17th September 2025, Amsterdam – The latest INREV quarterly Market Insights reveal improving, albeit still cautious, sentiment across the European non-listed real estate market. Four out of five INREV Consensus subindicators moved upwards this September, lifting the headline indicator to 56.4, up from 52.2 in June. This brings an end to two consecutive quarters of decline.
The Investment Liquidity subindicator improved the most over the summer, moving out of contraction territory to 55.2.
A dynamic financing landscape
The Financing subindicator maintained its leading position, strengthening further to 67.3 – the highest level recorded across any subindicator since INREV started to track the market consensus in March 2023. Almost 40% of respondents noted improved financing conditions from both traditional and non-bank lenders.
The September Consensus Indicator Survey results also showed that 27% of respondents observed financing conditions characterised by higher loan-to-value ratios and looser covenant structures, up from 19% in June.
Performance dips, but outlook signals potential turning point
Q2 2025 sees fund level total return dip to 0.98%, down from 1.08% in the previous quarter, with capital growth easing to 0.17%.
Southern Europe continues to pull ahead in sentiment, with Spain retaining the top ranking, followed by Italy. These markets are benefitting from broader economic growth, and they are offering ample opportunities beyond main sectors and core strategies; investors are especially drawn to sectors such as hotels, student housing, and operational assets. In line with its persistently positive investment sentiment, Spain continued to deliver solid returns across sectors.
France and Germany, which have lagged European peers in recent quarters, are now showing signs of sentiment stabilisation. Performance in both countries was weighed down by their sizeable office exposure and the accompanying negative capital growth.
Falling valuations in these markets are potentially providing openings for re-entry, which could lead to an inflection point in the near future – hence the improving sentiment as investors start to consider re-entering.
Investor appetite beyond traditional main sectors
Despite early signs of increasing confidence, market participants also report a marginal uplift in risk sentiment. This is likely reflective of persistent external pressures, such as international trade turbulence and broader economic headwinds.
Residential emerged as the most preferred sector, attracting 39% net interest – a 14% increase since June and well above its long-term average of 27%. It has maintained its position as the most favoured sector for three consecutive years, underscoring its continued resilience.
Hotel and leisure followed as the second most preferred sector, with 21% of respondents indicating plans to increase investments in the sector. This is more than double its long-term average of 10%, suggesting that investor appetite continues to broaden beyond traditional main sectors.
Iryna Pylypchuk, Director of Research and Market Information at INREV, commented: “It is reassuring to see signs of confidence returning to non-listed European real estate. After two consecutive quarters of decline, the latest sentiment is promising; however, it is too early to call it a full-swing, pan-European recovery just yet.
“France and Germany may also be nearing the bottom of the cycle where a valuation threshold will attract renewed investor interest, despite recent political and/or economic turbulence. Overall, while the market seems to be turning a corner, how long this turning point will drag on through a sluggish recovery remains difficult to predict.”
“There is some pressure to sell in markets and sectors facing performance drag, such as offices. A robust financing market provides reassurance, but as we are in an alpha driven market recovery, the key drivers of performance will be derived from active asset management, tenant strength and stickiness, and asset / fund selection. Looking ahead, we can expect growing dispersion in performance across different market segments just as much as within the same sectors and geographies.”