Prime Highlights:

The real estate investment in Europe would increase by 15% in 2025, that is, major markets like U.K. along with other prime European regions have a chance for recovery.

The occupancy rates as well as the leasing activity of the office market in Europe is expected to gain momentum due to return-to-office mandates.

The residential sector is also going to be on the gain side, with average asking prices forecasted to increase by 4% by the end of 2025.

Key Background:

The real estate market in Europe is expected to rebound strongly in 2025 as investment and growth in key property segments pick up again. Analysts expect further cuts in interest rates to ease the pressure on the sector and create a more solid environment after years of muted performance.

Real estate investment activity in Europe is expected to rise by 15% in 2025, with markets in the U.K. Other big European areas are forecast to grow strong. CBRE-the largest property group, points that 2025 is likely going to prove an important milestone in the performance for the entire real estate business; capital value in properties having begun to level up already would therefore result in a competitive returns generation across every line of properties and even across the most critical lines.

Office is going to be one of the sectors where marked recovery is expected in terms of occupancy rates and leasing levels with return-to-office mandates. However, the market is going to remain polarized, with Grade A office spaces witnessing a greater demand than that for secondary assets.

The residential market is also positive and likely to grow. Analysts project that average asking prices will rise by 4% at the end of 2025 as consistent with long-term trends. With lower borrowing costs, demand for residential property is likely to rise, especially in prime markets such as Stockholm, Marbella, and Madrid. London and Paris will likely continue their dominance in luxury real estate despite the political uncertainties.

It also shows there will be continued powerful operational demand in traditional real estate. In addition, there has to be examination into other more structural trends for instance, digitalization and demographic change. The advancement of artificial intelligence will have an enormous effect on the sector, and investors await the exploitation of AI to improve property management, market analysis and tenant acquisition strategies.