David Invest

Unlocking European Real Estate Prospects: The 2025 Investment Surge and Transformative Trends

• David (Viacheslav) Davidenko

Share episode

Uncover the transformative potential of European real estate in 2025, where a 15% surge in investment is on the horizon! We'll explore how cities like Stockholm, Madrid, and Marbella are emerging as the new hotspots, and why sustainable office spaces are outpacing their outdated counterparts. Additionally, our expert guest highlights the intriguing "beds and sheds" phenomenon, where logistics hubs, student housing, and hotels are set for remarkable growth. Listen as we dissect the housing paradox of rising rents amidst price stability and a critical supply shortage.

Empowering you with strategic insights, we navigate the complex terrain of investing in this evolving market. From the flexibility and sustainability of office spaces to the affordability challenges in residential areas, we spotlight both opportunities and potential pitfalls. Our discussion emphasizes the need for adaptability and innovation, helping you stay ahead in a rapidly changing landscape. Embrace the complexities and view challenges as catalysts for growth, as we guide you through the vibrant future of European real estate with actionable advice and a forward-thinking mindset.

📰 Read more about this topic in our latest article: https://sunrisecapitalgroup.com/european-real-estate-in-2025-a-year-of-transition/

🔗 Check out our website for more information and valuable resources: https://linkin.bio/davidinvest

📸 Follow us on Instagram for updates and behind-the-scenes content: https://www.instagram.com/davidinvestai/

🔗 Network with me on LinkedIn for professional connections and advice: https://www.linkedin.com/in/vdavidenko/

📧 Subscribe to our newsletter for exclusive investment tips and insights: https://sunrisecapitalgroup.com/subscribe/

📚 Check out my course on Udemy - https://www.udemy.com/course/passive-real-estate-investing/

Disclaimer: The content provided on this channel is intended for educational and informational purposes only and does not constitute investment, financial, or tax advice. We strongly recommend that you consult with qualified professionals before making any financial decisions. Past performance of investments is not indicative of future results. The information presented here is not a solicitation or offer to buy or sell any securities or investments. Our firm may have conflicts of interest, and we do not guarantee the accuracy or timeliness of the content provided. Investing involves risks, and you should carefully consid...

Speaker 1:

Welcome to the Deep Dive. Today we're going to dive into the future of European real estate in 2025. Specifically, we've got this CBRE report that's predicting a pretty optimistic outlook, so we're going to unpack it all. You know all the juicy details. See what it means. You know for you.

Speaker 2:

Yeah, so we're talking like a potential 15 percent surge in investment offices making a comeback Well, sort of and some seriously hot residential markets. To help us break this down, I've got our expert with us. They can not only like break down the numbers and stuff, but also connect the dots, tell us what it all means.

Speaker 1:

Yeah, the report's definitely pretty optimistic. I think what's really striking is this prediction of a 15% rise in investment activity. You know we've been in kind of a slow period the last few years, so this could be a big change like a real inflection point.

Speaker 2:

Okay, inflection point.

Speaker 1:

I like that.

Speaker 2:

What's making everyone so confident all of a sudden? Is this like a temporary thing, or is there like something bigger going on? It's like a bunch of things happening at once. Interest rates are supposed to fall, so it'll be cheaper for investors to, like you know, borrow money and make big moves. But it's not just about cheap money. There's just this feeling of optimism about the European economy in general, and that usually means good things for real estate.

Speaker 1:

So it's not just a wave. It's more like a real belief that Europe is back on track. Now the report says offices are making a comeback, but not like we might have thought a few years ago. What's going on there?

Speaker 2:

It's really interesting. Actually, we're seeing two very different things happening in the office market, almost like two different worlds or two different types of offices, I guess. On the one hand, you've got these grade A spaces, you know, top quality, sustainable, flexible layouts, those are in high demand.

Speaker 1:

That makes sense. Companies are getting picky, especially with everyone working from home. Sometimes they want spaces that are cool, attract talent and help them be sustainable and stuff. What about those other offices, the ones that aren't so fancy?

Speaker 2:

Those are facing some tough times. Yeah, companies just don't want those old, inefficient spaces anymore, and this is a big deal for developers. They've got to change, and fast, or they'll be left behind.

Speaker 1:

So it's not enough to just have an office. It has to be the right office. That makes me wonder how are developers responding to these new demands? What will the office of the future look like? We'll have to see.

