Opportunities in European real estate for 2025
The real estate sector in Europe enters 2025 with a renewed sense of optimism, according to the latest report by Cushman & Wakefield. Forecasts highlight significant growth in several key segments, including offices, retail, and logistics, while sectors such as housing face persistent challenges. The consultancy anticipates a period of recovery and expansion driven by improving macroeconomic conditions and greater business and consumer confidence. Despite some hurdles in the residential sphere, the positive outlook in other segments offers a wide range of opportunities for investors seeking strategic assets.
Offices: sustained rental growth
The office segment is emerging as one of the sector’s key drivers in 2025. Between January and September 2024, 7.4 million square meters of office space were leased in Europe, representing a 3% increase compared to the same period in 2023. Cushman & Wakefield projects an average rental growth of 1.9% in 2025, with Madrid, Barcelona, and other European capitals like London and Brussels identified as key markets.
In Madrid, office leasing hit a record of 190,000 square meters in the third quarter, driven by demand for prime spaces despite limited supply, with prices exceeding €41/m². The lack of availability in the city center has shifted demand toward the outskirts, where activity has grown. In contrast, Barcelona saw a 50% increase during the same period, although with a smaller volume of 61,000 m².
Regarding prices, Madrid outpaced Barcelona in average office rental rates during the third quarter of 2024, according to a report by consultancy MVGM. The study highlights that the average rental price in Madrid reached €24 per square meter, compared to €19.6 in Barcelona.
Retail: the revival of mid-sized retail parks
In retail, high-quality assets promise to solidify as an attractive investment option. Mid-sized retail parks are outperforming traditional shopping centers and high street stores, according to Cushman & Wakefield. This rebound is supported by more controlled inflation and improving economic prospects across Europe.
Between 2021 and the first half of 2024, fashion led real estate transactions in retail, accounting for 29% of the total, followed by food and beverages (16%) and personal items (14%). In 2025, diversification in consumer categories is expected to continue attracting investors, although uncertainty in markets such as Poland, Germany, and the UK might limit more accelerated growth.
Logistics: a turning point
The logistics market, which remained stable throughout 2024, is at a pivotal moment. Indicators suggest that 2025 will see increased activity, driven by greater economic and business confidence. Logistics take-up consistently exceeded 30 million square meters per quarter during 2024. Despite challenges such as higher vacancy rates in markets like Barcelona, a gradual recovery is expected due to sustained demand for modern and well-located logistics assets.
Housing: structural challenges
The residential sector remains the “Achilles’ heel” of the European real estate market. Cushman & Wakefield notes that no immediate solutions are in sight to balance supply and demand. Construction completions in 2024 fell short of expectations, and forward-looking indicators, such as new construction starts and building permits, reflect a mixed outlook for 2025.
In Spain, for instance, the population is projected to grow by 4% over the next 15 years, according to projections by Moody’s Analytics, as cited by Cushman & Wakefield. This will increase pressure on an already limited residential market. Investment in the Living segment in Europe reached €40 billion in 2024, but it remains insufficient to address the sector’s structural challenges.
Hotels: between recovery and expansion
The hotel sector, meanwhile, is moving past the recovery years and entering a phase of expansion. The supply of luxury hotels in Europe is expected to grow by up to 7% in 2025 compared to 2023, while general categories will continue to show moderate increases.
Madrid and Barcelona stand out in the Spanish market, with hotel supply expected to grow by 1% in 2024 and 3% in 2025. Improved performance and increasing transactional activity will drive the consolidation of this segment as an attractive option for investors.