Resilience in residential, early office recovery
Residential investment was a notable bright spot of the October release, reflecting investor rotation toward counter-cyclical, supply-constrained assets. The sector’s resilience was underscored in the INREV Consensus Indicator Survey, where residential ranked as the most preferred sector in Q3 2025 for the third consecutive quarter. Reflecting this momentum, residential-focused European funds delivered top-tier total returns: +2% in Q2 and +8% year-over-year.
While office investment remained close to historical lows in absolute terms, there is the emergence of some green shoots. Volumes rose 5% in Q3 and 3% YTD, with London and Paris central business districts leading the way. Prices are rebounding, and prime rents are showing notable growth in 1H25. Similar signs of stabilization are emerging in supply-constrained markets, such as Madrid and Amsterdam, as well.
Adjacent to the traditional real estate sectors, data centers continue to gain momentum. Transaction volumes rose by +15% in Q3 and were flat on a year-to-date basis, an impressive result given the broader market softness. Data centers increasingly blur the lines between real estate and infrastructure: they offer long-term contracted revenue, essential service functions, high barriers to entry, and leases that are based on power availability rather than traditional CRE that’s measured by the size of the usage area. These attributes make them especially attractive as Europe ramps up digital and energy infrastructure investment. As part of real estate, infrastructure, or “digital real asset” strategies, investors should expect data centers to continue seeing inflows in the quarters ahead. That said, these transactions are typically large and occur infrequently, making quarterly fluctuations volatile and not necessarily indicative of medium- to long-term trends.
