentally different from owning an apartment outright. Property management, maintenance, tenant search and any necessary works are all handled by the company. The risk is no longer concentrated on a single apartment, but spread across the entire portfolio, in several countries and across many tenants. And the entry threshold starts at just €1000, making this type of investment accessible long before one has saved enough for a direct purchase.
An important distinction from German real estate funds
Many readers in Germany will remember the difficulties of the offene Immobilienfonds (open-ended real estate funds) in the late 2000s, when several of them suspended redemptions before being wound down at a loss. The investment discussed here differs from those funds in three important respects.
First, its legal structure. The investor directly owns shares in a property-holding company, not units in a collective fund. The rules governing how it operates, how it is valued, and how it invests are different.
Second, the way money is recovered. Withdrawals don’t depend on the immediate cash position of the company; they rely on the resale of shares to new investors. This requires a longer investment horizon, but it avoids the scenario of a generalised freeze on withdrawals during periods of market stress.
Third, its track record. This format has existed since the 1960s and has been through several very different real estate cycles, including the 2008 crisis. It is used today by several hundred thousand savers across Europe.
What it pays, and how the fees work
In financial terms, this type of investment has historically returned around 7% per year before fees, or roughly 6% per year once management fees are deducted. In some years, the value of the share itself also rises, depending on the underlying property market. It is worth bearing in mind that what has been observed in the past is no guarantee of what will happen in the future, and the value of the shares can also decline.
The fee structure deserves a brief note. Subscription fees are already included in the share price and are only effectively borne at the time of resale. In practical terms, as long as the investor holds the shares, the recommended duration is at least 5 to 7 years, these fees do not reduce the income received each year. Management fees are taken directly by the company from the rents it collects, before they are passed on to investors. The investor’s only obligation is to declare the income received on their tax return, as with any other rental income.
This type of investment has a name in France: SCPI: Société Civile de Placement Immobilier, a regulated French real estate investment vehicle.
Bear it, or benefit from it
The day after our conversation, my friend wrote to ask for a meeting. She wanted to look at this type of investment in detail, and to understand whether it could fit her own situation.
That is exactly the right question. An SCPI is not a universal solution. Whether it makes sense depends on how long you can leave your money invested, how much capital you have available, your personal objectives, and your tax situation. This is the approach I take at Feller Financial Advisory: looking at a situation as a whole before considering any recommendation.
Rising rents, the erosion of savings, inflation: these are forces no one can bend on their own. But the choice between bearing them and benefiting from them, that one is yours to make.
If you would like to explore the second option, let’s take 30 minutes together. We will look concretely at whether, and how, this type of investment could fit your situation.
This article is published for informational purposes only and does not constitute personalised investment advice. Any recommendation requires a prior review of the investor’s individual situation in a dedicated meeting. The performance figures mentioned are historical and are no guarantee of future returns. An SCPI investment carries a risk of capital loss; the value of the shares and the income distributed can move both upward and downward. The resale of shares is not guaranteed and depends on demand from investors on the secondary market. The recommended investment horizon is at least 5 to 7 years.
