Real Estate Market Trends

After two years of falling or flat values, global private real estate has now logged five straight quarters of gains, with positive total returns across 21 major countries in Q2 2025. Analysts describe 2025 as a turning point, with prices broadly stabilizing as inflation cools and interest-rate paths become clearer.

Transaction volumes are recovering from 2023 lows, rising about 19% year‑over‑year as investors rebalance portfolios and slowly re‑enter the market. Still, activity remains below pre‑2022 levels, reflecting lingering uncertainty around growth, tariffs and financing costs.

In the U.S., the housing market is described as “largely frozen”: both supply and demand are low, yet prices are still expected to rise around 3% in 2025. Tight inventory and strong homeowner balance sheets support values despite affordability challenges from higher-for-longer mortgage rates.

Globally, residential assets are seen as relatively resilient compared with other sectors, as demand for housing remains solid while new construction slows. Multifamily vacancies in the U.S. have fallen toward 4%, though they are expected to tick up slightly as new supply delivers and markets like the Sun Belt digest recent building booms.

Office remains the weakest major sector, with widening gaps between high-quality, well‑located buildings and older, commodity stock. Prime offices in key cities benefit from back‑to‑office mandates and limited new supply, while secondary assets face rising vacancies and negative absorption.

In the U.S., overall office vacancy is projected near 19% by year‑end 2025, with significant move‑outs from pre‑2020 buildings as tenants “flight to quality.” Many global investors expect continued write‑downs or repurposing for obsolete space, underscoring the need for careful asset selection.

Industrial and logistics properties remain in demand, helped by e‑commerce growth and supply-chain reconfiguration, even as rent growth slows from peak levels. Third‑party logistics providers are expected to take a larger share of leasing, and vacancy in modern facilities remains relatively low.

Data centers have become one of the hottest segments, supported by AI and cloud computing, with preleasing of new capacity above 75% in major U.S. markets. Large deals in this space illustrate how digital infrastructure is blurring the line between traditional real estate and infrastructure investing.

For investors, 2025 is less about broad market beta and more about picking the right sectors, cities and assets. Living, logistics and necessity-based properties are favored, while highly leveraged, lower‑quality offices and retail remain under scrutiny.

For buyers and renters, conditions differ sharply by location: some high‑growth regions are seeing softer rent gains and more choice, while supply‑constrained cities still face tight vacancies and sticky prices. With interest rates edging lower but not returning to the ultra‑cheap era, the next phase of the cycle is likely to be slower, more income‑driven and more selective than the last boom.