Business district of Paris, France with car-filled roads at sunset.
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.

25-4889191

Want to read the full article?

View PDF
Headshot of Paul Stewart smiling at the camera.

Paul Stewart

Head of Research & Strategy—Real Estate
Headshot of Ben Thatcher smiling at the camera.

Benjamin Thatcher

Associate Director
Headshot of Jo Warren smiling at the camera.

Joanne Warren

Director, Real Estate Research

Forecasts in this document reflect Barings’ market views as of the preparation date and may change without notice. Projections are not guarantees of future performance. Investments involve risk, including potential loss of principal. The value of investments and any income may fluctuate and are not guaranteed by Barings or any other party. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Examples, portfolio compositions, and investment results shown are for illustrative purposes only and do not predict future outcomes. Actual investments may differ significantly in size, composition, and risk. No assurance is given that any investment will be profitable or avoid losses. Currency exchange rate fluctuations may impact investment value. Prospective investors should consult the offering documents for detailed information and specific risk factors related to any Fund/Strategy mentioned.

Barings is the brand name for the worldwide asset management and associated businesses of Barings LLC and its global affiliates. Barings Securities LLC, Barings (U.K.) Limited, Barings Australia Pty Ltd, Barings Japan Limited, Baring Asset Management Limited, Baring International Investment Limited, Baring Fund Managers Limited, Baring International Fund Managers (Ireland) Limited, Baring Asset Management (Asia) Limited, Baring SICE (Taiwan) Limited, Baring Asset Management Switzerland Sarl, Baring Asset Management Korea Limited, and Barings Singapore Pte. Ltd. each are affiliated financial service companies owned by Barings LLC (each, individually, an “Affiliate”). Some Affiliates may act as an introducer or distributor of the products and services of some others and may be paid a fee for doing so.

NO OFFER: 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 in any jurisdiction. 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, an investment recommendation, investment research, or a recommendation about the suitability or appropriateness of any security, commodity, investment, or particular investment strategy, and must not be construed as a projection or prediction.

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. Individual portfolio management teams may hold different views than the views expressed herein and may make different investment decisions for different clients. 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 service, security, investment or product outlined in this document may not be suitable for a prospective investor or available in their jurisdiction.

Copyright and Trademark
Copyright © 2025 Barings. Information in this document may be used for your own personal use, but may not be altered, reproduced or distributed without Barings’ consent.

The BARINGS name and logo design are trademarks of Barings and are registered in U.S. Patent and Trademark Office and in other countries around the world. All rights are reserved.