Real estate in Europe: major challenges 2025

Increased regulation, construction costs, and resource availability were the main real estate related concerns among industry experts in Europe according to a 2024 survey. Construction costs have been on the rise since the coronavirus pandemic because of the high demand and inflation. About 70 percent of respondents feared that the escalating costs and resource availability will continue to be an issue in the next year.

Investment and development prospects in Europe

According to the survey, London was the European city with the highest real estate investment and development prospects, followed by Madrid and Paris in 2025. To calculate the scoring, the source considered the following factors: transport connectivity, forecast real estate returns, city’s economic performance, availability of assets/opportunities for new development, market size and liquidity, regulatory environment, digital connectivity, attractiveness to talent, city leadership, housing affordability, affordability of space for new/small/growing businesses.

Investments and return

In 2024, the United Kingdom, Germany, and France were the top three countries in Europe by total value of commercial real estate investment. In terms of profitability, the industrial and retail warehousing real estate sectors in the UK are estimated to bring the highest returns in the next five years.

Issues impacting European real estate according to industry experts in 2025

Characteristic	Share of respondents
Increased regulation (national/international)	74%
Construction costs and resource availability	70%
Capex requirements	69%
Environmental sustainability/decarbonisation requirements	67%
Availability and/or cost of (re)finance	65%
Market liquidity issues	60%
Asset obsolescence	56%
Availability of suitable assets/land for acquisition and development	54%
Access to power/energy sources/power procurement	41%
Availability and/or cost of insurance (e.g. property/materials/construction)	39%

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Release date

November 2024

More information

Region

Europe

Survey time period

2024

Number of respondents

1,214 property investors

Age group

18 years and older

Special properties

The source does not mention the exact date of the survey.

Method of interview

Face-to-face interview, online survey

Supplementary notes

1,089 property professionals completed surveys, were interviewed or took part in a series of roundtable meetings across Europe as a part of the research for this report.

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