Investment in Europe’s real estate sector showed strong recovery in the first quarter of 2025, following years of subdued activity, according to new research by commercial property group CBRE.
During the first three months of 2025, investment volumes increased by 6 % year-on-year, reaching 45 billion euros ($51 billion). Over the past twelve months, total investment rose by 25 % to 213 billion euros, fueled by improving macroeconomic sentiment and lower interest rates.
Growth was broad-based across different segments, with living assets – including multi-family housing and student accommodation – leading the surge. According to CBRE’s 2025 European Investor Intentions Survey, these sectors were top priorities for cross-border investors.
Living, Retail, and Office Sectors Drive Growth
Living sector investments grew by 43 % over the year, making it the fastest-growing category. Retail followed closely, with a 31 % annual rise and a 26 % increase in the first quarter alone – the strongest quarterly performance across all sectors.
Hotels, industrial and logistics, and office sectors also saw notable growth, with annual increases of 23 %, 19 %, and 16 % respectively. Meanwhile, healthcare was the only sector to experience a decline in investment volumes during the period.
Interest Rate Cuts Boost Investor Confidence
The European real estate market began to recover in 2024 as the European Central Bank and the Bank of England initiated interest rate cuts, improving the investment climate across major European economies.
Similarly, U.K. real estate platform Rightmove recently reported a rise in first-quarter investment activity in Britain’s office, industrial, and retail sectors, reflecting broader positive momentum across the continent.
Outlook Remains Cautious Amid Global Challenges
Despite the strong start to 2025, CBRE cautioned that emerging global risks could impact future investment flows. A key concern is the newly implemented U.S. tariff regime, which has contributed to a cooling in global economic sentiment.
Chris Brett, Head of Capital Markets for Europe at CBRE, noted:
“2025 has got off to a solid start, with retail, living, and office assets looking particularly attractive to investors. However, we are cognizant of the rapidly changing macroeconomic environment and anticipate a more cautious approach from both sellers and buyers in response to market volatility.”
The International Monetary Fund (IMF) last week downgraded its 2025 global growth forecast to 2.8 %, down 0.5 percentage points from its previous estimate, citing U.S. tariffs as a major negative shock to growth. The eurozone’s growth forecast was also lowered to 0.8 % for the year, compared to 1 % previously projected.
