Macro & capital markets

Rates: The ECB paused after multiple cuts; key rates were held on 24 July 2025 with inflation near target—so financing conditions are steadier, but not loosening fast. Markets expect “hold” into autumn barring surprises.
Activity pulse: Eurozone PMIs turned expansionary into August, pointing to modest growth support for occupier demand.
Investment volumes: Europe’s recovery resumed in 2024 led by living, industrial & hotels; offices lag. Expect a gradual pickup in 2025 as bid–ask gaps narrow.

Sector-by-sector

Logistics/Industrial

Vacancy trending stable-to-lower in 2025 on thin new supply; leasing should re-accelerate in H2; rent growth cools from prior peaks but remains positive in undersupplied nodes.

Living (PRS/Student/Senior)

Structural undersupply persists; major cities forecast net population growth and constrained pipelines—keeping occupancy tight and supporting rent growth where regulation allows.

Hotels

Another active year: lenders’ maturities + clearer debt pricing are set to lift volumes; EMEA participation healthy as urban markets lead.

Retail

Stabilization continues; prime convenience and dominant centers show resilient footfall and selective rent growth; risk still bifurcated by asset quality.

Offices

Bifurcation remains: CBD/prime sees rental growth and early signs of yield compression; peripheral/older stock faces higher vacancy and capex drag. Aggregate European vacancy likely peaks ~9% in 2025 as completions drop.
Evidence of selective recovery in top submarkets (e.g., London CBD clusters) highlights the “flight-to-quality” theme.

The recast EPBD (Directive (EU) 2024/1275) is now in force; the Commission issued implementation guidance on 30 June 2025 ahead of 2026 national transposition—expect tightening MEPS and renovation planning to shape capex and valuations (brown discounts vs. green premia).

Core+ tilt to scarcity: Target prime logistics near tier-1 cities, living in supply-choked metros, and high-spec CBD offices where replacement cost and limited new starts support rents.
Value-add via retrofit: EPBD-driven upgrades (energy, HVAC, on-site renewables) can unlock leasing and yield compression; under-invested non-prime offices/retail need capex or conversion plans.
Hotels for cycle timing: Lean into urban assets with capex deferred during 2020–23 and clearer NOI visibility; supply additions are still muted.
Watch the risks: Policy/tariff headlines, uneven hiring, and still-elevated vacancy outside CBDs could slow the rebound; underwriting should stress refinancing and capex