Geopolitical instability, increased regulation and construction costs are key factors that will affect the 2025 real estate market. Though the trend is towards growth, it will be slow and cautious, with an eye on the evolution of the conflicts that currently have the world on edge. Arum Group’s experts in real estate consulting and management have analyzed the PwC’ and Urban Land Institute’s report “Emerging trends in real estate – Europe 2025,” and below we share the five factors they believe most likely to influence the European real estate sector over the coming year.
- Geopolitical and economic uncertainty. International political instability is the chief concern of real estate professionals. This uncertainty directly influences the continent’s economic expectations, with 77% of the sector’s entrepreneurs concerned about European economic growth, compared to 62% who worry about global growth.
- Inflation and financing costs. Although inflation and high financing costs remain relevant, their impact has diminished compared to the previous year. This suggests an adaptation of the sector to economic conditions and a possible stabilization on the horizon.
- Investment outlook and confidence in the sector. Despite the challenges, there is increased confidence and moderate optimism for 2025. Investors are showing greater interest in areas such as data centers and energy infrastructure, but are not neglecting the residential sector.
- Spain’s position in the European market. With Madrid overtaking Paris in terms of projected investment in the city, the Spanish capital is consolidating its position as the second largest real estate market in Europe after London, reflecting increased confidence in Spain’s growth potential over the coming years.
- Investment in assets and operations. Real estate investors are focusing their attention on operation assets, especially in segments like student residences, tourism and logistics. So-called integrated platforms that combine real estate and operations are the most attractive assets because they promise returns via both sources.
In a complex environment marked by geopolitical uncertainty, the industry is cautiously optimistic about the 2025 real estate market and confident that investment diversification will be the lifeline that allows it to adapt to new dynamics and challenges as they emerge.
