Germany has been an inactive market for Estateguru since the end of 2022. We are not issuing new loans and all remaining German loans are currently under active recovery procedures. Our sole focus is resolving the existing portfolio and maximising recoveries for investors.
For investors with German loans in their portfolio, the key questions are clear: What has changed in the market? Why does the recovery process take time? And what can realistically be expected in 2026?
In this interview, Antje Mertig shares her perspective on market conditions, structural constraints and the outlook for ongoing recoveries.
Over the past 12 months, how has the German real estate market evolved, and what role has the broader economic environment played in that development?
Over the past year, the German real estate market has moved into a broad-based recovery, but it has shown signs of selective stabilisation. The macroeconomic backdrop has remained weak: Germany’s economy grew only marginally in 2025, construction activity stayed subdued and corporate insolvencies remained elevated. At the same time, lower ECB rates have improved financing conditions compared with the peak stress period, which has supported sentiment and reopened parts of the transaction market.
However, the recovery has been uneven across asset classes and locations. Residential and living-related segments have stabilised more clearly, while towns outside of metropolitan areas, older buildings and development-heavy situations remains under pressure. Transaction activity has picked up from the lows, but it is still below long-term normalised levels and underwriting remains materially more conservative than in the 2019–2022 low-interest-rate environment.
For assets financed until 2022, this means that business plans often have to be reassessed on the basis of lower liquidity, longer exit timelines, tighter refinancing conditions and more selective investor demand. In that sense, the broader economic environment has not triggered a market rebound, but it has clearly reset pricing, execution risk and recovery expectations.
Do you see signs that the price correction phase has stabilized, or are certain regions and asset types still under structural pressure?
The price correction phase has stabilised in parts of the residential market, but the picture remains highly segmented.
Completed or well-located residential assets have shown relative resilience. By contrast, residential development projects in secondary locations continue to face structural pressure, mainly due to weaker liquidity, longer sales periods and lower exit certainty.
As a result, distress is not universal but concentrated in specific sub-segments. Since Estateguru’s collateral pool is largely exposed to residential developments in secondary locations, these factors remain highly relevant for recoveries and value preservation.
How does today’s financing environment affect both property owners and the liquidity of the market?
Today’s financing environment remains a key constraint on market liquidity.
While interest rates have eased from their peak, lending standards are still materially tighter than before 2022. Banks are more selective, leverage is lower, equity requirements are higher and underwriting is more focused on cash flow resilience and execution certainty. For property owners, this means refinancing and new funding are harder to secure and require more robust business plans.
This has a direct impact on market liquidity. Even where buyer interest exists, financing availability can limit execution speed and pricing. Transactions therefore tend to take longer; buyers remain more selective and assets in secondary locations or with development risk are especially affected. In our experience, financing approvals often take four to six months in more complex situations.
What makes the German enforcement and insolvency framework particularly time-consuming compared to other European markets?
Germany’s recovery framework is highly formalised and, especially in real estate, strongly court-led.
Enforcement usually requires a sequence of judicial and administrative steps. This ranges from valuation and formal notifications to auction, distribution of proceeds and land register implementation. Debtor protection mechanisms and procedural remedies can add further delay.
If insolvency proceedings are opened, individual enforcement is generally stayed and the case shifts into a collective court-supervised process with an insolvency administrator. As a result, recoveries in Germany are often slower and less direct than in more creditor-driven systems.
In practical terms, where does most of the delay occur — courts, administrators, procedural rules, or borrower behavior?
Most delays are structural.
In practice, the biggest bottlenecks are court workload, mandatory procedural sequencing, valuation and publication requirements, and statutory waiting periods between enforcement stages. In insolvency situations, timing is also influenced by the insolvency administrator’s execution capacity and the need to coordinate multiple stakeholders.
Borrower behaviour can delay individual cases, but in our experience it is usually not the main driver. The overall pace is more often determined by the legal and procedural framework itself.
Have you seen any structural improvements in processing times over the last year, or does the system remain equally burdened?
There is no clear evidence of systemic acceleration in German recovery or insolvency processing times.
Recovery processes continue to progress, but generally in the same gradual, sequential manner. Where timing has improved, this is usually due to case-specific factors rather than a structural change in the legal or institutional framework.
So overall, the system still appears burdened rather than materially faster.
What tangible progress has been made in Estateguru’s German cases over the past 12 months?
Since the end of 2022, Germany has been an inactive origination market for Estateguru and our focus has been entirely on resolving the existing portfolio.
Over the past 12 months, seven loans have been brought to resolution. In addition, we currently expect another three to five cases to be resolved during the year.
Recoveries are mainly being achieved through auctions and insolvency-related sale processes. In parallel, we seek to preserve value by funding necessary holding costs and, where appropriate, targeted measures that improve asset marketability.
Are similar recovery timelines visible across the broader German real estate finance market, or is this situation specific to certain platforms?
Broadly yes. The current environment reflects a market-wide adjustment rather than a platform-specific issue, although the severity differs by asset type, location, loan vintage and lender profile.
Across the German real estate finance market, many lenders are moving away from a pure ‘extend and pretend’ approach and toward more active resolution strategies. These include restructurings, selective asset sales, enforcement steps and insolvency-related processes, depending on the case.
This shift is a consequence of the broader transition from the low-rate, high-leverage environment before 2022 to a much more conservative credit regime. That transition is affecting banks, debt providers and alternative lending platforms alike, even if outcomes vary significantly across portfolios.
What is the current market appetite for distressed or incomplete assets, and what factors most influence whether a property can be successfully sold?
Market appetite is there, but it is highly selective.
In Germany today, distressed or incomplete assets are saleable if the risk profile is understandable and the pricing is realistic. The most important factors are location, completion status, legal clarity, capex needs, energy efficiency and buyer financing.
Completed or near-completed residential assets generally attract broader interest. Incomplete developments, especially in secondary locations, tend to face a much smaller buyer pool, longer execution periods and greater pricing pressure.
So the question is usually not whether a property can be sold at all, but to whom, over what timeframe and at what price. This limited buyer appetite is often evident in foreclosure auctions, where some assets receive no bids at all. In a number of cases, court-appointed valuations appear to remain above what the market is currently willing to pay. Against that background, a sale at or slightly above 50% of the appraised market value is not necessarily a ‘fire sale’, but may simply reflect the property’s true market clearing price under current conditions.
What are realistic expectations for problematic German loans in 2026?
Realistically, 2026 should be seen as another year of structured work-out rather than rapid normalisation.
Conditions are more stable than at the height of the market correction, but recovery timelines remain driven by legal processes, asset quality and market liquidity. We expect further case-by-case resolutions, not a sudden acceleration across the portfolio.
Our focus remains on disciplined execution and maximising recoveries for investors in what is still a complex and time-intensive environment.
