Investors shift focus as Europe’s markets evolve amid uncertainty, say experts

Leading advisers, investors and investment promotion agencies convened to discuss the top opportunities and market considerations for 2025 during Real Asset Media’s CEO Outlook Summit.

The roundtable brought together voices from across Europe to examine where capital is flowing and what factors are shaping decision-making. The event took place in February in London, and was hosted by RSM.

Global economic policies, sustainability regulations and geopolitical shifts are reshaping investor sentiment and driving a shift from core markets to emerging opportunities. Despite renewed optimism, experts warn of ongoing structural risks. Investors are navigating valuation uncertainties, regulatory changes and the risk of economic slowdown as they allocate capital for 2025.

“The way investors are seeing the geographies and the asset classes and also real estate equity versus debt — it’s a new world,” said Guillaume Turcas, managing partner at Paris-based Faro Capital Partners.

Hugh Garnett, investor strategies senior specialist for real assets at the Institutional Investors Group on Climate Change, underscored that, despite a backlash against ESG in the US, European investors remain committed to net zero. They are prioritising high-performing, energy-efficient assets and increasingly integrating climate-risk assessments into financial decision-making.

Ken Wood, managing director, UK and Ireland, at consultancy Drees & Sommer, noted that investor interest is evolving beyond traditional hubs like London, Paris and Frankfurt toward Madrid, Milan and Amsterdam, which are now seeing increased liquidity and rental growth opportunities. Simon Wallace, managing director and head of the UK real estate group at DWS, echoed this view, explaining that London and Paris remain first-movers in attracting capital, but secondary cities across Europe are gaining traction as investors seek better valuations and long-term growth potential.

US safe havens

Meanwhile, US real estate and debt markets are perceived as safer havens, offering better credit protection and equity stability. However, Southern European markets, particularly Spain and Italy, are emerging as attractive alternatives, driven by favourable tax policies and rising investor interest in leisure and residential assets.

Real estate remains a key driver of foreign direct investment in places such as Italy, the UK and Iceland, where international investors are fuelling market growth.

Italy’s real estate sector contributes 21% to GDP, with 70% of commercial investment coming from abroad, led by the US, France and the UK. Northern Italy is emerging as a hub for logistics and data centres, benefiting from its strategic location and lower costs than Germany and Austria, said Aster Thackery, investment director for the Italian Trade Agency in London.

In the UK, the West Midlands is now second only to London in FDI-driven job creation, Jon Baty, head of inward investment at the West Midlands Growth Company, pointed out. Financial and professional services dominate the region’s economy, while logistics faces land constraints. New investment zones and incentives aim to boost further capital inflows.

Meanwhile, Iceland is leveraging its renewable energy to attract data centres, hospitality and logistics investors, according to Arnar Guðmundsson, head of Invest in Iceland. The Keflavík Airport redevelopment is a major draw, offering residential, industrial, and eco-industrial park opportunities to international investors, he noted.