Real Estate Revival: What to expect in 2025
GRI Club Europe
High-level content and networking, shaping the present and future of the real estate market
As the real estate market embarks on a new cycle, optimism prevails across market analyses. CBRE forecasts a nearly 15% increase in European real estate investment activity in 2025, while further interest rate cuts are expected to alleviate pressure on the sector and fuel growth across multiple market segments.
Meanwhile, M&G’s 2025 market outlook describes a more compelling investment environment considering adjusted price points, attractive income return potential, and strengthening rental growth, predicting the “next five years to reflect the strongest performance that real estate has seen for the best part of a decade.”
?? Regarding specific sector performance, leasing in the office sector is expected to continue on its upward trajectory across a number of European cities, including London, Brussels, Madrid, and Barcelona, according to Cushman & Wakefield’s European Office Outlook 2025. This demand is highly centred around grade A properties, which now account for more than 50% of leasing activity.
Similarly, the living space is expected to enjoy continued demand growth, report Cushman & Wakefield, driven by projections for significant population growth in several European countries through 2040, fuelling demand for living space, particularly in urban areas where growth is concentrated. This trend is further supported by evolving societal preferences, particularly the increasing demand for well-located, high-quality rental properties.
Regarding the resurgence of the retail sector, fundamentals are expected to strengthen further in 2025, say Cushman & Wakefield, driving increased investment - once again centred around high-quality assets, including retail parks, top-tier shopping centres, and prime high streets.
European tourism hit pre-pandemic levels in 2024, greatly supporting the retail sector. Consumer confidence also began to recover in 2024, and although it is expected to strengthen further in 2025, supported by wage growth and inflation stabilisation, political and economic uncertainties are adding an element of fragility.
?? Despite optimism around real estate’s recovery, geopolitical impacts are certainly one to watch. Besides ongoing conflicts in the Middle East and Ukraine, geopolitical uncertainty stemming from the short-term impacts of widespread political elections are expected to prevent rapid market recovery, with pressing questions around Trump’s tariffs on Europe, and how this will impact global growth.
GRI Club will be kicking off 2025 addressing these questions and more with Europe’s top CIOs and Heads of Real Estate at the annual GRI UK & Europe Reunion 2025.
Latam investors eye long-term strategy in Iberian RE, but is the feeling mutual?
With stable economic growth and strong long-term returns, particularly in the luxury hospitality and residential sectors, interest from Latin American investors in the Iberian real estate market remains strong.
Capital flow in the opposite direction encounters more challenges, primarily due to currency volatility and political instability, however, the expanding middle class and nearshoring trends, especially in Mexico, present attractive opportunities for Iberian investors seeking to diversify their portfolios.
?? Collating key takeaways from the recent ‘Ibero-American Real Estate Investment’ Online Meeting, GRI Club’s report kickstarting 2025 addresses influencing factors behind the investment interest and dynamics between Latin America and Iberia.
Not all investors are created equal however, and the report reveals clear differences in strategies and preferences between family offices and institutional investors active in the region, as well as fierce competition from a more standardised and liquid North American market.
The new era of luxury real estate
European luxury real estate has shown remarkable resilience, standing strong even as the broader market faced significant challenges in recent years due to the global pandemic and rising interest rates.
Be it retail or hospitality, luxury has outperformed across European real estate, largely down to the increase in global wealth and post-pandemic tourism boom, and growth is expected to continue, with particular interest incoming from American and Middle Eastern buyers.
London’s New Bond Street has seen rents triple since 2010, while its rival Oxford Street has seen minimal growth. Similarly, Paris’ high-end Rue Saint-Honore has now far surpassed Boulevard Haussmann.
?? The “finite” nature of these assets supports valuations and increasing interest from Blackstone in 2024 as they snapped up luxury stores in both Paris and London after years of actively reducing their retail portfolio has proven the sector’s attractiveness.
Meanwhile, average daily room rates for London’s luxury hotel market have grown an impressive 42% since 2023, while the wider market has seen growth of just 27%. Paris and Milan tell a similar story with 42% and 60% growth, respectively, in the same period, against 37% growth in each of their wider hotel markets.
?? What is luxury in this day and age, though? “Experience is as important as product for consumers,” says CBRE’s Luxury Real Estate 2024 report, and the industry is fast redefining luxury as personalised, boutique experiences rather than traditional opulence.
领英推荐
At GRI Hospitality Europe 2024, Jeroen van Gils , Development Director at BWH Hotels , discussed just this with Gustavo Favaron , CEO & Managing Partner of GRI Club during an exclusive interview.
“High-end luxury; is that still the hotel with the butler service, the rooftop swimming pool, the turned out service? I think the newer generation has another definition. A luxury hotel can be a downtown boutique hotel with extremely good personal service, personalised to my experience, to my needs,” explains Jeroen.
Other News ??
Corporate Radar ??
If you’ve enjoyed GRI Insights, don’t forget to subscribe!?