Real estate investment across Europe is forecasted to reach €214 billion in 2025, reflecting a 23% increase from the previous year, according to real estate consultancy Savills. This surge is attributed to shifting investor sentiment and strong data from the final quarter of 2024, during which investment in the sector reached €53 billion—a 31% rise compared to the same period the year before.
Savills projects that total investment for 2024 will reach approximately €174 billion, representing a 17% year-on-year growth. This upward trend underscores a renewed confidence in the European real estate market, driven largely by expectations of lower interest rates.
Spain Leads as the Top Investment Destination
Savills identifies Spain as the most attractive European market for real estate investment in 2025, based on a survey of international investors managing assets worth over €800 billion. Following Spain, the United Kingdom and France round out the top three preferred markets. More than half of surveyed investors indicated plans to increase their allocation to real estate assets across Europe and the Middle East in the coming year.
Investment interest remains strongest in assets valued between €20 million and €60 million, and Savills anticipates a rise in transaction volumes throughout 2025, supported by improved financial conditions.
Key Asset Trends
Residential and logistics properties continue to be the top choices among investors. However, the Savills survey also highlights a growing interest in office spaces located in financial districts, as well as increased demand for hotels, data centers, and retail properties. Notably, 45% of investors surveyed expressed a willingness to take on higher levels of risk, a significant jump from 28% in the previous edition. This shift is driven by limited new developments and increased competition for high-quality assets.
Sustainability is also playing an increasingly important role in investment strategies, with more investors aligning their portfolios with ESG (Environmental, Social, and Governance) criteria in 2025.
Key Factors Influencing Investment in 2025
Savills highlights several factors that will shape real estate investment performance in 2025, including global trade dynamics, political uncertainties, and the repurposing of outdated buildings. Additional influences include technological advancements, energy production, and the growing impact of climate change.
As the investment landscape evolves, diversification is becoming a crucial strategy for mitigating risks. Savills also anticipates increased cross-border and intra-European investment activity, fueled by a more dynamic office market, rising profitability, and growing rental yields.