The UK is likely to take the lead in the real estate sector’s recovery around the world in 2025, as growing stability and capital value gains are promising, reports M&G Real Estate in its latest Global Real Estate Outlook.
The report emphasizes that the UK, after coming out of a protracted period of uncertainty, has emerged with renewed economic momentum. This sets the stage for increased investment, particularly in sectors demonstrating structural resilience. The key drivers expected to shape investor returns in 2025 include structurally undersupplied sectors poised for strong growth, a mixed but improving picture across Europe, stock selection dominance in sector dynamics, and a return to growth in the Asia-Pacific region.
According to Martin Towns, Deputy Global Head of M&G Real Estate, “Optimism is building, and with stabilizing capital values and easing interest rates, investors are starting to recalibrate their portfolios. This is ushering in a recovery phase for many global markets, creating an environment that would encourage more buying, selling, and lending.”.
Town believes that sectors deemed alternatives just a few years ago are currently gaining acceptance of institutional investors. The dwelling sector should experience the majority of benefits with increased demand and limited supplies to drive their investment. House shortage in UK stands at 4.3 million houses, the house price is high: Private sector investment will hence unlock house delivery. Further, it will be pointed out that energy-efficiency regulations and retrofit projects-from brown to green-will generate value-added opportunities.
Although year-on-year growth in the urban multi-let industrial sector did not match recent levels, critical undersupply of modern, high-quality spaces in core UK markets will sustain investor demand. The outlook is more nuanced in Europe. While southern Europe will outperform, rate-sensitive markets such as the Nordics and the Netherlands will temper inflation. Rental growth will be driven by constrained residential supply, while prime office spaces in central business districts will improve rental prospects better than secondary locations.
The report also underlines the increasing demand for Asia-Pacific real estate portfolios, with improving economic conditions and inward migration creating attractive urban investment opportunities, mostly in markets such as Tokyo’s multifamily residential sector. M&G’s overall report forecasts a strong upsurge in the global property market, and the UK sits at the very head of this trend.
