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Real Estate

European Real Estate: So, We Survived Til '25?

July 2025 – 8 min read

Global geopolitical uncertainty has postponed the hoped-for European real estate recovery this year. However, while macro risk is high, property market risk is low—and the pause in recovery arguably extends the opportunity to invest near the start of a new property cycle.

Executive Summary

ECONOMY

  • Eurozone economic momentum remains elusive, with growth struggling to reach 1% per annum.
  • Export surplus generating economies are potentially more impacted by global trade tensions, than those that are service sector and more domestically focused.
  • While energy prices have ticked up of late, two more ECB rate cuts are expected in 2025.

PROPERTY MARKETS

  • Speculation that real estate investment capital may be diverted from the U.S. is highly anecdotal and isn’t evident in data like USD/EUR exchange rates in a meaningful way to date.
  • In an increasingly volatile world, the local nature of property income and its relative stability may be set to become increasingly attractive.
  • A tight supply of modern buildings will intensify, as new development remains constrained by high development finance and construction costs.
  • Prime best-in-class real estate should continue to offer real inflation adjusted rental growth, despite a tepid European economy.

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Paul Stewart

Head of Research & Strategy—Real Estate
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Benjamin Thatcher

Associate Director
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Joanne Warren

Director, Real Estate Research

The document is for informational purposes only and is not an offer or solicitation for the purchase or sale of any financial instrument or service. The material herein was prepared without any consideration of the investment objectives, financial situation or particular needs of anyone who may receive it. This document is not, and must not be treated as, investment advice, investment recommendations, or investment research.

In making an investment decision, prospective investors must rely on their own examination of the merits and risks involved and before making any investment decision, it is recommended that prospective investors seek independent investment, legal, tax, accounting or other professional advice as appropriate.

Unless otherwise mentioned, the views contained in this document are those of Barings. These views are made in good faith in relation to the facts known at the time of preparation and are subject to change without notice. Parts of this document may be based on information received from sources we believe to be reliable. Although every effort is taken to ensure that the information contained in this document is accurate, Barings makes no representation or warranty, express or implied, regarding the accuracy, completeness or adequacy of the information.

Any forecasts in this document are based upon Barings opinion of the market at the date of preparation and are subject to change without notice, dependent upon many factors. Any prediction, projection or forecast is not necessarily indicative of the future or likely performance. Any investment results, portfolio compositions and/or examples set forth in this document are provided for illustrative purposes only and are not indicative of any future investment results, future portfolio composition or investments. The composition, size of, and risks associated with an investment may differ substantially from any examples set forth in this document. No representation is made that an investment will be profitable or will not incur losses. Where appropriate, changes in the currency exchange rates may affect the value of investments.

Investment involves risks. Past performance is not a guide to future performance. Investors should not only base on this document alone to make investment decision.

This document is issued by Baring Asset Management (Asia) Limited. It has not been reviewed by the Securities and Futures Commission of Hong Kong.

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