Global Real Estate Perspective, November 2025

U.S. trade policy appears to have reached a state of temporary stability, at least with respect to most country tariffs. As tariff concerns have eased, fiscal sustainability risks have risen, driving up global bond yields. Most major markets are expected to see continued economic expansions this year and the outlook for 2026 is more positive, supported by lower average interest rates and a more predictable global trading environment.

Occupier activity was mixed across markets and property types during the quarter but remained resilient. Despite ongoing supply chain uncertainty, sentiment is improving in industrial markets as pent-up demand returns. Retailers continue to expand in core locations, while global office leasing over the first nine months of the year rose further to its highest level since 2019.

Global capital markets performed strongly in the third quarter as trade policy uncertainty reduced and major central banks continued to loosen monetary policy. Direct investment volumes rose further, with stable property fundamentals and highly liquid debt markets acting as catalysts for increased transaction activity. Fundraising marked a significant rebound after several challenging years, driven in part by strong performance in debt strategies and growing investor interest in secondary funds.

Direct investment activity reached US$213 billion in the third quarter of 2025, –an increase of 17% year-over-year. Year-to-date transaction volumes have now increased by 21% compared to 2024. The Americas posted particularly strong gains as transaction activity rose 26% in the third quarter led by the United States. EMEA investment volumes were 19% higher than last year in Q3, with the UK and Germany the two most liquid markets while Spain, Sweden and Belgium all posted robust growth. Trends were more nuanced in Asia Pacific where direct investment declined by 8% year-over-year. Activity in Japan remained strong despite the normalization of borrowing rates, with volumes rising by 16% year-over-year.

Cross-border investment has continued to recover in spite of geopolitical pressures, with third quarter growth of 7% year-over-year and year-to-date volumes 26% higher. The share of cross-border flows into each of the regions has remained relatively steady so far in 2025.

Office leasing demand continued to increase moderately from the previous year during Q3. Expansionary demand in North America pushed take-up higher, while longer deal timelines in Europe and Asia Pacific contributed to lower activity. Following on from a strong first half, global volumes over the first nine months of the year were at their highest level since 2019.

The global vacancy rate fell during the quarter, with decreasing availability of prime, central space. Groundbreakings have fallen to a new record low in the U.S. with three quarters of the remaining pipeline already pre-leased, while new construction starts are at the lowest level in over a decade in Europe. Occupiers with large requirements will need to explore options earlier as competition for the best space intensifies. 

Future trends: Focus shifting from workplace planning to implementation

Short-term: Although portfolio optimization remains a priority for many companies, higher utilization targets, reduced downsizing rates and centralization as tenants upgrade into higher-quality space are expected to support continued growth in leasing through year-end 2025 and into 2026.

Long-term: Affordability and availability will be increasingly in focus for occupiers as available new space in prime central submarkets remains limited. Companies will need to start searches earlier and maintain flexibility; renewals and extensions will account for a larger share of activity, while leasing in refurbished projects and core-adjacent submarkets is likely to increase.

Future trends: Demand returning despite ongoing supply chain uncertainty

Short-term: The implications of new trade policies will continue to impact planning and inventory strategies into 2026 and beyond. Demand from 3PL and distribution companies will keep rising to support more agile outsourced distribution management, while deferred decisions will gradually return to the market.

Long-term: The longer-term shape of trade policies and supply chain reconfiguration is still evolving, which will slow overall decision-making. However, delayed transactions are adding to the future pipeline, while drivers including the regionalization of higher-value manufacturing, growing defence spending, rising e-commerce and urbanization are expected to underpin future growth.

The living sector is on track for a strong 2025, with investment volumes on course to reach pre-Covid averages. The U.S. is leading the way with the third quarter notching the highest deal activity of the year. Volumes have also risen strongly in Europe and Asia Pacific , where strong demand for purpose-built student accommodation (PBSA) assets has been evident.

Future trends: 2025 set to be strong year for global living investment

Short-term: A strong Q3 and healthy pipeline of multifamily opportunities in the U.S and student accommodation portfolios in Europe and Asia Pacific means that living investment in 2025 should reach pre-Covid levels for the first time in over three years. Apartment construction challenges in Europe and signs of slowing rental demand in the U.S. may weigh on the sector’s growth trajectory next year.

Long-term: Continued housing shortages relative to the long-term growth in demand should see living remain the world’s largest real estate investment sector over the cycle. Many established markets will see continued emphasis on asset repositioning towards higher density operational living types such as PBSA and coliving.

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