F
all 2025 Outlook – 2 Oct 2025

    **Sector Conditions and Outlook**

    **Office** – The European office market shows early signs of stabilization in H1 2025, with modest rent growth and the first yield compression in nearly three years. Investor sentiment remains cautious; demand is concentrated on prime CBD assets, while older peripheral properties lag. Selectivity is key – focus on well‑located, resilient assets in London, Paris, and Madrid.

    **Industrial/Logistics** – E‑commerce, automation, and fiscal stimulus continue to underpin the sector, sustaining capital flows and occupier demand. Rent growth has slowed and vacancies have edged up, mainly in older stock, but yields have tightened further. Development pipelines are tight, reinforcing medium‑term strength and reducing supply risk.

    **Residential** – Residential remains a top investor choice, driven by solid rent growth and early yield compression in core markets. The sector is recovering gradually, with a widening supply‑demand gap expected in coming years. Housing delivery is likely to slow due to high construction costs, limited urban land, and stricter regulations.

    **Hotel** – Hotel performance stays positive, buoyed by resilient leisure demand and ADR growth, especially in Southern Europe. Corporate travel remains subdued. Transaction volumes exceed trend, supported by large luxury deals in Southern Europe and renewed interest in Germany and the Netherlands.

    **Retail** – Retail investment has accelerated thanks to stabilizing fundamentals, larger lot sizes, and renewed confidence after years of rationalization. Sales, footfall, and vacancy trends indicate a more sustainable recovery. Retail parks and centres are stronger, while high‑street retail remains weaker. Low inflation, falling borrowing costs, and record‑low unemployment should further lift consumer confidence and spending.

    **Data Centres** – Data centres are Europe’s best‑performing property type, with demand outpacing supply for a third consecutive year. Core hubs face development bottlenecks, but secondary and emerging markets attract investment. The Nordics and Southern Europe are likely to benefit most, given uncongested grids and shorter connection times.

    **Healthcare** – Healthcare real estate is gaining momentum, with transaction activity and capital values above long‑term averages for the third straight quarter. Care operators enjoy a favorable environment due to a normalizing debt market, price upside, and occupancy above pre‑pandemic levels. Investment is led by care homes and clinics, with the UK delivering its strongest first half in over a decade.

    **Student Housing** – Student housing continues to draw investor interest, though volumes dipped slightly due to a UK slowdown. Continental Europe is gaining traction, with record inflows into France, Denmark, and Spain, driven by strong international student demand and a positive economic outlook, especially in Spain.

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    **Risk Considerations** – Investing carries risks, including potential loss of principal. Past performance does not guarantee future results. Risks include value fluctuations, market pricing volatility, liquidity constraints, leverage, credit, occupancy, and legal issues, all of which can reduce property value, income, and security value.

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