Real estate market under pressure: bottom reached? Experts discuss in Frankfurt!

Real estate market under pressure: bottom reached? Experts discuss in Frankfurt!

At the Urban Leader Summit of the Urban Land Institute (ULI) in Frankfurt, leading industry representatives discussed the challenges and opportunities of the investment market. Participants such as Victor Stoltenburg, Thomas Mann, Britta Drexler, Viktor Zimmermann, Markus Wiedenmann and Jürgen Fenk made it clear that geopolitical unrest and the erratic economic policy of the USA represent the central challenges that institutional investors are confronted with. Nevertheless, the group was optimistic that the market development is not as bad as is often assumed. A central topic was the question of whether the real estate market had now bottomed out.

Despite difficulties, the European real estate market is showing cautious optimism. A recent study by ULI and PwC surveyed 1,143 industry executives about trends for 2025. Over 80% of respondents expect business confidence and profits to remain the same or increase in the coming year. At the same time, 85% of participants express concern about political instability, while 83% identify conflicts in Europe and the Middle East as a cause of potential market fluctuations.

Concerns and challenges

However, the mood among investors is also characterized by concerns. According to the study, 77% of companies are “very worried” about economic growth, while 62% are “somewhat worried.” The influence of interest rate policy in the USA and in the respective countries is seen as a decisive factor. In addition, 74% of experts in the EMEA region point out that increasing regulatory requirements are hindering the development of the real estate industry. Construction costs and the availability of resources are also a major problem, which 70% of those surveyed confirmed.

Another key issue is tenant demand. 44% of respondents say lower demand is a challenge, down from 48% last year. When it comes to sustainability, around 70% of experts show concern for future developments. Issues such as cybersecurity are also becoming increasingly important, with 59% ranking this as the biggest risk by 2030.

Investment potential at a glance

Despite all the challenges, there are also bright spots. Data centers, energy infrastructure facilities, student housing and logistics are considered sectors with the best investment and development prospects. London remains the leading market for European real estate investment, followed by Madrid and Paris, according to the survey. In Germany, Munich, Frankfurt am Main and Hamburg are among the top 10 real estate investment locations. Berlin takes fourth place.

Additionally, the report highlights growing climate risks, which are leading to higher insurance costs. Two thirds of those surveyed expect costs to increase in the next five years. Cooperation and awareness within the industry regarding these risks is considered to be insufficient.

Overall, the discussion and the accompanying study show that institutional investors must learn to live with uncertainty and develop strategies to navigate a market that appears volatile. The key to success will be the ability to adapt to changing market and political conditions.

Further details on the current market situation can be found in the reports from iz.de and haufe.de.