Why now is the time to consider real estate
After a period of repricing and market uncertainty, the European property landscape is showing signs of renewed strength. Investment volumes in 2024 marked a sharp recovery from the lows of 2023, with sovereigns, Real Estate Investment Trusts (REITs), institutions, and private investors actively re-entering the market. Despite geopolitical frictions dampening activity in early 2025, Europe’s three largest markets – the UK, Germany and France – continue to account for 60% of deal volume.1
With capital values rebased from their peak in the second half of 2022, forward-looking returns are building on a stronger foundation. In fact, total returns in the eurozone are projected to outpace both the US and APAC from 2025-2029, with residential, retail and industrial sectors leading the way.
Why active real estate management is well placed
Just as in fixed income, structural themes are creating winners and losers in real estate. Active management is key to capturing opportunities and avoiding obsolescence. Four megatrends underpin the case:
- Demographics: Ageing populations and mobile younger generations are driving demand for flexible housing and urban living.
- Realignment: Supply chain resilience is reshaping logistics and industrial footprints.
- Digitalisation: Technology is accelerating the obsolescence of outdated assets, while boosting demand for data-driven infrastructure.
- Decarbonisation: Regulatory pressure and tenant demand make sustainability not just a value-add, but a requirement.
The implication is clear: value now concentrates in buildings that are functionally relevant – ie, aligned with occupier needs and corporate environmental, social and governance (ESG) agendas. This creates compelling opportunities for real estate investors.
Considering a Swiss investor´s perspective
For Swiss institutional investors, global real estate offers a relative return advantage compared with domestic allocations. While hedging costs can reduce absolute yields, the sector’s strong diversification, stable income generation and potential for capital appreciation remain compelling. We have been working with Swiss investors for more than 10 years. Our real estate strategies across Europe and the UK provide exposure to markets far broader than the concentrated Swiss property universe, allowing investors to capture demographic and structural tailwinds while mitigating single-market risk. In particular, core residential and value-add opportunities can complement portfolios by enhancing yield and diversifying long-term return sources.
What sets our strategies apart?
At Columbia Threadneedle Investments, our philosophy is rooted in active, thematic allocation combined with tactical flexibility. We see four pillars of opportunity across Europe and the UK:
- Retail core: Investing in iconic high-street assets across Paris, Cannes, Madrid and Lisbon, positioned in wealth-driven and tourist-fuelled catchments. Target returns of 5%+ are supported by stable rental demand and growth potential.
- UK diversified core: Smaller, high-quality assets in dynamic sub-markets offering2 liquidity, diversification and resilience. With annualised targeted returns of 7%-8%, this strategy combines operational net zero commitments with strong income potential.
- Residential core: Focused on dominant European metropolitan areas such as Berlin, Hamburg, The Hague and Paris, covering the full private rental sector spectrum. Has targeted total returns of 5%+, with income distribution of 4%, backed by fundamental housing demand.
- Value-add opportunities: For investors with a higher risk tolerance, selectively acquiring mispriced assets offers the potential for extraordinary returns. Success in this space requires disciplined entry pricing, active asset management to reposition buildings, and intelligent financing strategies. When executed well, value-add can generate superior upside relative to core strategies.
We commit to becoming net zero carbon by 2050 or sooner, aligning each strategy explicitly with this goal and integrating ESG and social outcomes into asset selection and management.
Positioned for the next cycle
The European real estate market is entering a new phase. Capital repricing has created a solid base, demographic and structural drivers are intact, and investor demand is returning. For investors willing to be selective and active, the next five years offer a window of opportunity.
Real estate is back – and Columbia Threadneedle Investments is positioned to lead.
