European real estate investment to surpass €50bn in Q1 2025

European real estate investment is poised for a strong start in 2025, with total transaction volumes expected to surpass €50 billion in Q1, according to a new forecast from global real estate advisor Savills. The firm anticipates that total investment for the year will reach €216 billion, signaling renewed investor confidence in the European property market.

Despite economic uncertainty and ongoing geopolitical challenges, Savills’ outlook suggests that investment activity is gaining momentum, driven by improving financing conditions, stabilizing inflation, and pent-up demand from institutional investors.

Resurgence in Core Markets

The forecast highlights Germany, France, and the UK as key destinations for capital, with the logistics and residential sectors attracting significant interest. Investors are also expected to target prime office assets in major European cities, as the market adjusts to new workplace trends and sustainable building requirements.

Savills notes that Southern European markets such as Spain and Italy are set to benefit from increased cross-border investment, particularly in hospitality and retail sectors, as tourism continues its post-pandemic recovery.

Institutional Investors and Private Capital Leading the Charge

Institutional investors, including pension funds and sovereign wealth funds, are anticipated to drive the bulk of capital inflows in core real estate segments, while private equity firms are expected to focus on value-add and opportunistic strategies.

“With interest rates stabilizing and investor sentiment improving, 2025 is shaping up to be a pivotal year for European real estate. The projected €216 billion investment volume underscores a return to long-term fundamentals,” said Marcus Lemli, CEO of Savills Germany and Head of European Investment.

Sectors Poised for Growth
• Logistics & Industrial: Demand for last-mile distribution centers and sustainable warehousing remains high, fueled by e-commerce growth and supply chain realignment.
• Living & Residential: The multifamily and student housing sectors are drawing capital due to resilient rental demand and affordability concerns in major cities.
• Offices: While secondary assets face challenges, prime-grade ESG-compliant office buildings in key business hubs continue to command investor interest.

Outlook for 2025

If investment volumes meet Savills’ projection of €216 billion, it would represent a notable increase from 2024, reflecting rising liquidity and investor confidence. However, macroeconomic factors, including interest rate policies and geopolitical developments, will remain key variables influencing market dynamics.

With capital markets showing signs of stabilization and investors adapting to the new market environment, the European real estate sector appears set for a strong rebound in 2025.

Source: Savills