CEO Outlook 2025: Spain and UK ahead as market recovers

Spain and the UK are ahead in what is a recovering but still disconnected European real estate market, delegates heard at the Investors Roundtable – Opportunities in 2025 during Real Asset Media’s CEO Summit 2025, which took place this week at RSM’s offices in London.

“It is not the case that the tide will lift all boats,” said James Halstead, CIO European Value Add Real Estate, BlackRock. “If you go to Spain or Germany you are in different worlds, and the situation is unlikely to change in the next couple of years. We have chosen to invest in Spain.”

The Spanish real estate market is driven by the country’s strong economic fundamentals and positive growth outlook, well above the Eurozone average.

“There’s a real sense of confidence in the Spanish market and a benign environment for investors with a can-do attitude at the planning level,” said Kevin Beirne, head of retirement living, Octopus Real Estate.

In the UK there are concerns about the sluggish economy and the tax burden, but sentiment about the market is improving.

“Two-thirds of people are optimistic about prospects for real estate in the UK,” said Stacy Eden, partner, head of real estate and construction, RSM. “There is an expectation that valuations will pick up and that planning reforms will make things easier. Offices are doing well, especially in London, and we see among our clients a lot of appetite for BTR, driven by demand.”

The living sector continues to attract investors’ interest, as demand exceeds supply across Europe.

“There is huge undersupply everywhere,” said Paul Gibson, chief investment officer – EMEA direct real estate strategies, CBRE Investment Management. “We’ve had 6,000 applications for a 90-unit development in Amsterdam and it’s the same in other cities.”

Such demand means that being on the front line of fundraising is a little bit easier.

“I’ve been pleasantly surprised by the response we’ve been getting when fundraising for a resi strategy in Europe, there’s a real appetite among investors,” said Beirne. People are actively in buy mode, which is tangibly different from a few months ago.”

Other segments, like budget hospitality or retail, data centres or self storage, are also seen as good bets. It is a question of seeing where the liquidity gaps are and aligning strategy to a market in flux.

“There are structural changes on both the occupational and the investor side,” said Gibson. “Occupiers are more discerning and want best-in-class space and amenities. On the investor side new capital is coming in from defined contribution schemes and high net worth individuals.”

These changes present challenges but they also create opportunities, he said. The tailwinds are the cyclical correction underway and the consensus that interest rates are on a downward trend. The headwinds are volatility in the market and geopolitical uncertainty.

There is a “big disconnect” in the market, said Halstead, as “there is a lot of action on the value-add side but we’re not seeing capital at the lower end.”