European Living Market Perspectives 2025

Investment in the living sectors rebounded in 2024, buoyed by a return of multifamily in large markets like Germany and Sweden. The living sector was the largest in Europe for the second year running, accounting for 26% of 2024 direct real estate investment.

Investor sentiment is underpinned by stable yields, strong operational performance and supported by central bank rate cuts. In Europe this is expected to translate to further growth, with a return of large portfolios and operational asset sales, pushing annual investment over €60 billion in 2025.

Larger deals and portfolios are expected to return, contributing more than half of investment. However, high construction costs will remain a challenge for investors seeking to unlock new purpose-built supply. That structural undersupply will continue to strengthen investor demand.

Within the next five years (2025-2030) the largest 15 European cities are expected to grow by 1.14 million people. Overall housing supply in these markets has been in decline since 2021 and will need to overcome viability obstacles following high rises in construction costs. Private capital will be essential to providing a range of living solutions to avoid deepening the housing undersupply.