Speaker 2:

Now let's talk about houses and apartments. Is everything good in the residential market?

Speaker 1:

For the most part. Yeah, it looks pretty stable. We might see about a 4% rise in average asking prices. But and this is where it gets interesting there's this weird situation where there aren't enough houses, so rents are going up, even though we expect more people to buy and sell because of the lower interest rates we talked about A housing paradox.

Speaker 2:

huh, that's not something you hear every day. The report also mentions some markets that are really taking off right, Definitely.

Speaker 1:

Places like Stockholm, madrid and Marbella are supposed to do really well. Price growth could be over 5%. Both local and international buyers are interested. So even with all the uncertainty in the world, these cities still have something special that attracts people. It's kind of like what the report said about London and Paris. You know, even with all the political stuff and regulations, people still want to invest in luxury real estate there. It seems like those cities have a certain I don't know appeal that goes beyond the headlines. Let's move beyond offices and houses for a sec. The report mentions this category called beds and sheds, and I got to say I'm kind of curious, what exactly is that called Beds and Sheds? And I got to say I'm kind of curious, what exactly?

Speaker 2:

is that Beds and Sheds is a fun way of saying things like logistics hubs, student housing and hotels, you know, warehouses for online shopping, places for students to live, hotels for tourists. These are all supposed to do well in the coming years because of some big changes that are happening.

Speaker 1:

I get the sheds part with all the online shopping that's happening, but why beds? What's driving that?

Speaker 2:

It's about demographics and lifestyles changing. More people are moving to cities, student populations are going up, so there's a need for more student housing and more places for tourists to stay when they visit European cities.

Speaker 1:

So to succeed in this beds and sheds game, you really got to understand the big picture. It's not just about building. It's about building the right things in the right places. Feels like we're just scratching the surface here. The report mentions a bunch of other trends that are changing the European real estate world Things like sustainability, AI, new construction methods, the whole nine yards. Where do we even begin with all that?

Speaker 2:

Well, it's true, the real estate world is changing fast, you know. Technology, regulations, everything's evolving, and all this creates both opportunities and challenges for investors.

Speaker 1:

All right, let's dig into those trends. What are the key things investors should be thinking about?

Speaker 2:

Let's start with sustainability. It's not just a good idea anymore, it's essential. Across Europe, environmental rules are getting stricter, so buildings that aren't sustainable are going to struggle. Investors want buildings that are good for the environment.

Speaker 1:

And so sustainability is good for business too, not just the planet.

Speaker 2:

Exactly. And then there's AI, which is going to totally change how we design, build and manage real estate. We're talking about systems that can do things like optimize space, figure out what tenants are going to do and even run buildings automatically.

Speaker 1:

Wait, AI can predict what tenants are going to do. That sounds like something out of a movie. Tell me more.

Speaker 2:

It's pretty amazing. Actually, ai can look at tons of data and find patterns, so it can make predictions about what tenants want, how they move around and even when things might need fixing. Imagine knowing what your tenants need before they even ask. That's the power of AI.

Speaker 1:

Wow, that's wild. So AI is a big deal for real estate, not just a buzzword.

Speaker 2:

Absolutely, and let's not forget about how we build things. New materials and techniques are making construction faster, cheaper and more sustainable. Modular construction, for instance, is becoming more popular. It's like building with giant Legos, which can save a lot of time and money.

Speaker 1:

So it's about building smarter, not harder. What else is out there?

Speaker 2:

Urban resilience is becoming a big deal. Cities are facing problems like climate change, population growth and not enough resources, so they need to be designed and built in a way that's flexible and sustainable. Think green spaces, efficient transportation and mixed-use developments that create vibrant communities.

Speaker 1:

So it's about building better for the long term, not just building more. What else is new?

Speaker 2:

Technology is not just about AI. Blockchain can make buying and selling properties smoother, more transparent and safer. We're also seeing more and more prop tech, which is basically all kinds of new tech for the real estate world.

Speaker 1:

So technology is a big part of this, but it's not just about the tech itself. It's about how we use it to make things better, right?

Speaker 2:

Right. And finally, there's more emphasis on cross-sector collaboration. That means governments, developers, tech companies and communities are working together to find new solutions to problems in the real estate industry. It's about breaking down walls and working together to create a more holistic and sustainable approach.

