While geopolitics has been a significant feature of recent editions of Emerging Trends Europe, it was more prominent this year due to concerns about elections at home and further afield, as well as the conflicts in the Ukraine and the Middle East.
Alongside geopolitics, the economic situation is a major area of concern for institutional investors, lenders and occupiers. Following nearly three years of high inflation and interest rates, central banks have been cutting rates, which suggests that the end is in sight. Unfortunately, the predicted recovery is weaker and likely to take longer than previously expected, with some respondents taking a 3–5-year view on recovery.
The overall effect of this has been a subdued investment market. While some sectors, primarily logistics, storage and residential, have fared relatively well, investors are wary about prices being inflated by over-optimistic growth assumptions, especially in the face of ESG requirements.
In fact, over two thirds of our respondents were concerned about meeting environmental and decarbonisation requirements by 2025, and many industry stakeholders believe that ESG regulations should be broader to fully capture the complexities of real estate and its overall impact on society.
Even with all these concerns, the respondents are cautiously optimistic about the upcoming year, displaying more business confidence and expecting larger profits than in the last few years.
This year’s annual survey of European real estate sector leaders’ expectations, by the Urban Land Institute (ULI) and PwC, captures the views of sector leaders from across Europe, covering current influences and the trends shaping the industry over the next two decades.
"The European real estate industry is affected by events and developments around the world – US Federal Reserve rate cuts, the conflict in the Middle East, trade relations in the rapidly growing economies of China and India, election results around the world, to name a few. The sector needs to find ways to remain flexible for these global changes while focusing on matters closer to home."
Sector prospects
Over half of European investors use a sector-based approach when allocating capital, focusing on major social and economic trends (demographics, digitisation and decarbonisation) to decide which sectors have the most favourable risk-return characteristics.
However, there are changes afoot. Previously geographic and opportunistic criteria would play a role in asset selection, but now investors are only interested in a thematic approach. Using this approach, investors are facing a dilemma. Two of the four established real estate sectors – offices and retail – are now considered to be problematic, even though they make up a significant share of existing investment portfolios. The other two sectors – residential and logistics – are likely to benefit from structural changes but are oversubscribed and expensive.
Additionally, with 40% of investors ranking risk management and diversification as important when allocating capital to real estate, it is unsurprising that this approach feels risky to some investors.
With diversification in mind, there is a growing tendency for investors to look for smaller, emerging sectors to put their capital to work. Many of the current growth sectors involve a strong operational element enabling investors to enhance returns by collecting rent, generating additional income and growing value.
This requires a different outlook to identify investment opportunities that will support future technology, innovation, digitisation and decarbonisation. For example, the Nordics and Southern Europe are well-placed for growth with excellent fibre networks, abundant green power and good connectivity. Compare this to locations such as Amsterdam and Dublin, where the electricity grids lack capacity, offering limited scope for expansion. Going forward, key power and digital infrastructure is likely to become more critical as European politicians work to bolster strategic autonomy as a buffer against increasing geopolitical instability.
Sector prospects in 2023 - Top 10
| Rank | Sector |
| 1 | Data centres |
| 2 | New energy infrastructure |
| 3 | Student housing |
| 4 | Logistics facilities |
| 5 | Private rented residential |
| 6 | Self-storage facilities |
| 7 | Retirement/assisted living |
| 8 | Co-living |
| 9 | Education-related real estate |
| 10 | Serviced apartments |
City prospects
The city rankings clearly reflect the premium on liquidity and market size, with London top in the rankings for the fourth consecutive year. Madrid also demonstrates these big city benefits, along with a high quality of life which has helped the Spanish capital climb from eighth in 2021 to second in 2025. Paris rounds out the top three, with Olympic-driven investment helping to offset an environment of political instability and uncertainty.
Despite concerns about Germany’s economy, Munich, Frankfurt and Hamburg have enjoyed a modest rebound in the rankings. This is in contrast to Dublin, which has the advantage of being the only English-speaking capital in the EU, but has dropped four places to 17th after several years of upward momentum.
The Benelux cities present varied levels of optimism among respondents. Amsterdam has secured a strong sixth position, while Brussels has declined to 14th and Luxembourg has risen to 18th.
Southern European cities are facing mixed fortunes with Milan ranked strongly at seventh, Lisbon dropping to 10th, Barcelona slipping out of the top 10 and Rome remaining static at 19th. There is a growing level of confidence in central Europe, with Warsaw leading the way with a jump to 12th place as Poland’s encouraging economic outlook overrides concerns over the turmoil caused by the war in neighbouring Ukraine.
Overall prospects - Rank 2025 vs 2024
| City | ETRE Ranking (2025) |
ETRE Ranking (2024) |
Change |
| London | 1 | 1 | = |
| Madrid | 2 | 3 | ▲ |
| Paris | 3 | 2 | ▼ |
| Berlin | 4 | 4 | = |
| Munich | 5 | 7 | ▲ |
| Amsterdam | 6 | 5 | ▼ |
| Milan | 7 | 6 | ▼ |
| Frankfurt | 8 | 9 | ▲ |
| Hamburg | 9 | 11 | ▲ |
| Lisbon | 10 | 8 | ▼ |
| City | ETRE Ranking (2025) |
ETRE Ranking (2024) |
Change |
| Barcelona | 11 | 10 | ▼ |
| Warsaw | 12 | 14 | ▲ |
| Vienna | 13 | 15 | ▲ |
| Brussels | 14 | 12 | ▼ |
| Zurich | 15 | 16 | ▲ |
| Copenhagen | 16 | 18 | ▲ |
| Dublin | 17 | 13 | ▼ |
| Luxembourg | 18 | 20 | ▲ |
| Rome | 19 | 19 | = |
| Stockholm | 20 | 21 | ▲ |
"European sustainability targets remain a cause for concern for real estate investors. Are the regulations too narrow to fully capture the complexities of real estate? Will these targets still be relevant in 10 years’ time? Are they achievable for a reasonable cost or do they push prices up too much? And is ESG a distraction from delivering high-quality real estate?"
About Emerging Trends in Real Estate® Europe
Emerging Trends in Real Estate® Europe, a trends and forecast publication now in its 23nd edition, is a highly regarded and widely read report in the real estate industry. Undertaken jointly by PwC and the Urban Land Institute, the report provides an outlook on investment and development trends, capital markets, cities, sectors and other real estate issues throughout Europe. Emerging Trends Europe 2025 reflects the views of sector leaders from across Europe.
About the Urban Land Institute (ULI)
The Urban Land Institute is a non-profit education and research institute supported by its members. Its mission is to shape the future of the built environment for transformative impact in communities worldwide. Established in 1936, the institute has over 46,000 members worldwide representing all aspects of land use and development disciplines.
ULI’s mission priorities that the organisation will be focusing on over the next three years include decarbonising the real estate sector and targeting net zero; educating the next generation of diverse real estate leaders; and, increasing housing attainability in communities around the world.
ULI has almost 5,000 members in Europe across 13 National Council country networks. For more information, please visit uli.org, or follow ULI on Twitter, LinkedIn or Instagram.
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