Now in its 22nd edition, this report is a joint survey by PwC and the Urban Land Institute (ULI), providing an outlook on real estate throughout Europe for 2025 and beyond.
The overwhelming majority of European real estate leaders expect business confidence and profits to stay the same or rise in 2025, thanks to the greater predictability provided by the stabilisation of interest rates and valuations.
Many lenders say they are “ready to do business”, but there is still caution among borrowers about loan terms and costs, and so recovery may be bumpy, slow and uncertain. Increased optimism around capital inflows to Europe could quickly evaporate if geopolitical events within the region trigger another inflation spike and force interest rates higher.
Identifying investment opportunities in the physical infrastructure that will support future technology, innovation, digitisation and decarbonisation is increasingly front of mind for real estate sector analysts. Data centres now occupy the top spot for investment, development and overall income prospects for 2025, followed by new energy infrastructure related real estate.
Despite regulatory and investment hurdles, environmental, social and governance (ESG) remains a prominent challenge for real estate, both in the short and long-term, while the use of emerging technology such as artificial intelligence (AI) to improve efficiency continues to gain traction in the industry.
Two related areas of concern for the real estate industry in an environment of increased climate risk and rapid transition to net zero are the importance of access to power and the availability and/or cost of insurance.
“We're looking more and more at fully integrated operating/real estate platforms, so that we can create this double performance - both the real estate and operational performance.”
European real estate chiefMarket size and liquidity are the most important factors for survey respondents when selecting a city for investment or development amid the prevailing challenging conditions.
City preferences also reflect a sector-based approach to capital allocations that prevails across the industry, widening the geographical profile of portfolios beyond the major cities that historically tended to dominate office and retail holdings.
London keeps its top position in the rankings for the fourth consecutive year, underscoring its resilience, premium on liquidity and continued appeal to international investors, while Paris remains a strong market despite slipping to third.
Madrid’s inexorable rise continues, moving up to second this year as both macroeconomic and microeconomic factors, alongside a high quality of life, draw real estate players to the Spanish capital.
There are signs of a rebound in German cities, which have faced gloomy growth forecasts and declining rankings since 2021, with Munich, Frankfurt and Hamburg all moving up the rankings. However, Dublin and British provincial cities have seen notable declines following several years of upward momentum.
Southern European cities are facing mixed fortunes but there is a growing level of confidence in central European cities such as Warsaw, Vienna and Prague.
Rank |
City |
Score |
1 (1) ➖ |
London |
2.72 |
2 (3) ⬆️ |
Madrid |
2.12 |
3 (2) ⬇️ |
Paris |
2.07 |
4 (4) ➖ |
Berlin |
1.95 |
5 (7) ⬆️ |
Munich |
1.93 |
6 (5) ⬇️ |
Amsterdam |
1.75 |
7 (6) ⬇️ |
Milan |
1.71 |
8 (9) ⬆️ |
Frankfurt |
1.63 |
9 (11) ⬆️ |
Hamburg |
1.53 |
10 (8) ⬇️ |
Lisbon |
1.43 |