Germany’s housing market adjusts to permanent scarcity
Germany's housing shortage has now definitively crossed an important line. What was once treated as a cyclical undersupply
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Germany's housing industry is running out of ways to build slowly. After years of spiralling costs, collapsing margins and shrinking output, developers and investors are converging on a single idea: factory-made housing is no longer experimental—it is inevitable.
That was the message REFIRE picked up clearly from a recent RUECKERCONSULT online discussion hosted by four companies who rarely share a stage but increasingly share a mission: WvM Berlin Immobilien, INDUSTRIA Immobilien, Periskop Development, and Hohental Gruppe. Serial and modular construction - once a niche solution for social housing - is on course to become the country's new standard building method within this decade.
The shift is being driven as much by institutional capital as by engineering logic. For Thomas Wirtz, managing director of INDUSTRIA Immobilien, modular construction has evolved from a technical tool into a strategic investment theme. “Conventional housing construction can barely meet institutional investors’ return expectations anymore,” he said. “Industrial prefabrication allows projects to be completed quickly, with predictable costs and designs that are both attractive and sustainable.”
INDUSTRIA, which manages 24,000 residential units worth €5.7bn, has been quietly studying the modular sector for a year and is now considering dedicated fund vehicles. A survey the company conducted this spring found that nearly half of institutional investors would consider investing in modular housing funds, while only around 10% rejected the idea outright. Crucially, 56% of respondents expect higher returns than from conventional building—a sign that yield compression in traditional assets is forcing investors to look elsewhere.
The attraction is obvious: shorter construction times, reduced financing costs and less exposure to labour shortages. Modular buildings, once viewed as temporary or low-end, now come with architectural quality that investors can present to their committees without embarrassment. Wirtz predicts that as familiarity grows and perceived risks decline, the “risk premium” attached to serial projects will steadily evaporate.
From a development perspective, serial building is not simply about production—it begins with planning. Simon Kempf, managing director of Periskop Development, argued that the shape and size of building plots determine how efficiently modular systems can be deployed. “The more advanced the degree of prefabrication, the higher the demand for a suitable plot,” he said. His company’s analysis found that industrial prefabrication can cut construction time significantly, reduce cost risk and improve recycling rates to as high as 90%. These attributes also align closely with the ESG targets that increasingly drive institutional investment.
Kempf cautioned, however, that not every site lends itself to serial methods. Transport and logistics costs can erode margins, and early capital commitment is unavoidable. The solution, he said, lies partly in harmonising Germany’s fragmented state building codes - a precondition for scaling modular production.
Jens Wadle of the Hohental Gruppe also emphasised the importance of planning culture. Serial building, he said, begins long before the first module is assembled. “Repeatability is the key,” he argued. “With awareness of urban design and open spaces, recurring grids and modular design approaches can actually enhance quality, not diminish it.” Wadle cited the GdW framework agreement for serial and modular construction as a “milestone” for municipalities. The framework offers pre-qualified suppliers and legally secure templates that shorten tendering cycles. Hohental, one of the approved partners, calls it a “ready-made path” for public housing clients to build quickly and confidently.
If serial building once belonged to the world of social landlords, that era is ending fast. David Fischer, managing director of WvM Berlin, said serial production is now being applied to premium condominiums. His company’s Zwieseler Hof project, delivering 147 owner-occupied flats in Berlin, integrates modular techniques with the architecture of Nöfer Architekten to achieve earlier completion while retaining high design quality. Buyers who commit early can still choose their finishes - from flooring to fixtures - allowing personalisation within the system.
Fischer’s second Berlin project, at Liebermannstraße in Weißensee, will finish six months ahead of schedule thanks to the same method. The 48-unit development demonstrates the time savings that translate directly into reduced financing costs. “Serial building is not the opposite of variety,” he said. “Modular principles create typological flexibility - housing for different groups in a fraction of the time.”
For WvM, prefabrication will become standard for most projects except highly bespoke or historically sensitive sites. “The method must serve the location, not the other way around,” Fischer said.
Serial construction is not a panacea for Germany's housing shortage. Factory-made modules will not erase land bottlenecks, financing constraints or planning delays overnight. But the movement now gathering pace around modularity is notable precisely because it draws its momentum from multiple corners of the market - investors, developers and public-sector clients.
What unites them is impatience. Germany's housing crisis has become a test of whether the country can industrialise its building processes as efficiently as it once built its cars. Prefabrication offers what conventional methods lack: predictability and speed. These virtues are fast becoming the currency of a market where deadlines slip, budgets burst and public trust is wearing increasingly thin.
REFIRE: If 2025 marks the start of serial construction's mainstream moment, the coming years will show whether Germany's real estate industry can convert its fascination with process into genuine delivery. For once, the country's problem is not knowing how to build - it's finding a way to do so at scale, on time and within budget. Serial logic, it seems, may offer more than speed. It may be the last chance to restore credibility to the act of building itself. For investors, that credibility may soon prove the only foundation worth building on.
Germany's housing shortage has now definitively crossed an important line. What was once treated as a cyclical undersupply
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