News / Insights

The report, based on a survey of 1,498 industry professionals, highlights that the recovery of the European real estate market may take longer than expected, due to persistently high bond yields, geopolitical tensions, and doubts about the competitiveness of real estate relative to other asset classes. Confidence in the sector’s outlook remains subdued, with 42% of respondents expecting an improvement in the economic environment, compared to 45% last year. Among the main causes for concern are interest rate trends (55%) and European economic growth (52%), followed by increased regulation (38%), while in the short term, fears related to the escalation of geopolitical conflicts (66%) prevail. Investment strategies are therefore focused primarily on income stability and more efficient property management, rather than on a general increase in property values. Nearly half of respondents (49%) plan to target higher annualized returns over the next twelve months, while 47% expect an increase in allocations to European real estate over the next two years, compared with 15% who anticipate a reduction. Although occupier demand remains relatively resilient and credit is still available—albeit under more selective terms—the market’s lack of liquidity and the gap between buyers’ and sellers’ price expectations continue to hold back transactions. Furthermore, the role of family offices and private investors is growing, while the sector is undergoing a phase of consolidation, characterized by mergers and acquisitions and a greater focus on the size and operational strength of market participants.

Investment prospects reflect the major structural transformations currently underway, including the energy transition, digitalization, demographic shifts, and housing needs. Data centers and new energy infrastructure remain in first and second place, respectively, among the sectors with the best prospects, while housing maintains a central role, with six housing-related segments ranking among the top ten in terms of investment attractiveness: healthcare, senior living, serviced apartments, student housing, affordable housing, and rental and social housing. Housing affordability and availability are considered the main challenge for European cities over the next decade, ahead of climate adaptation, infrastructure, and social cohesion. Fifty-three percent of respondents expect the issue of access to affordable housing to become more significant as early as 2027, representing a 14-percentage-point increase from the previous survey. Geographically, London remains in first place among European cities for the sixth consecutive year, followed by Madrid and Paris, while Milan has moved up to fifth place, driven by improved growth prospects and renewed investor interest. Italy continues to attract capital thanks to competitive returns, relative political stability, and a shortage of supply in certain segments, particularly hospitality, residential, logistics, and urban regeneration projects. In the ESG sphere, the focus is gradually shifting from decarbonization to adaptation to climate risks and energy resilience. Fifty-three percent of respondents believe that adaptation to physical climate risks will become more important as early as 2027, a figure that rises to 59% when considering a five-year horizon. This issue has seen significant growth compared to last year, when the percentages were 35% and 51%, respectively. Spaces and services dedicated to communities—including green spaces—are also gaining greater importance, with 44% of industry professionals citing them as short-term priorities.

Finally, respondents identify artificial intelligence and digital technologies as key drivers of transformation in the real estate sector, set to have an increasingly significant impact on asset management and investment and development decisions. AI can help maximize the value of data already available in corporate systems and integrate it with new information from sensors, smart buildings, and digital twins, thereby improving operational efficiency, resource allocation, and property management. This issue is also taking on growing strategic importance in the medium term, with more than one-fifth of respondents considering it the most important factor over the next five years. However, competitive advantage will depend not so much on the adoption of technological tools per se, but rather on the ability to integrate them with management expertise, professional judgment, and high-quality data. From this perspective, 75% of respondents believe that smart buildings and digital capabilities represent a significant competitive advantage, while opinions remain divided on the ownership of data generated by buildings: 45% favor shared management, and 43% believe the data should belong to the property owners.