Five trends identified for 2025
According to Savills, preliminary data suggests that real estate investment volume in Europe was about €53 billion in Q4 2024. This represents an increase of 31% compared to Q4 2023 and represents the highest quarterly volume since the end of 2022.
According to the international real estate consultancy, this development, combined with improved investor sentiment, could indicate that the broad-based recovery of the European real estate market is now firmly established. For 2025, Savills predicts five key trends that will influence the real estate industry in Europe:
- The impact of global trade conflicts and political challenges on capital flows and real estate investment decisions
- Repositioning versus conversion of "obsolete" buildings
- The impact of technological advances on the world of work and its impact on real estate demand
- The role of the real estate industry in the transformation of energy production and its contribution to energy independence and resilience
- The impact of extreme weather events on real estate and how innovative real estate concepts can mitigate these challenges
Savills expects increased interest in well-located properties with development potential across all sectors – particularly those that offer opportunities for active management strategies such as repurposing or repositioning in line with ESG standards. Diversification remains a priority for investors looking to minimise sector-specific risks so that all asset classes can benefit from the modest market recovery.
Lydia Brissy, Director European Research at Savills, said: "The strong performance in the last quarter of last year is expected to push annual investment volume to around €174 billion, close to our forecast of €170 billion and representing annual growth of 17%. For 2025, we expect a total investment volume of 214 billion euros, which corresponds to annual growth of 23%."
James Burke, Director Global Cross Border Investment at Savills, adds: "Cross-border investment activity is also expected to increase this year, driven by a revival of intra-European capital flows and continued interest from North American investors. French private equity companies as well as German, Israeli and Spanish investors are likely to remain active, especially in the Western European office markets. North American private equity firms, which have so far focused on the London and Dublin office markets, could increasingly look at other European cities that offer rental growth and potential for yield compression."
Marcus Lemli, CEO Germany and Head of Investment Europe, adds: "Key interest rate cuts, robust rental markets and a lot of private and, increasingly, institutional capital should provide a tailwind for the European investment market this year. In Germany, the recovery is likely to be somewhat slower in view of the weak economic environment. Parallel to the ongoing upswing, the structural shifts between the types of use continue, from which the markets for logistics and residential real estate in particular should benefit."
Further information as well as all facts and figures on the European real estate market can be found in our following publications:
