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Real Estate

European CRE: Macro Uncertainty Outweighs Strong Fundamentals

October 2025 – 7 min read

Europe has managed to weather various geopolitical storms this year, but the hoped for recovery in property investment has stalled. With property pricing also treading water, the opportunity to enter at the start of a new property cycle has been extended.

Executive Summary

ECONOMY

  • European growth prospects remain sluggish, escalating long term fiscal concerns.
  • Uncertainty regarding U.S. policy is expected to continue to deter global trade and restrain investment activity.
  • Inflation is back on track and another 2025 rate cut is possible.

PROPERTY MARKETS

  • Elevated geopolitical risks have delayed the property investment recovery to 2026, despite strong fundamentals, attractive yields and improving lender sentiment.
  • The uncertainty is masking a highly favorable market entry point for commercial real estate.
  • Despite competition for capital deployment, European real estate debt markets remain mainly focused on refinancings due to low property transaction volumes.
  • Not withstanding the tepid economy, robust prime real rental growth is broad based and occurring across the four main property sub-sectors.

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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

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