Emerging Trends in Real Estate®: Europe 2025

More respondents are using AI today than a year ago, and the vast majority expect AI to have some or a large impact on all areas of real estate over the next five years. 

Current AI use cases include predicting when a tenant is going to leave and why they choose one property over another, and hotels maximising occupancy and overbooking by predicting when a reservation will be cancelled.

In terms of future opportunities, one real estate CEO sees AI's applications as widespread, helping in “everything from rent collection to collating energy and water usage numbers and aspects of property management”. Another CEO of a private real estate investor says, “AI will be an extraordinary tool in terms of analysing markets and deals”.

ESG was seen as the primary influence driving real estate activities last year, but it has fallen behind changing customer demands and corporate financial health this year. What has changed? 

Some in the industry are struggling to keep environmental concerns top of mind when investment returns are harder to reach and business profits are under pressure. Lack of clarity around increasingly stringent ESG requirements is an issue, with some respondents questioning the value of acting now when “what is considered to be sustainable now could be very different in 20 years’ time”. 

Despite this, ESG clearly remains a priority for the industry. “We make no purchase without getting the ESG story,” says the finance chief of a Nordic developer.  

Rather than a backlash, the sentiment in this year’s survey reflects a need for clarity and consistency in ESG requirements, with a growing emphasis on aligning sustainability goals with long-term investment strategies.

The high-interest rate environment of the last two years and its impact on transaction volumes and valuations has seen opportunities for operational real estate. 

Operational real estate offers a pathway to value creation, especially in segments like student housing, hospitality, and logistics. Investors are increasingly looking at fully integrated operating/real estate platforms to achieve dual performance in both real estate and operations.

But operational real estate requires specific expertise and a clear understanding of structural trends. “Often the opportunities that arise require a high skill set – so it's stepping into your ongoing developments rather than a distressed situation where you can just easily come in with bridge capital and take a very passive role,” says the European CEO of a global institutional investor.

The alignment of operational strategies with trends such as ecommerce, demographic shifts, and digitalisation is crucial for long-term success, as can be seen by significant investment and M&A activity in data centres, driven by the growing demand for digital infrastructure.