Weakened sentiment towards European real estate as economic and political challenges hit home

The latest INREV Market Insights reflects a mixed picture for European real estate. While market performance showed further signs of improvement, sentiment remains cautious, and in some areas, it is deteriorating.

Key highlights:

• The latest INREV Consensus Indicator dropped to 56.7 from 57.8 in December 2024 — the first decline since September 2023.
• All five sub-indicators declined in March. Investment liquidity (63.2) and financing (61.3) fell slightly but remain the strongest subindicators, staying above the 60 mark. The economic subindicator saw a notable drop to 44.0, the weakest reading this quarter.
• The Q4 2024 INREV Quarterly Fund Index posted a total return of 1.21%, up from 0.57% a quarter earlier. This is the strongest performance since Q2 2022.
• On a one year annualised basis, all key assets delivered positive returns in 2024. Despite this strong asset performance, investors’ assessment of risk is dramatically higher, up by 30% from last December.
• Investor sentiment towards Southern European markets continues to gain momentum. Spain once again reached a record-high net positive sentiment (39%), followed by Italy (24%). However, sentiment has weakened across Europe’s largest economies; France and Germany registered net sentiment of only 3%, consistent with their average over the past two years.
• Residential retains the top spot for positive sentiment amongst key sectors, while retail holds momentum. Sentiment towards the industrial/logistics sector has moderated to 12%, down from 19% in December 2024. For offices, the net sentiment stands at 0% in March 2025, an improvement of 8% since December 2024.

Download the Market Insights March 2025 report, infographic and the Consensus Indicator below.

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