While fund models have long served as the dominant approach to commercial real estate investment in Germany, openings for listed property companies to capture a greater share of the market are beginning to emerge.

"Germany's listed real estate sector has huge potential for growth as investors increasingly come to realize the attractiveness of the listed model," said Philip Charls, chief executive of the European Public Real Estate Association (EPRA), during the organization's annual conference in London this month.

EPRA estimates that Germany has an underlying real estate investment market of €1 trillion, making it the largest market in Europe. Together, open-ended property funds and institutional investment funds control upwards of €125 billion in assets, according to EPRA's calculations. Meanwhile, listed real estate accounts for approximately €25 billion in market capitalization.

In September 2010, the German government instituted a two-year holding period for open-ended real estate funds. Consequently, the attractiveness of investing in such appears to be fading. A survey of more than 100 institutional investors by asset management company Schroders, conducted since the implementation of the new rules, found that 38 percent of respondents planned to stop investing in open-ended property funds as a result of the minimum two-year holding period. Also, one-third noted that they plan to withdraw their investments in the funds within the next 12 months.

"Real estate stocks are a very competitive alternative to the open-ended property fund model that has served the market in Germany for 50 years," Charls said. He pointed out that listed real estate offers international investors a liquid and transparent means of accessing the benefits of the German property market.

More German real estate companies are going public, evidence of the momentum behind the trend toward listed real estate, according to EPRA. Two companies, GSW and Prime Office, held initial public offerings in the last year and garnered a total of more than €1 billion in equity capital in the process.

"What we hear from our investors is that there is a lot of demand for exposure to Germany," said Olivier Elamine, CEO of Germany's first REIT, alstria office REIT-AG (FSE: AOX), in a video interview with REIT.com. "The recent IPOs have been good for the sector, because what we're missing in Germany is critical mass."

Additionally, from the beginning of September 2010 to the beginning of September 2011, Germany's share of the FTSE EPRA/NAREIT Europe Index grew from 3.5 percent to 6 percent, signifying a market capitalization increase of more than 75 percent.

Looking ahead, Germany could be a key piece in what EPRA sees as a potential groundswell in the growth of listed real estate throughout Europe.

"The real estate sector in Germany could be in the vanguard of a new period of expansion for the European listed market," Charls said.