Speaker 1:

Wow, there's so much to think about. It sounds like 2025 is going to be a crazy year for European real estate, but with all this good news, are there any potential problems or risks that investors should consider? I mean, it can't all be perfect, can it?

Speaker 2:

That's a really good point. It's easy to get carried away with all the positive stuff, but every investment has its risks. The report focuses on the good things, but there could be some downsides too.

Speaker 1:

Right Like a reality check before anyone jumps into European real estate. So let's be a bit pessimistic for a minute. What could go wrong with these predictions?

Speaker 2:

Well, the economy can be unpredictable, right, we can't rule out inflation coming back or some unexpected global event that messes things up. Even things like governments changing policies, like raising interest rates or making new rules could scare investors and slow things down.

Speaker 1:

So even if the European economy seems strong now, things could change. It's important to remember that. What else should investors be careful about?

Speaker 2:

Overbuilding. That's a real possibility, especially in certain areas. We've seen it before. Everyone gets excited about something and then suddenly there are way too many of a certain type of property. That can cause rents and profits to go down and investors don't make as much money as they thought they would.

Speaker 1:

It's like having too much of a good thing, I guess. So just because something's popular now doesn't mean it's a guaranteed win. Investors need to do their research and make sure there are enough people who actually want what's being built. And people can be fickle, right. What they want can change quickly.

Speaker 2:

Absolutely. What's hot today might be out of fashion tomorrow. Like online shopping has been huge for warehouses and logistics hubs, but what if that slows down? Or what if people get tired of fitty life and start moving back to the suburbs? Those kinds of changes could really affect the value of certain properties.

Speaker 1:

It's like trying to predict fashion trends. What's cool one season might be totally forgotten the next. It shows how important it is to be flexible and adapt to what people want. Speaking of different types of real estate, are there any specific risks for each of the sectors we've talked about?

Speaker 2:

For sure. Let's take offices first. The report says grade A offices are in demand, but more people working from home could change that. If more companies go fully remote, even the fanciest offices might have trouble finding tenants.

Speaker 1:

So even the winners in the office market have to stay on top of things and be ready to adapt. What about the residential market? Are there any potential problems there?

Speaker 2:

Well, we already talked about how expensive it is to buy a house in many places, but investors also need to pay attention to what's happening in specific areas. Some cities have rules about short-term rentals, like Airbnb, which can make it harder to make money from those properties, or there might be zoning changes that could change how much a property is worth.

Speaker 1:

So you have to know the local rules and regulations, not just the big trends. What about beds and sheds? Are there any unique risks there?

Speaker 2:

Those sectors often rely on very specific things to stay strong, which means they can be easily affected if those things change. For example, student housing depends on how many students there are at universities, so any changes in population or education policies could have a big impact. And logistics, like warehouses, are all about online shopping. If fewer people buy things online, those properties could lose value.

Speaker 1:

So you got to understand what drives these sectors and be ready for unexpected changes. It sounds like investing in European real estate in 2025 is both exciting and risky. You need to be careful and smart about it.

Speaker 2:

Exactly. It's about being informed, strategic and making good choices. Do your research, know the risks and base your decisions on solid information and good advice. But it's also about having a vision for the future and being a part of shaping how European real estate evolves.

Speaker 1:

That's a cool way to think about it. So for anyone thinking about investing in European real estate, what's the most important thing to remember?

Speaker 2:

I think the key is to go in with your eyes open. The European real estate market is recovering, but it's not a simple situation. There are good opportunities and there are risks, and investors need to be aware of both.

Speaker 1:

So don't just follow the crowd right. Do your homework, know the risks and be ready to adapt as things change. What would you say is the single most important piece of advice for someone thinking about investing in this area?

Speaker 2:

Focus on the fundamentals. Find properties in good locations with strong reasons why people would want them. Don't get distracted by all the hype and trends. Really try to understand what makes a property valuable in the long run.

Speaker 1:

So look beyond the surface and see the real value. Right, what else?

Speaker 2:

Keep an eye on the bigger picture, Know what's happening with demographics, the economy and technology. Those big trends are going to shape real estate for years to come, so make sure your investments line up with them.

Speaker 1:

So be aware of the long-term changes, not just the quick wins.

