M&G: Europe and Asia are appealing amidst global real estate recovery
M&G Real Estate has today published its mid-year Global Real Estate Outlook report, which highlights that real estate markets globally are presenting attractive cyclical entry points, and that Europe, the UK and Asia are poised to be the beneficiaries of shifting capital flows as investors sharpen their focus on diversification.
Martin Towns, Global Head of M&G Real Estate, said:
'We are experiencing a profound structural transformation in global real estate investment. A market bolstered by rebased valuations, declining interest rates and constrained development pipelines is providing a more stable, supportive environment for investors, but it’s the geopolitical landscape, most obviously with the overhaul in US policy, that is reshaping investor sentiment and capital flows.
Europe, the UK and Asia are rapidly emerging as key destinations for real estate investment – spanning popular sectors like logistics and residential, as well as high-demand infrastructure such as data centres. Meanwhile, renewed interest in office and retail spaces is also gaining momentum. For long-term investors, current market conditions present a rare opportunity to acquire high-quality assets at prices near the bottom of the cycle. The recent market disruption is expected to keep investor sentiment cautious, effectively extending the window for value-add strategies to deliver strong returns over time.
To drive income, a major change since the pandemic is that successful investors are taking a more consumer-centric approach on an asset-by-asset basis. In offices, investors are increasingly focused on delivering high-quality amenities and exceptional service – recognising that occupiers of prime and super-prime buildings are willing to pay a premium for spaces that enhance experience, productivity, and wellbeing. Meanwhile, recognising the broad-based demand for homes amidst widespread housing shortages, investors are putting their capital to work in providing a range of living solutions, including purpose-built student accommodation, affordable homes, or private rented apartments appealing to urban professionals.'
Laurien van Wieringen, Director for Investment & Asset Management in the Netherlands for M&G Real Estate, added:
'The Dutch real estate market is showing signs of renewed momentum in 2025, particularly in sectors aligned with long-term structural demand. Logistics continues to attract strong institutional interest – while take up is slowing down, it still exceeds long term average. Residential investment volumes are up 34%1 year-on-year, underpinned by demographic pressure and a chronic housing shortage. Investment increase is mainly seen for existing complexes, investment in new built remains limited. Meanwhile, prime office assets with strong energy credentials are outperforming — offices with top energy labels are commanding up to 20%1 higher rents. Across all sectors, sustainability is no longer a differentiator but a prerequisite, and we are focused on assets that combine environmental performance with resilient, long-term income potential.'
Key themes from the 2025 Global Real Estate Outlook include:
Shifting Investor Sentiment and Capital Flows
- Heightened uncertainty around US policy is prompting a reallocation of capital towards Europe and APAC.
- Falling interest rates, increased defence spending and a drive for economic self-sufficiency are supporting investor confidence in Europe.
- In Asia, regional cohesion and China’s fiscal expansion are bolstering intra-regional investment.
Diversification and Risk Mitigation
- Investors are increasingly turning to real assets to protect against inflation and market volatility.
- Core, income-driven strategies are being targeted, while value-add opportunities remain compelling amid market dislocation.
- The Living sector continues to offer defensive qualities and long-term growth potential.
A Broader Opportunity Set
- Logistics remains a key sector, though trade-related volatility may temper demand in some locations.
- Data centres are emerging as a resilient asset class, underpinned by AI adoption and digitalisation.
- Office and retail are back on the agenda, with outperformance from prime, ESG-compliant assets in core locations.
