In a period of ongoing uncertainty in the real estate market, value-add investments are drawing increased attention from investors seeking to reposition assets and unlock long-term returns. At a press conference organised by RUECKERCONSULT, industry representatives Michael R. Baumann of Colliers, Lars Bothe of HIH Invest Real Estate, Dominik Barton of the Barton Group, and Patrick Brinker of Hauck Aufhäuser Lampe discussed how evolving market conditions are shaping investment strategies. Michael R. Baumann, Head of Capital Markets Germany at Colliers, explained that the shift in interest rates in 2023 prompted a growing interest in value-add strategies. Compared to core and core-plus segments, value-add investments have gained a larger share of the transaction landscape. While their proportion of total transaction volume increased from 24 percent in 2022 to 36 percent in 2023, that figure slightly declined to 32 percent in early 2025. However, the number of individual deals has steadily risen, with value-add accounting for 58 percent of transactions in the first quarter of 2025—indicating a rise in smaller-volume transactions. Baumann also highlighted a shift in regional focus. Since 2023, investor activity has moved away from major “A” cities and toward smaller towns and regional centres. Around half of all value-add transactions between 2023 and early 2025 took place in small towns. Offices have become the most traded asset type within this category, accounting for over 30 percent of volume, followed by logistics at 18 percent and retail at 8 percent. While residential property is not yet reflected in the transaction data to the same extent, it is widely viewed as having strong growth potential. Dominik Barton, CEO of the Barton Group, emphasised that residential assets offer significant long-term opportunity due to persistent demand and insufficient supply across Germany. His company is actively acquiring residential properties in well-connected B and C cities and managing them internally through its asset, property, and facility management divisions. He acknowledged that the value-add approach requires upfront investment and involves higher risk, but noted that careful repositioning can ultimately result in increased returns. Barton also pointed out that investor sentiment remains cautious in light of geopolitical and economic conditions, though he expects stabilisation and improved planning visibility in the coming months. He observed a clear trend away from passive investment strategies, stating that property values can only grow if the underlying assets are actively improved. Lars Bothe, Head of Value Add Investments at HIH Invest Real Estate, said the firm formally launched its value-add division in 2024 to address the evolving market landscape. HIH is focusing its value-add strategy on logistics and residential sectors, including redevelopment and energy-efficiency upgrades. Bothe described projects such as CityHub Leipzig, a joint venture with Partners Group that involves the repositioning of a former distribution facility into a flexible logistics hub. The company is also exploring opportunities in project development and has recently acquired a development site in the Ruhr region. HIH’s residential strategy is twofold: acquiring stalled developments and investing in older housing stock requiring refurbishment. Bothe sees these efforts as part of a broader countercyclical strategy with a medium to long-term perspective, based on detailed market analysis. Patrick Brinker of Hauck Aufhäuser Lampe Real Estate Investment Management (HAL REIM) presented the bank’s approach to value-add within a regulated environment. HAL REIM has implemented a “managed-to-core” strategy, particularly in the retail sector. The firm has repurposed former large-scale retail sites—such as former Real stores—into modern neighbourhood shopping centres. These redevelopments include regulatory optimisation, new leases, and targeted renovations, all managed in-house. In addition to generating stable cash flow, this repositioning adds long-term value to the properties. HAL REIM is also applying value-add strategies within its social infrastructure fund, allocating up to 20 percent of capital to repositioning projects. A key example is the transformation of a former Krupp administration building in Duisburg into a healthcare centre. Brinker noted that this project illustrates how value-add investment can be aligned with social objectives, creating both financial and community value. The fund targets cash-on-cash returns above 4.75 percent, combining predictable income streams with selective value-add enhancements. As market volatility persists, the speakers agreed that value-add investment strategies are becoming increasingly relevant. Success in this segment requires an active management approach, flexibility, and a long-term outlook. Despite the higher risk profile, these investments are viewed as essential for unlocking underused potential, improving property performance, and contributing to broader economic and social objectives. Photo (left to right): Lars Bothe, Head of Value Add Investments-HIH Invest Real Estate, Patrick Brinker, Head of Real Estate Investment Management-Hauck Aufhäuser Lampe, Dominik Barton, CEO-Barton Group and Michael R. Baumann, Head of Capital Markets Germany-Colliers