European Real Estate Market Outlook 2025: Cushman & Wakefield Analysis
The European real estate market is gearing up for a positive year in 2025, with improving economic indicators and favorable financing conditions on the horizon. According to Cushman & Wakefield’s ‘EMEA Outlook 2025’ report, factors like GDP growth and resilient labor markets are expected to drive momentum in the industry.
While different sectors will see varying levels of activity, the key to success in this evolving landscape lies in adapting to economic, environmental, and technological trends. Market volatility is predicted to stabilize, leading to a gradual decrease in prime yields and creating opportunities for investors seeking capital growth and total returns.
Cushman & Wakefield forecasts that office prime rental growth will lead the way in 2025, with an average growth rate of 2.1% across Europe. This will be followed by retail and logistics sectors at 1.9% each.
Sukhdeep Dillon, Head of EMEA Forecasting at Cushman & Wakefield, anticipates a period of recovery and growth for the European real estate market in the coming year. With improved macroeconomic conditions, business and consumer confidence, and lower interest rates, the stage is set for the property sector to rebound in a meaningful way in 2025.
In the office sector, quality over quantity is the driving force, with a preference for premium locations and Grade A leases becoming increasingly popular. Rental growth is expected to continue to rise, with completions peaking in 2024 before tapering off slightly over the next two years. Despite weak investment activity in 2024, there is a growing interest from investors and an increase in available properties, sparking cautious optimism for 2025.
Looking ahead, carbon reduction and climate risk will influence long-term strategies, with EU regulations impacting asset values and tenant demand. Asset repositioning and repurposing are also on the rise, particularly in major cities like London and Paris.
In the logistics sector, a positive economic outlook for 2025 signals a turning point for the industry. Rental growth is expected to continue, albeit at a slower pace, with different markets showing varying levels of growth. Strong sustainability features will be a key factor in property attractiveness, with markets like the UK, Slovakia, and Ireland expected to be particularly active. Despite potential disruptions from international trade policies, the impact is expected to be manageable.
Overall, 2025 looks to be a promising year for the European real estate market, with opportunities for growth and success in various sectors. Staying agile and adapting to changing trends will be crucial for investors and industry players looking to make the most of the evolving landscape.
