In today’s dynamic real estate environment, identifying investment hot spots is more important than ever. This is particularly true when picking cities and urban districts that have a high development potential. Two outstanding examples in the German office market are the central urban redevelopment zones of the HafenCity district in Hamburg and the Werksviertel district in Munich. These former industrial estates are currently being transformed into modern multi-functional urban neighbourhoods, which offer not only office and residential accommodation, but also retail and leisure facilities.

Although, on the surface, stranded asset risk presents more investment complexity — especially for larger office buildings that are trickier to refurbish viably — it also provides an exciting opportunity for investors. In fact, now is an opportune time for those with capital and the right skill set to step in and transform well-located “brown” offices in many major European cities into future-proof, high-quality workspaces in what are now termed brown-to-green investment strategies.

Exit queues for funds in the NFI-ODCE have been at all-time highs for several quarters now — higher even than during the global financial crisis, by a substantial margin. Based on what we’ve been hearing at our Editorial Advisory Board meetings and the virtual and face-to-face regional roundtables we run for the benefit of the investor community and the investment managers who sponsor our publications, there are concerns fund managers simply aren’t taking write-downs fast enough.

We are about to discover if there is any substance to the phrases “survive until ’25” or “don’t deep six until ’26”. These phrases have been doing the rounds in property investment circles in 2024, in reference to a time in 2025 when expectations of falling interest rates would spark a bounce-back in real estate markets, lowering refinancing risks and driving a recovery in valuations. As we approach the New Year, then, can European real estate investors look ahead with confidence?

Vacancy rates in newly constructed office buildings offering best-in-class tenant experience and sustainability credentials have tumbled in London, says Knight Frank. The consultancy says office space availability for the newest prime workspaces sits at 0.3 percent in London’s West End and at 0.5 percent in the City of London. This equates to only 379,394 square feet (35,246 square metres) of office space in two of London’s largest submarkets, which is less than 8 months of average take-up for new office space in both areas. In comparison, vacancy rates across all London office stock currently stands at 9 percent, with the majority being space in average- to lower-quality buildings.

Real estate alternative lenders looks set to prosper in Europe throughout 2025. In a new white paper on the European real estate debt market, DWS says the start of a new cycle, refinancing needs, as well as more restrictive capital requirements for banks, mean the set of opportunities for alternative lenders will widen, particularly in mainland Europe.

Half of the existing office space across 66 markets around the globe will require some $1 trillion (€950 billion) in investment to remain viable, says JLL. The advisory firm has published the figure in a new report called Opportunity through obsolescence, in which it says between 322 million square metres (3.5 billion square feet) and 425 million square metres (4.6 billion square feet) of office area needs upgrading over the medium term. JLL calculates that 44 percent of projected obsolescence is likely to be in the United States given higher levels of structural vacancy, along with an additional 34 percent in Europe.

INREV estimates some €11.8 trillion is needed to address the undersupply, affordability, and energy efficiency of homes in Europe. INREV bases its figure on housing policy requirements and the cost of delivering housing units in seven countries — the United Kingdom, France, Netherlands, Germany, Ireland, Spain and Sweden — during the next 10 years.

Scotland has been off-limits for more than a few investors throughout the past decade. Reasons often cited for shunning the region include risks associated with the country becoming independent, the makeup and performance of its occupier markets, and concerns over the depth of investor demand. While these are legitimate worries, they are not necessarily borne out by current data.