Institutional Real Estate Europe

July 1, 2025: Vol. 19, Number 7

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From the Current Issue

Europe

Crossed lines: Cross-border real estate investment is becoming more politically sensitive and structurally shaped by policy — not only asset-level fundamentals

When geopolitics supersede fundamentals, cross-border investors often default to caution. For much of the first half of 2025, many who expected to be active found themselves on the sidelines — not due to deteriorating fundamentals, but because of escalating and unquantifiable geopolitical and policy risks. US President Donald Trump’s sweeping tariff regime, introduced earlier and more aggressively than anticipated, delivered a macro-political shock that halted transactions, disrupted capital flows and reignited doubts over trade alliances. It coincided with rising inflation, budget deficits and renewed geopolitical brinkmanship, all compounding investor anxiety. The decision to pause or delay was pragmatic: to hedge against deploying capital into policy uncertainty or selling into illiquidity.

Europe

The march of the alternatives: Tracking the decade-long rise of European alternatives

In 2015, alternative sectors such as purpose-built student accommodation (PBSA) and build-to-rent (BTR) were considered niche real estate asset classes. Other alternatives, such as senior housing, self-storage and life sciences were even more nascent. Scalable, institutional-quality opportunities in these sectors were few and far between. Today, the opposite is true. It is increasingly evident that institutional investors are rotating allocations from commercial sectors towards a wide range of alternative sectors across Europe.

Europe

Rays of hope: There is cautious optimism for real estate finance in a shifting market

While new lending remains subdued, so far in 2025, lenders are focusing on prime assets, strong sponsors and manageable leverage levels. Private credit funds are proving critical to bridging the financing gap where commercial banks will not provide further extensions to debt maturities. Although they demand higher returns and may not have the same scale of balance sheets as banks, they are agile, comfortable with complexity, and increasingly focused on transitional and value-added assets.

Europe

Finding bright spots: Unlocking opportunities in the hospitality sector

After weathering the pandemic, the hospitality sector has been experiencing record levels of growth and is rapidly evolving in line with changing consumer preferences and innovation. Hotel investment, once considered an alternative asset outside mainstream real estate, is now attracting significant interest from a broader investment audience. Investors increasingly recognise that the sector’s multiple value drivers and ability to hedge against inflation through dynamic pricing mechanisms more than outweigh its inherent cyclical risks.

Europe

Stand by me: Investors need more reassurances before they fully commit to affordable housing

The prospect of having to deal with negative press reports and unreliable tenants puts a lot of investors off the affordable housing subsector. Tenants raising unjustified or false complaints at landlords for any number of supposed infringements of contracts is one of the top concerns some investors have, but these worries are based on rare examples, rather than common occurrences. Damage to property and unsocial behaviour are two other fears. Again, however, people tend to pick one outlier case and then almost use it to justify their bias against the subsector. Tackling these fears, as well as a perception that the subsector offers very low returns is crucial if Europe is to effectively manage its housing crisis.

Europe

IRE.IQ update: Raise your institutional real estate market IQ faster and more cost-effectively

For the past 38 years, it has been our mission at Institutional Real Estate, Inc to shine more light on market activity, while helping our investor readers and publication sponsors identify and develop relationships to achieve their individual real estate investment and business objectives. As a result of our work over the decades, we have collected an incredible amount of data. Starting in 1996, we organised this data into a database that evolved into FundTracker, and later, IREI.Q. We are now rebranding and relaunching IREI.Q as IRE.IQ (“Institutional Real Estate IQ”). This involves a great deal more than simply moving a period.

Europe

In good health: Germany’s new government is boosting healthcare real estate

Germany’s new government is determined to invest some €500 billion into improving Germany’s defence and infrastructure, as well as fostering digitalisation. In terms of healthcare, there will be a €50 billion transformation fund to restructure the hospital system. This will involve consolidating the hospital landscape, boosting outpatient structures and fostering cooperation between clinics and outpatient services. The ultimate aim is to provide better, and more cost-effective, care for patients.

Europe

PBSA is fastest growing European real estate sector

Investment in European purpose-built student accommodation (PBSA) rose from 1.9 percent of total European investment activity in 2019 to 5.3 percent at the end of 2024. Hines says this means PBSA become the fastest-growing real estate sector during this period.

Europe

TPG Angelo Gordon raises closes Europe fund at $2.5b

TPG Angelo Gordon has closed its TPG AG Europe Realty Fund IV at nearly $2.5 billion (€2.2 billion), including $2.27 billion (€1.99 billion) in capital commitments and an additional $214 million (€188 billion) in co-invest capital.

Europe

Turning point? UK office vacancy rate falls for the first time in five years

Rising global uncertainty failed to dent the recovery in the UK office occupier market in the first quarter of 2025 as take-up remained resurgent and net demand turned positive for the first time in five years. This allowed vacancies to compress slightly after several years of increases. Over half a million square feet (46,500 square metres) more office space was moved into than vacated in the first three months of the year. This ended a run of consistent demand losses going back to the lockdown quarter of 2020, with 41 million square feet (3.8 million square metres) vacated on a net basis during the past five years.

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