Speaker 2:

And lastly, don't be afraid to think differently. The real estate world is changing fast, and the people who succeed are the ones who embrace new ideas, new technology and new ways of doing business. This is not your parents' real estate market anymore.

Speaker 1:

That's awesome advice Be informed, be strategic, be adaptable and be open to new things. Sounds like a winning formula for European real estate. So, basically, the European real estate market in 2025 looks good, but it's not without its risks. Investors need to be informed, strategic and adaptable to make smart choices in this changing market.

Speaker 2:

Exactly. And one last thought for our listeners We've talked about the pros and cons, but it's important to do your own research and figure out the specific risks and opportunities that match your own goals and how much risk you're comfortable with.

Speaker 1:

That's a really important point. There's no one-size-fits-all approach to real estate. You need to know what you want and make smart choices based on good research and careful thought. So doing your homework is crucial, but how can someone go beyond just reading reports and actually figure out those specific risks and opportunities? Where do they even start?

Speaker 2:

That's where it gets really interesting. You got to go beyond the big trends and look at the details. For example, if you're interested in apartments in Stockholm, you can't just look at the city as a whole. You got to look at specific neighborhoods. Who lives there? What are the buildings like? Are there any new construction projects planned that might affect property values?

Speaker 1:

So it's like being a real estate detective right Looking for clues to find the hidden gems or maybe avoid some traps. I like that. What are some other ways investors can get that kind of detailed information? What are some other ways?

Speaker 2:

investors can get that kind of detailed information. Technology is a big help here. There are all these data platforms and tools that can give you really specific information about properties, neighborhoods, even individual buildings. You can find data on everything from how much rent you can get and how many empty units there are to what kind of amenities are nearby and even crime rates.

Speaker 1:

It's amazing how much information we have access to these days, but it can also be overwhelming, right? How can investors figure out what's important and what's just noise?

Speaker 2:

That's where working with experienced professionals comes in. A good real estate agent, a lawyer who knows their stuff or a financial advisor can help you understand the data, see the potential, risks and opportunities and make good decisions that fit your goals.

Speaker 1:

So build a team of experts right. Use their knowledge and experience to help you navigate this complex world. Speaking of complex, we've talked about offices, residential beds and sheds. Are there any specific risks that stand out in each of these areas?

Speaker 2:

Let's start with offices. We talked about how more people working from home could be a problem, but there's more to think about. The rise of co-working spaces and flexible offices is changing how businesses think about space. They don't want those long-term leases as much anymore, which can be tough for landlords who are used to that.

Speaker 1:

So the office market is becoming more flexible, which means investors need to be more adaptable too. What about residential? Any red flags there?

Speaker 2:

Affordability is a big one, like we discussed, but you also need to know what's going on locally. Some cities have rules about short-term rentals, like Airbnb, which can make it harder to make money from those properties, or there might be zoning changes coming up that could change a property's value.

Speaker 1:

So it's not just about knowing the big trends, it's about understanding the local rules and regulations. What about beds and sheds? Anything specific to watch out for there?

Speaker 2:

Those sectors are really sensitive to specific things. For example, student housing depends on how many students are going to universities. So if the population changes or if the government changes education policies, it could have a big impact. And logistics like warehouses are tied to how much people are buying online.

Speaker 1:

If people start shopping online less, those properties might not be as valuable. So you have to understand what drives those sectors and be ready for things to change. It seems like investing in European real estate in 2025 is both exciting and a bit risky. You need to be informed and strategic to make good decisions.

Speaker 2:

Absolutely. It's about being smart and making calculated decisions, Do your research, know the risks and make choices based on solid information and good advice. But it's also about having a vision for the future and helping to shape how European real estate evolves.

Speaker 1:

That's a great way to put it. So, for our listeners who are thinking about getting into European real estate, what's the most important piece of advice you'd give them?

Speaker 2:

I'd say embrace the complexity. Don't let the challenges scare you. Instead, see them as chances to learn, grow and make a real difference. The European real estate market is dynamic and changing, and it's full of potential. The people who are willing to jump in, do the work and stay ahead of the curve are the ones who will succeed.

Speaker 1:

That's inspiring. So to all our listeners keep exploring, keep learning and keep asking questions. The future of European real estate is being shaped right now, and you can be a part of it. Thanks for joining us on a deep dive and we'll see you next time.

People on this episode

Head Shot

David (Viacheslav) Davidenko

Host