Real Estate - Industry - Europe Market, Share and Trends 2023-2028

Summary of Real Estate

Europe’s real estate sector has seen robust investment activity over the past decade, led by major gateway cities like London, Paris, Berlin, Madrid and Frankfurt. Total transaction volumes reached over $300 billion in 2021. The UK and Germany are the largest markets but allocations are rising into Central Eastern Europe, Nordics and peripheral Western European markets given relatively higher yields.

Based on our estimates, we can say that the European real estate industry is forecasted to be a $1772.77 billion industry in 2029 from $1285.45 billion in 2023 with a CAGR of 5.45 %.

Logistics and private rented sector multifamily assets are growing rapidly due to e-commerce adoption and urbanization. Meanwhile— Brexit, high inflation and rising interest rates have dampened investment activity in 2023 as investors grow cautious.

From a funding perspective – US private equity firms like: Blackstone, KKR and Starwood Capital are very active in European property thanks to their experience in managing risk across cycles. They often partner with local operators for on-the-ground execution support. Sovereign wealth investors from Asia and the Middle East are also growing allocations to Europe to diversify from home markets.

Adoption of ESG standards around energy efficiency, renewable energy procurement, electric vehicle infrastructure and green building certifications is growing rapidly across European real estate which are in line with EU climate policies.

Recent Trends and Insights

Driven by the e-commerce boom, investment into European warehouses, fulfillment centers and distribution facilities has tripled over the past decade to over $60 billion in 2021. Germany and the UK lead but flows into CEE markets are rising given lower costs.

Rapidly growing economies like: Poland, Czech Republic, Hungary and Romania offer higher yields and upside. Logistics and offices are key targets along with emerging sectors like rental apartments.

Institutional investment into multifamily rental housing development is accelerating given urbanization and housing shortages across cities like: London, Madrid, Warsaw and Lisbon. However, rising costs and policy risks exist.

Investors are moving into smaller European cities like: Manchester, Birmingham, Marseille, Florence, Budapest and Warsaw in search of higher yields, led by domestic mid-market PE firms.

After limited historic distressed deal flow, more opportunistic investors are now targeting struggling retail, hotel, office and other assets impacted by the Ukraine conflict and economic deterioration.

Product Insights

Lower risk funds focused on stable income generation from traditional property types like London West End offices, Paris apartments and German retail. Similar safe asset focus as core funds, but with modest value-add elements like light refurbishments, lease restructuring and asset repositioning.

Target assets with clear value creation opportunities through redevelopment, repositioning or renovation, across sectors like: logistics, offices, and alternative property types. Leverage is moderate.

Paris is the gateway city and is seeing heavy investment into offices and high-end retail. But secondary cities like Lyon and Marseille are growing in popularity for residential and mixed-use developments as yields rise.

Pursue high-return investments like: land development, distressed assets or niche property types like data centers and cold storage. Risk and leverage levels are higher. Lend to real estate owners and developers across the capital structure from senior loans to subordinated debt and preferred equity, secured against property assets.

Specialized funds focused purely on acquiring and developing logistics and warehouse assets feeding into e-commerce and supply chain networks. Developers or acquirers of housing assets across rental apartments, student housing, senior living and built-to-rent family housing.

Key Companies

Some major players within this vast domain of industry are

• Segro
• Covivio
• Blackstone Group
• Hines
• Strabag Group
• Elm Group
• Places for People Group Limited
• LEG Immobilien AG
• Consus Real Estate AG
• CPI Property Group

Regional Analysis

The UK and Germany are Europe’s largest real estate investment targets, followed by France, the Nordics, Iberia and key CEE markets. The logistics and multifamily rental sectors are growing rapidly here. London remains the epicenter for global capital flows, along with other major cities. Investors are cautious on lower-yielding offices and retail.

Berlin, Frankfurt, Hamburg and Munich attract the most investment, offering stability and strong tenant demand. Logistics, offices and residential are highly sought after. Yield compression is slowing flows from overseas investors.

Stockholm, Oslo, Copenhagen and Helsinki have benefited from technology sector growth. Logistics and multifamily also see strong demand, while overseas investors are cautious on high prices.

Spain and Portugal have seen a property boom, especially in logistics and tourism-related assets. Madrid and Barcelona lead in Spain, along with Lisbon and Porto in Portugal.

Market Segmentation

By Type:

• Residential
• Commercial
• Office
• Retail
• Industrial
• Other

By End User:

• Residential
• Office
• Retail
• Industrial
• Other

By Enterprise Size:

• Land
• Buildings

By Country:

• Germany
• United Kingdom
• France
• Italy
• Russia
• Netherlands
• Switzerland

Our Methodology

We have offered a well-founded review of European regional real estate market along with ongoing trends and upcoming projections to highlight proximate investment opportunities in this report. Moreover, an extensive analysis of any future prospects, challenges, competitors, or navigating aspects is also provided. A methodical detailed regional examination is presented.

Primary Research  

Our multi-pronged research approach includes interviews with industry leaders and a global survey of advanced manufacturing professionals to gain qualitative insights. We utilize our proprietary databases encompassing key performance indicators worldwide in order to collate relevant data points. A multivariate forecasting framework considering historical performance, current dynamics and qualitative factors are utilized to develop market sizing and growth projections through 2029.

We supplement our primary research with a careful examination of secondary materials such as– case studies, news stories and references from other sources. Organizations can benefit from the strategic advice and conclusions offered because they will be better equipped to respond to the dynamic nature of this industry and seize emerging possibilities.

We employ a comprehensive and iterative research methodology focused on minimizing deviation to provide the most accurate market estimates. Our research utilizes a combination of bottom-up and top-down approaches across segments and utilizes databases, primary research insights and industry experts for analysis.

Raw data is obtained from multiple sources and thoroughly filtered to ensure only authenticated and validated sources are considered. We collect data from raw material suppliers, industry associations, technology providers, and buyers to gain a holistic perspective.

Quantitative Analysis

Our market estimates are derived through statistical models, beginning with collection of historical data and analysis of macro- and micro-economic factors influencing the market. Gathered information on market dynamics, technology and pricing trends are utilised to build the models.

Econometric and technological models are applied to project short- and long-term market potential respectively. A bottom-up approach is preferred to minimize errors. Key parameters considered include market drivers and restraints, material pricing trends, regulatory scenarios, and capacity additions.

Weights are assigned to these parameters based on impact analysis and market forecasting is performed via statistical tools and techniques. We believe this methodology results in an accurate and realistic market picture.