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urope's real estate sector is expected to make significant strides in 2025, with analysts forecasting a 15% increase in investment activity across major markets, including the UK. This uptick in transactions, which began in 2024, is set to gain momentum as interest rates continue to fall, easing pressure on the sector and reviving growth.

    The office market is also poised for recovery, driven by rising occupancy and return-to-office mandates. Leasing levels are expected to approach historic averages, with prime assets delivering the strongest performance. However, the recovery will be polarized, with rents and valuations diverging between top-tier properties and secondary assets.

    In the residential sector, average asking prices are forecast to rise 4% by year-end, while rents remain elevated due to supply constraints. Prime real estate is expected to continue growing in value, maintaining Europe's status as a global wealth hub. Cities like Stockholm, Marbella, and Madrid will lead this charge, with price growth exceeding 5%.

    Demand for operational real estate, including logistics hubs, student accommodation, and hospitality, will remain strong. However, understanding structural trends such as digitization and demographic shifts is crucial to differentiating between winners and losers.

    Key trends in 2025 include the impact of sustainability targets on the sector, with strong coordination required among occupiers, landlords, investors, and lenders. Artificial intelligence is also set to play a critical role, with 85% of respondents expecting AI to have a significant impact on real estate over the next five years.