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The European real estate market is experiencing a robust recovery, with investment volumes showing notable growth after a period of subdued activity. According to new research from commercial property group CBRE, investment volumes have increased by a quarter over the past year.

In the first quarter of 2025, investment in European real estate rose by 6% year-on-year, reaching 45 billion euros ($51 billion). This growth is attributed to improved macroeconomic sentiment and lower interest rates. Over the past year, investment volumes have surged by 25% annually, totaling 213 billion euros.

The inflows were widespread across various sectors, with living assets, including multiple dwellings and student housing, leading the way with a 43% increase over the year. This sector was previously highlighted as a primary target for European cross-border real estate investment, according to CBRE’s 2025 European investor Intentions Survey.

Retail investment followed closely, with a 31% year-on-year increase over the past 12 months. In the first quarter of 2025, retail investment increased by 26%, surpassing all other sectors.

Hotels, industrial and logistics, and offices also experienced increased annual inflows, with growth rates of 23%, 19%, and 16% respectively, over the past year. Healthcare was the only sector that recorded lower investment volumes during this period.

These findings align with similar data from U.K. real estate firm Rightmove,which earlier this month reported a resurgence in first-quarter investment volumes in Britain’s key office,industrial,and retail sectors.

This recovery follows signs of improvement in Europe’s real estate sector in 2024, after the European Central Bank and the Bank of England reduced interest rates, and growth prospects improved across several key markets.

However, CBRE cautioned that a recent decline in global economic sentiment, partly due to the new U.S. tariff regime, could negatively impact investment appetite in the future.

“2025 has got off to a solid start, with retail, living and office assets looking notably attractive to investors,”

Chris Brett, head of Capital Markets for Europe at CBRE, stated, “2025 has got off to a solid start, with retail, living and office assets looking particularly attractive to investors.”

He added, “Though, we are cognizant of the rapidly changing macroeconomic habitat and anticipate a more cautious approach from both sellers and buyers in response to market volatility.”

Last week, the IMF reduced its 2025 global growth forecast to 2.8%, a decrease of 0.5 percentage points from its previous estimate,citing U.S. tariffs as a “major negative shock to growth.” The financial body also lowered its growth outlook for the euro area this year to 0.8% from 1% previously.