Investment property in Munich: what the 2026 figures really say

Andriy Bezborodko · 2026-10-13

You are considering buying a flat in Munich as an investment. The city is growing, housing is scarce, and landlords here can generally find new tenants quickly. At the same time, an existing two-room flat of 60 m² built in the 1990s costs around 444.000 € on average.

This very contradiction determines whether your figures stack up. Demand is stable, but rent is low relative to the purchase price. We have compiled the official figures, calculated rental yields ourselves and worked through a typical flat down to its after-tax cash flow.

01Munich in figures

The key data for investors in one table. Where two sources provide different figures, we explain this in the following sections.

02Population and demand

Two population figures circulate for Munich, and both are correct. The city's Statistical Office counts everyone registered with their main residence in the population register: 1.612.429 at the end of 2025. The Bavarian State Office for Statistics, by contrast, updates the 2022 Census figure and arrives at 1.505.005 for the end of 2024. In many large cities, the census found fewer people than were registered.

What matters for your decision is the direction, and that is clear. In its population forecast, the city expects around 226.000 additional residents by 2045, an increase of 14 %. Young adults moving to the city for education, training or work are expected to account for the largest share. A forecast is not a guarantee, however, and says nothing about prices.

For landlords, vacancy matters more than population size. On the census reference date of 15.05.2022, 22.403 homes in Munich were empty, equivalent to 2,4 % of the stock. Just over half were available for occupation within three months, representing normal tenant turnover. The German Economic Institute cites 2,5 % as the minimum needed for moves to take place smoothly. Munich is below that level.

Then there is the household structure. 55 % of Munich households consist of one person. One- and two-room flats are therefore in strong demand. Too little is being built to offset this: 6.503 homes were completed in 2024. In 2025 alone, the population register recorded around 8.600 additional residents.

03Economy and labour market

Munich is primarily a service-sector location. Of the 970.646 employees subject to social security contributions (30.06.2024), 413.510 worked for business service providers, for example in IT, consulting, finance and insurance. A further 247.469 worked for public and private service providers, and 146.917 in the production sector. Major companies such as BMW, Siemens, Allianz and Munich Re are based in the city.

More people work in Munich than live here. On the same reference date, 718.992 employed people were resident in Munich. Our calculation therefore puts net inward commuting at around 250.000 employees. Some of them would like to live closer to work.

The labour market is not entirely without challenges. The city's unemployment rate was 5,7 % in September 2026, compared with 5,6 % a year earlier. The Employment Agency describes the autumn upturn as weaker than in economically strong years. For landlords, this means demand is broadly spread, but Munich tenants also feel the effects of the economic cycle and industrial job cuts.

Universities generate a demand segment of their own. More than 104.000 people were enrolled at the Technical University (52.292) and Ludwig Maximilian University (51.737) alone in the winter semester 2025/26. Munich University of Applied Sciences and other higher education institutions add to this.

04Rents, purchase prices and rental yields

Now for the specifics. The qualified rent index for 2025 reports an average net rent excluding utilities and service charges of 15,38 €/m², 5,5 % higher than in the 2023 rent index. Newly signed tenancy agreements averaged around 17,06 €/m² during the survey period, while existing agreements averaged around 14,47 €/m².

Purchase prices come from the Property Valuation Committee, which analyses all property purchase contracts in the city. Existing flats in average and good locations cost between around 6.500 and 9.150 €/m² in 2025, depending on their year of construction. In the first half of 2026, new-build flats cost around 9.800 €/m² in average locations and 10.550 €/m² in good locations.

These two figures allow us to calculate the gross rental yield: annual rent divided by purchase price. Its reciprocal is the purchase price multiple, meaning how many years' rent you pay for the flat.

For simplicity, we use the average rent from the rent index for all construction years here. Newer flats command higher rents, while older ones often achieve less. This makes little difference to the overall scale.

For comparison: according to the Property Valuation Committee, entire rental apartment buildings sold for an average of around 30 times annual rent in the first half of 2026, equivalent to a gross yield of about 3,3 %. Prices have stabilised following the falls in 2022 and 2023. In 2025, owner-occupied/individually owned flats averaged 2 % below the previous year; in the first half of 2026, existing flats were 1 % higher. These figures do not tell us what happens next.

What is your flat's rental yield? Enter the purchase price, rent and costs to compare gross and net yields.

05Districts at a glance

The Property Valuation Committee does not publish freely accessible average prices for individual districts. We therefore assess locations without providing our own price figures, drawing on the city's population forecast, neighbourhood preservation bylaws and university locations.

According to the forecast, inner-city districts will grow below average or even lose residents. This reflects a lack of building land, not a lack of demand. For investors, it means you pay for scarcity in the centre and for development that has yet to materialise on the outskirts.

06Rules for landlords in Munich

Munich applies just about every tenancy-law instrument available in Germany. Anyone buying here should understand them before the notary appointment.

The rent brake primarily constrains your calculations. For a new letting, budget on the rent index figure plus no more than 10 %, not on property portal listings. With an average rent of 15,38 €/m², that would be around 16,90 €/m².

Neighbourhood preservation bylaws cover around one fifth of Munich's flats. If you buy a flat or building there, the city may examine whether it can exercise a pre-emption right. Major modernisation works require permission. Since February 2026, the city has, as a rule, stopped approving the demolition of residential buildings in these areas.

Bavaria has an advantage when it comes to purchase costs. Property transfer tax in Bavaria is 3,5 %, compared with 6,5 % in North Rhine-Westphalia. Add around 1,3 to 1,8 % for the notary and land registry, plus an estate agent where applicable. The purchase costs calculator works out your total.

