Resilience in European investment: €210 Bn forecast & emerging strengths 

As 2025 progresses, European real estate is showing a resilience few predicted a year ago. Despite lingering macroeconomic headwinds and uneven recovery across asset classes, investors are returning to the market, cautiously but confidently. 

According to the latest Savills European Investment Forecast, total real estate investment volumes are expected to reach €210 billion in 2025. This marks a return to growth after a subdued 2024, supported by renewed investor appetite, stabilising interest rates, and a steady pipeline of quality assets. 

The story of European investment today is not uniform recovery, but selective resurgence with the Nordics, southern Europe, and alternative sectors leading the rebound. 

Investor appetite is evolving 

The appetite for European real estate is returning, but with new patterns. Institutional capital, which had retreated to the sidelines in 2023, is flowing back into defensive and income-generating sectors such as residential, logistics, and data infrastructure. 

Reports from CBRE and INREV underline a clear shift in investment preference: 

• Living and residential sectors, including student housing and multifamily assets, are being viewed as long-term inflation hedges. 

• Logistics and industrial properties continue to benefit from near-shoring and e-commerce demand. 

• Data centres are emerging as one of Europe’s fastest-growing asset classes, with demand expected to outstrip new supply through 2026. 

At the same time, investor focus has pivoted from traditional offices toward prime, sustainable, and flexible workspaces. Secondary office stock continues to face headwinds due to elevated vacancy rates, but prime assets with ESG credentials are holding value and commanding premiums. 

Across the continent, the bid-ask spread is narrowing as vendors adjust expectations and buyers gain conviction. That alignment is helping revive transaction activity, signalling a maturing recovery phase rather than speculative bounce. 

The region’s focus on sustainability, technology, and institutional transparency continues to attract global capital. While office vacancy remains a concern in some markets, prime assets with high energy performance ratings are outperforming. For investors seeking stable returns in mature, transparent environments, the Nordics offer an increasingly compelling proposition. 

Southern Europe: momentum and opportunity 

Meanwhile, southern Europe including Spain, Portugal, Italy, and Greece is seeing a wave of cross-border capital chasing opportunities across the living, tourism, and logistics sectors. 

Spain, in particular, has surged in investor rankings. INREV’s 2025 survey places Madrid and Barcelona among Europe’s top three preferred cities for new investment, driven by strong demand for student housing, hotels, and logistics. 

These markets combine solid fundamentals, rising rental demand, and attractive pricing, making them a prime target for investors seeking growth rather than yield compression. 

2025 outlook: a foundation for recovery 

With €210 billion in forecasted investment volumes, 2025 looks set to be a year of cautious optimism. 

Tailwinds include: 

• Lower inflation and stabilizing interest rates, improving financing conditions. 

• Return of large transactions, boosting liquidity. 

• Relative value opportunities, with many European markets still trading below long-term fair value. 

However, challenges persist. Geopolitical uncertainty, slow global growth, and regulatory burdens particularly around ESG compliance, could weigh on development and returns. Yet these same constraints are creating scarcity value in compliant, high-quality assets, reinforcing the “flight to quality” trend. 

What this means for investors  

Positioning portfolios around high-quality, sustainable assets in growth regions such as logistics platforms in the Nordics, living assets in Spain or Portugal, or data infrastructure hubs in Central Europe will be key. 

The European market is not returning to its pre-2020 rhythm, but it is evolving into something arguably healthier: smarter capital allocation, stronger fundamentals, and deeper regional diversity. 

As 2025 comes to an end, investors are no longer asking if Europe has turned the corner. They are asking where the next opportunity lies and increasingly, the answers are in north and south, in living and logistics, and in the data infrastructure that powers tomorrow’s economy.