Market Radar Europe: Real estate investment rockets to EUR 241 billion

Europe’s real estate investment landscape hit a fever pitch in 2025, with total deal volumes surging to a massive EUR 241 billion, according to the latest data from CBRE. This represents a robust 13% leap from the previous year, signaling a definitive return of investor appetite across the region.

The Sector Breakdown

• Hospitality: For the second consecutive year, hotels emerged as the star pupil of the portfolio. Investment in the sector rose by 13%, reaching EUR 23 billion.
• Retail: Defying the "death of the high street" narrative, retail investment climbed 11% to EUR 38 billion, proving that brick-and-mortar still holds significant allure for major players.
• Living: Residential and living investments rose 9%, capturing a dominant EUR 53 billion share of the total market.
• Offices: Perhaps the most surprising comeback was the office sector. Fuelled by a fresh wave of corporate confidence, office investments matched the growth of the living sector, rising 9% to hit EUR 47 billion.

Healthcare Takes the Crown

Amid these impressive growth stories is the European healthcare sector which reported record-breaking activity of 285% growth in 2025. Europe’s most liquid healthcare market, the UK accounted for 65% of this activity, with transactional volumes exceeding GBP 12 billion in 2025.

This significant figure represented 69% of the country's total operational real estate investment, as ageing populations and limited supply, saw average fee rates for senior living in the UK increase 9.8% in 2025, up from weekly rates of GBP 1,182 in 2024 to GBP 1,298 in 2025.

Mainstream institutional capital is increasingly recognising the sector as a defensive cornerstone for portfolios, considering the high demand, limited supply, and the inherently offline nature of the service. Key opportunities can be found particularly in the decentralisation of care into outpatient medical offices, which offer inelastic demand and stable cash flows.

However, despite the strong headline figures, the wider European market is up against operational and capital-driven risks, as many care-home operators grapple with labour shortages, high financing costs, and inflationary pressures, constraining new development.

Furthermore, while long-term demand is guaranteed by demographics, a "demographic gap" is expected to limit margins until the baby boomer generation begins entering care facilities around 2028-2029. Investors are consequently focusing on lease sustainability and the operational sophistication of partners.

European Housing Horizon

The European residential market is entering 2026 with a surge of institutional activity and significant large-scale transactions, driven by a desperate need to address structural housing shortages across the continent.

In Spain, economist Gonzalo Bernardos predicts a robust recovery with 60,000 more homes expected to be sold than in the previous year, supported by new initiatives like the EUR 400 million joint venture between ECE Work & Live and Conren Tramway targeting affordable housing in major cities.

Meanwhile, the Netherlands recently saw its largest new-build residential deal as Bouwinvest acquired 933 homes in Amsterdam’s Eleven Square development, amid a broader trend of investors pivoting toward high-density, mixed-use urban projects.

Beyond traditional apartments, the Purpose-Built Student Accommodation (PBSA) and Single-Family Housing (SFH) sectors are attracting substantial capital as alternative residential assets. The partnership between Ardian and Rockfield has rapidly expanded, recently acquiring the 750-bed Pallars complex in Barcelona from Commerz Real as part of a three-country transaction including projects in France and Italy.

In the UK, developers like Downing are pushing forward with massive student schemes in Bristol, while institutional backing for SFH remains strong, evidenced by Barclays providing a GBP 66.8 million debt facility to support Long Harbour’s GBP 1.2 billion housing fund.

As the continent's housing crisis continues, the sector is witnessing a strategic shift towards sustainable, professionally managed residential platforms across Europe’s most supply-constrained metropolitan areas.

Look out for a new edition of the GRI Institute's Market Radar Europe next week!