Top 10 questions on real estate markets for 2025

2024 was a year of recovery, with GDP rising across most countries and inflation moderating, albeit remaining volatile. Ultimately, the much hoped-for soft landing was achieved. Improved financial conditions and investor sentiment fed through to a slow pick-up in real estate investment activity. The easing of monetary policy in 2024 has resulted in the prolonged downturn coming to an end. However, we think that the conditions prevailing in the post-GFC era will not be mirrored, with interest rates set to remain elevated and above pre-pandemic levels. We think that 2025 will be a year of progress, as we turn the corner, but that economic and political uncertainties will remain.

Looking back at our 2024 predictions, we think they were fairly prescient. There were opportunities to access distressed assets at attractive and discounted pricing as the market bottomed out. Capital values rose or were flat across many markets in the residential, retail, and industrial sectors and we continued to see bifurcation in the office sector. Despite rate cuts in 2024, the higher-for-longer interest rate scenario continues to be relevant, with rates coming under renewed upward pressure in early 2025, and still expected to settle above pre-pandemic levels. Finally, the Bank of Japan ended its negative interest rates in 2024, as we predicted.

We have a year of change ahead, with many questions to consider, but have managed to narrow them down to our Top 10 for 2025. The key topics include analyzing Donald Trump’s plans as he returns to the White House, with tariffs expected, and the potential impact on the real estate market. We also discuss where the real estate market is in the cycle and its rebound potential. Next, we revisit the topic of Artificial Intelligence (AI), analyzing the pressure it’s putting on scarce electricity supplies and the resulting shift to nuclear power by BigTech. In addition, we discuss the slowdown in sentiment towards ESG, residential rent controls and how professional sports and real estate can interact for success or failure.

We’ve selected our Top 10 questions from a wide range of topics, though there are other important themes which we haven’t covered, such as: investment opportunities in Japan, where we expect further interest rate rises this year, what is next for logistics, and whether the UK political backdrop is a headwind for its real estate market. We hope you find our answers insightful to navigate 2025.