Real estate investment in Europe could reach €214 billion in 2025, marking a 23% increase compared to the previous year, according to forecasts by real estate consultancy Savills. This projection is based on shifting investor sentiment and data from the final quarter of 2024 when real estate investment across the continent totalled €53 billion – 31% higher than in the same period the previous year.
Savills' data suggests that the total investment volume for 2024 is expected to reach approximately €174 billion, representing a 17% year-on-year increase. This growth highlights a renewed interest in the European real estate sector, largely fuelled by the anticipated decline in interest rates.
Spain leads investor interest
Savills highlights that Spain has positioned itself as the most attractive destination for real estate investment in Europe in 2025, according to a survey of international investors managing assets worth over €800 billion. Following Spain, the United Kingdom and France complete the top three most sought-after markets. More than half of respondents indicated their intention to increase their allocation to real estate assets in Europe and the Middle East over the coming year.
Assets valued between €20 million and €60 million remain the most in-demand among investors. Savills also anticipates a rise in transaction volumes throughout 2025, driven by a more favourable financial environment.
Assets trends
Interest in residential and logistics properties remains the top choice for investors in Europe. However, the Savills survey also highlights a growing demand for office spaces in financial districts, as well as increased interest in hotels, data centres and retail. Notably, 45% of surveyed investors expressed a willingness to take on higher levels of risk, compared to 28% in the previous edition. This shift is largely driven by the limited supply of new developments across the continent and increasing competition for high-quality assets.
There is also a rising focus on ESG-led strategies, with more investors looking to align their portfolios with sustainability criteria in 2025.
Key factors influencing investment in 2025
Savills highlights that the real estate investment performance in 2025 will be shaped by global trade dynamics, political challenges and the repurposing of obsolete buildings. Other key factors include technological advancements, energy production and the growing impact of climate change.
In this evolving landscape, diversification is becoming an essential strategy for investors looking to mitigate risks within their portfolios. The consultancy also anticipates a rise in cross-border and intra-European investment activity, driven by a more dynamic and attractive office market, supported by increasing profitability and rising rental yields.
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