Key takeaways for 2025

• Stronger competition to acquire assets and lease space
• Challenging to stack up projects financially
• Stoneweg will continue to follow ESG-led strategy

How would you describe the 2024 real estate year?

2024 was an interesting year! There was optimism in the air at the start that investors would ‘go through the door in 2024’, but there was a lack of action. The industry had high hopes that the second half of 2024 would be much busier than the first. However, investment markets have remained relatively quiet as yields took most of the year to stabilise.

The world progressed through its largest-ever election year, which delivered few shocks and was characterised by an anti-incumbency shift.

Logistics, living and data centres were the most popular real estate segments while offices and retail remained more unloved. Capital raising continued to be challenging and occupier take-up slowed.

As we turn to 2025, our group is very optimistic about a recovery. Interest rates continue to fall, leading indicators of investment activity are flashing green and occupiers are becoming more acquisitive. As the supply pipeline dries up, we see stronger competition to acquire assets and lease space, meaning better times for European real estate investors like Stoneweg.

What are the main challenges facing the sector in general and your company in particular in 2025?

Real estate is undergoing a period of transformational structural change as it adjusts to megatrends like demographics, deglobalisation, digitalisation and decarbonisation. These create significant risks for real estate investors holding the wrong type of portfolios, which are aligned to stock that is suitable only for yesterday’s occupiers, not those of today or tomorrow.

At the same time, the megatrends create unprecedented opportunities for investors that own, or can create, the type of modern, technology-enabled and sustainable real estate which is experiencing growing demand but remains undersupplied. A significant challenge for the sector has been adapting to this change to preserve value and capture new performance, and this will continue in 2025.

‘Interest rates continue to fall, leading indicators of investment activity are flashing green and occupiers are becoming more acquisitive.’

Jaume Sabater, Stoneweg

From a cyclical perspective, the high interest rate environment, and an elevated level of economic and political uncertainty, made it harder to raise new funds, deploy capital and recalibrate existing stock in 2024. High construction costs have made it challenging to stack up projects financially, and labour shortages have fuelled inflation and project delays.

Cyclical metrics are improving now that rates are falling, and inflation has been tamed, but labour shortages will continue and construction will remain tough as costs are unlikely to fall and development impediments related to ESG rise.

The challenge for 2025, then, is to select and maintain stock carefully to navigate the multiple challenges we face and lean into megatrends to benefit as they play out. Boldness in decision-making will be critical.

What are the main elements of your strategy for the year ahead?

After successfully completing the corporate acquisition of Cromwell Europe at the end of last year, in 2025 we will focus on maximising the strengths of the combined entity. The acquisition doubled our AUM and provides us with a bigger base on which to grow performance and enhance returns for our investment partners.

We now have an expanded European footprint, which we will use to bring Stoneweg’s deep living expertise and Cromwell Europe’s logistics experience to new geographical markets. Investing into the hospitality and data centre sectors will also be a major focus, and we are actively exploring investment opportunities in both segments. We have some interesting refurbishment and development projects in the pipeline on behalf of client mandates and our Singaporean-based Stoneweg European REIT (SERT, formerly CEREIT).

We also like to continuously improve ESG performance of the portfolios and assets we manage. And we will continue to follow an ESG-led strategy to ensure we do the right thing by the planet while protecting the value of our investments from climate illiquidity risk and ensuring we have the best chance to attract and retain occupiers who increasingly demand the highest sustainability standards.

Jaume Sabater is the founder and CEO of Stoneweg