This year will be an inflection point for European real estate markets. The macroeconomic environment remains uncertain and long-term interest rates are likely to remain elevated. This means property returns will be driven by income and investors will have to work harder for them.

As we closed the door on 2024, economists had hoped that fundamentals across the European economies would start to look up after a difficult year. While both inflation and policy rates have improved, the real economy continues to suffer from worsening sentiment. Economic growth has been tepid at best, and the labour market is starting to show signs of weakness with rising unemployment. In addition to burgeoning doubt over trade policy there is uncertainty over long term interest rates. These are a key benchmark for the real estate market, and they remain higher than had been hoped.

To find out more, download our H1 2025 report.