Sustained demand has made the living sector the top target for European cross-border real estate investment.
According to CBRE’s 2025 European Investor Intentions Survey, which polled 781 Europe-based investors, 32% of respondents said the living sector was their top target, followed by logistics at 27% and offices at 16%.
Appetite for both retail and hotels grew when compared with last year, with the former increasing from 7% to 10%, and the latter from 7% to 9%.
Of those investors planning to target living sector assets, almost two-thirds selected build-to-rent due to the subsector’s strong long-term fundamentals. Grade-A offices in prime locations remain in favour for investors targeting the office sector, with logistics investors looking at modern facilities in major European cities.
A large proportion of investors also plan to pursue alternative investment strategies in 2025, with half of respondents preferring student living. The rapid growth of AI-driven demand has propelled data centres into second place at 36%, overtaking senior living, which now sits in third place at 30%.
Survey responses indicate optimism across the board, with 71% of respondents expecting a market recovery by the end of 2025. Plans to deploy capital mirror this view, with 92% of investors intending to maintain or increase their buying activity in 2025. Some 64% of respondents expect to buy more than they did last year, cementing the view that a market recovery is well underway.
Tasos Vezyridis, head of thought leadership for Europe at CBRE, said: “Our survey tells us that there is a marked difference in sentiment from last year, with increased deal flow expected in 2025. Despite continued disparity in buyer and seller expectations, there is a growing desire to both buy and sell. This, coupled with debt maturities and equity rotation expected, should lead to more product coming to market. As a result, these expectations should start to converge.”
CBRE’s research also found that European investors expect the UK to offer the highest returns for the third year in a row. Spain followed, improving from fourth in 2024, with Poland retaining third place.
Germany and Sweden completed the top five European investment destinations. At a city level, London is the most attractive for cross-border investment, a position it has held since 2021, followed by Madrid, Paris, Barcelona and Warsaw.
The top five, however, shifts significantly if domestic investment appetite is considered. While the UK would retain top spot, Germany rises to second, followed by Spain, Italy and Poland, demonstrating the strength of in-country demand in Germany.
CBRE also found that investors are increasingly looking at sustainability as a means of combining resilience and value creation, with more than 95% of respondents stating that they will factor sustainability into their 2025 investment plans.
When asked which sustainability strategies they plan to implement, 64% of respondents look to retrofit existing buildings, as this provides a good opportunity to enhance returns while meeting the necessary sustainability standards.
Chris Brett, CBRE’s head of capital markets for Europe, said: “London offers a lot to prospective investors. It boasts an unrivalled financial centre status and is a global leader in innovation and sustainability so it’s no surprise that it retains the top spot in our survey. However, competition is fierce and a number of countries across Europe have committed to future proofing their economies, notably Spain. This, alongside advanced legislation and solid financial infrastructure, has seen Spain rise in prominence with investors looking to deploy capital in Europe, with Madrid and Barcelona key focal points.”
Photo by Lydie Gigerichova/imageBROKER/Shutterstock
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