ULI & PwC: uncertainty dims hope of new real estate cycle
The growing optimism about prospects for real estate markets is tempered by caution over continuing geopolitical uncertainty, according to the Emerging Trends in Real Estate Global Outlook 2025 from PwC and the Urban Land Institute, which was presented yesterday at MIPIM in Cannes.
The Outlook amalgamates three regional surveys which canvassed thousands of real estate professionals and leaders across Europe, the United States and the Asia Pacific region.
“The industry is very keen to turn the page and start a new cycle, but wider (geo)political risks with potential monetary and macro-economic knock-on effects will lead to ongoing uncertainty for real estate investors and managers,” said Lisette van Doorn, CEO, ULI Europe. “Amidst this uncertainty there are pockets of opportunity, largely driven by structural growth trends, such as demographics, digitisation and the energy transition. These developments drive where the money is being deployed.”
Real estate leaders globally are braced for another challenging year of uncertainty, with lingering inflation, largely driven by factors including geopolitical instability and persistently higher interest rates in some regions, potentially delaying a hoped-for recovery in capital markets and occupancy metrics.
Uncertainty, driven by factors such as the US administration’s tariff policies and broader geopolitical shifts, is reshaping the global investment landscape. Financial markets and investment decisions across all three regions are being influenced by growing challenges and increasing regional divergences, potentially creating barriers to joint approaches to global crises.
In this context, political pushback against climate targets and the ESG agenda in the United States is beginning to influence Europe and potentially APAC.
Despite these dominant uncertainties, among some respondents there is also optimism that the industry is close to ending a three-year journey to recovery, and a view that 2025 may prove to be the ‘reset point’ or commence a new cycle, although there is caution also on the pace of recovery.
From a regional macro-economic, monetary and real estate perspective, Europe is thought to be on a good trajectory following central banks’ rate cuttings programme responding to lowering inflation and slower growth, and valuations reaching realistic levels. However, global geopolitical tensions will likely contribute some dark clouds in the region.
The most compelling opportunities, the report finds, lie in the likes of logistics, data centres, and new energy infrastructure, which are attracting record interest, reflecting the rising importance of energy security, AI-driven expansion, and regional economic independence. The trend towards digital infrastructure, with data centres highlighted in the report as the most promising sector across Europe, North America and Asia-Pacific, resulted in record transaction volumes in 2024.
“The global real estate markets are sending out positive signals,” said Thomas Veith, global real estate leader, PwC. “Our research suggests that the greatest opportunities for outsized returns lie with those assets at the intersection of real estate and infrastructure – with an acceleration of interest and capital deployment possible this year.”
ESG, availability of operational data, active management of office or the use of other building materials are being rethought, Veith said: “This process takes time but will encourage a lot of innovation. It will make the industry more resilient for the future, which is good and necessary.”