07Worked example: a rented flat in Munich

Take Markus. He is single, earns well and has taxable income of 100.000 € a year. He buys a rented two-room flat of 60 m², built in 1995, in an average location. The name is fictitious, and the figures are a worked example, not a forecast.

We set out the assumptions openly. The purchase price is 7.400 €/m² according to the Property Valuation Committee, making 444.000 €. Rent is 16,00 €/m², between the rent index average and the rent brake limit. The bank finances the purchase price at 3,6 % interest and 1,5 % principal repayment; Markus pays the purchase costs himself. We assume service charges not recoverable from tenants of 3,00 €/m² per month, half of which goes into the reserve fund.

Markus therefore contributes around 683 € a month out of his own pocket in the first year. Of this, 555 € goes towards principal repayment, reducing his loan. The actual after-tax loss is around 128 € a month. In return, he owns a flat whose rent may, but need not, rise over the years within the limits of the rent index and rent increase cap.

Why does the calculation turn out this way? At a purchase price multiple of 38,5, the rent does not even cover the interest. More equity reduces interest costs but ties up money that could be invested elsewhere. And the tax saving is high because Markus has a marginal tax rate of around 47 %. With a lower income, the monthly contribution would be larger. Our guide to tax on rental income explains the details of how rental income is taxed.

For comparison: a new-build flat in Munich

What would the figures look like if Markus bought a new-build flat instead of an existing one? For new-build flats in average locations, the Property Valuation Committee gives a provisional figure of around 9.800 €/m² for the first half of 2026. For 45 m², that comes to 441.000 €, almost as much as for 60 m² above. We assume rent of 26,35 €/m²: according to the city's Housing Market Barometer, this was the average advertised rent in 2025 for unfurnished first-occupancy flats of 40 to 60 m², based on listings. The rent actually agreed in the tenancy agreement may be lower. Income, interest and principal repayment remain as above.

In the first year, the after-tax contribution therefore falls from around 683 € to around 173 € per month. This is mainly due to declining-balance depreciation, which at 13.885 € is more than twice the straight-line amount above but decreases each year, generally lower maintenance costs in the early years, and the higher new-build rent: a flat first used and let after 01.10.2014 is exempt from the rent brake (§ 556f BGB), although the cap on subsequent rent increases still applies. In return, Markus pays around 2.400 € more per m², and the gross rental yield of 3,23 % depends on the advertised rent: at the rent index average of 15,38 €/m², it would be 1,88 %. Buying from a developer also adds the risk of delayed completion.

08Opportunities and risks of property investment in Munich

Munich is not a market for quick ongoing returns. The city offers demand that has been stable for years, but requires a high entry price and staying power in return.

The greatest risks lie in interest rates and costs. If the rate rises by one percentage point when refinancing, Markus would pay about 3.650 € more a year on an outstanding balance of around 365.000 € after ten years. Special levies for roofs, façades or heating systems affect owners in older buildings, and the reserve fund is not always sufficient. Tenant turnover costs time and money even in Munich.

09Other locations

Other cities in Bavaria: Bavaria overview · Augsburg · Kitzingen · Nuremberg · Regensburg · Würzburg

All locations compared: Where is investment property worthwhile? Cities compared in 2026 · Which federal state is suitable? All 16 compared

10Further reading

• A flat as an investment: advantages and disadvantages
• Tax on rental income
• Notary costs when buying property
• Rental yield calculator
• Purchase costs calculator
• Property transfer tax in Bavaria

11Sources

All sources accessed on 13.10.2026.

• Property Valuation Committee for the City of Munich: Half-year report 2026 (August 2026), Spring update 2026, Autumn analysis 2025; prices of existing flats in 2025 by year of construction from the annual report 2025, as cited by lehmannhueber.de and cross-checked against the chart in the half-year report 2026
• City of Munich: Munich rent index 2025; Population forecast 2025 to 2045; Statistical Office, announcement on the Statistical Yearbook 2025; Second S-Bahn trunk route
• New-letting and existing rents in the rent index 2025 according to kwag.de
• Munich Department of Social Services, Response to the city council enquiry “Clarity on vacant homes in Munich”, 20.01.2025 (2022 Census)
• Department of Urban Planning and Building Regulation, Brochure “Perspective Munich – 30 years of neighbourhood preservation bylaws” (area boundaries as at 31.08.2017)
• Rathaus Umschau 26/2026, Enforcement of neighbourhood preservation bylaws tightened, 09.02.2026
• Bavarian State Office for Statistics: Municipal statistics 2025, independent city of Munich (population, 2022 Census, employees, housing stock, housing completions); Press release 155/2026 (students in winter semester 2025/26)
• Munich Employment Agency, Labour market in September 2026
• Bavarian Tenant Protection Ordinance, GVBl. 2025 S. 718, amended by GVBl. 2026 S. 334; GVBl. 2025 S. 717 (extension of the Building Area Designation Ordinance); Bavarian State Government, Restrictions on converting rental flats, 29.05.2023
• § 556d BGB, § 558 BGB, § 250 BauGB, § 7 Abs. 4 EStG, § 32a EStG
• City of Munich, Department of Urban Planning and Building Regulation: Housing Market Barometer 2025, Table 1 (first-occupancy rents for unfurnished flats by size category, data from Immobilien Scout GmbH); Rathaus Umschau 82/2026, 30.04.2026
• § 7 Abs. 5a EStG (declining-balance depreciation), § 7b EStG (special depreciation), § 556f BGB (new-build exemption from the rent brake)
• Purchase price multiple, gross rental yield, net commuter balance and worked example: own calculations, as at 13.10.2026

Note: This page provides general information and does not constitute investment, tax or legal advice. All figures come from the sources cited or are illustrative calculations with disclosed assumptions, as at 13.10.2026. Past trends and forecasts are not a reliable indicator of future results.