- Investor sentiment rebounds: For the first time since 2022, nearly 40% expect valuations to rise
- Core and Core+ regain momentum: 60%+ plan to increase allocations
- RE-Infra: Emerging sector seen as very attractive investment opportunity, but education needed
- Sustainability surges: 75% targeting brown-to-green upgrades and 69% deepening ESG integration
- Decade of infrastructure continues: Energy transition and digital transformation on top of investors agenda
Augsburg, London. 10 September 2025. According to PATRIZIA’s fifth annual global client survey – capturing the views of 110 leading institutional investors representing close to EUR 1 trillion in capital – sentiment in real estate is making a clear comeback after two challenging years.[1]
For the first time since 2022, more institutional investors expect asset valuations to rise than fall, with 39% forecasting increases over the next two years. This is a significant rebound from just 2% in 2023 and 27% in 2024. Optimism is also growing around returns. 80% of respondents now expect total returns to either rise or remain stable, extending a steady upward trend from 64% last year and 45% the year before.
Mahdi Mokrane, Co-Head of Fund Management and Head of Fund Management Real Estate, commented: “The rebound in sentiment marks a real turning point. After more than two cautious years, confidence is returning as valuations stabilise and even start increasing, and appetite grows across select real estate strategies. In this new cycle, investors are well-advised to tap into structural growth opportunities driven by the “DUEL” megatrends: digitalisation, urbanisation, energy and living.”
Market poised for rebound as bottoming out sparks renewed deal activity
Transaction volumes in real estate are set to rise, with 73% of institutional investors expecting increased activity over the next 12 to 24 months – up from 64% in 2024. This growing optimism reflects a broadening consensus that valuations have bottomed out. As market conditions stabilise, lower-risk strategies are regaining appeal: 61% of investors plan to increase allocations to Core or Core+ strategies, up from around 40% last year. This shift signals a renewed appetite for dependable, income-generating assets and a broader re-entry into the market.
Residential remains the top choice among asset classes, with 47% of investors ranking it first, followed by modern living strategies – such as student housing, senior living, and co-living – preferred by 21%. Logistics continues to attract interest (16%), ahead of Offices (9%), Hospitality (5%), and Retail (3%).
At the same time, operational improvements gain more attraction. Three in four investors are prioritising brown-to-green transitions and refurbishments, underlining a strategic focus on sustainability and asset enhancement as key levers for long-term value creation.
The decade of infrastructure continues
Investors continue growing their infrastructure allocations, confirming a consistent, multi-year trend that reflects the growing strategic importance of the asset class. 35% of institutional investors plan to increase their infrastructure exposure, while 57% expect to keep their allocations as of today. The continued growth is supported by improving investment choices: 80% of investors report better investment opportunities in infrastructure today than in previous years – a sharp rise from just 48% in 2023 and further increase from 73% in 2024. The optimism for infrastructure is reinforced by performance expectations: 44% of respondents anticipate an increase in infrastructure valuations over the next two years, while only 10% expect them to decrease.
The growing infrastructure allocations are supported by long-term megatrends that increasingly shape investment decisions. Nearly 40% of respondents are targeting assets linked to the energy transition, while 37% are focusing on digital infrastructure such as fibre networks or data centres, outpacing traditional sectors like utilities (10%) and transport (10%).
An increasingly important trend is the convergence of real estate and infrastructure: more than 86% of investors now view combined RE-Infra strategies as attractive or are open to exploring them, highlighting a growing appetite for integrated, sustainable, and smart investment approaches. This shift reflects a broader recognition that the boundaries between real estate and infrastructure are blurring as investors seek holistic solutions aligned with long-term structural megatrends.
Graham Matthews, Head of Infrastructure at PATRIZIA, comments: “The decade of infrastructure continues, driven by strong investor appetite to modernise smart real assets in line with our DUEL megatrends. Co-investments and public-private partnerships enable broader investment options across all risk profiles and deal sizes. The convergence of real estate and infrastructure is no longer a vision – it’s already taking shape.”
Investors stay the course on ESG despite headwinds
Despite ongoing challenges, 69% of institutional investors plan to further integrate ESG criteria into their investment processes. The most cited barriers remain regulatory complexity and the lack of high-quality, standardised data – both flagged by 64% of respondents as major obstacles to scaling sustainable investment strategies.
Looking ahead, investor sentiment is divided: 45% believe ESG will become even more important in the years to come, while 37% expect its influence to wane. Yet just 13% think global political developments will have no impact on ESG, underscoring the increasingly complex interplay between sustainability and geopolitics.
Edward Pugh, Head of Investment Management Sustainability, commented: “Even amid this uncertainty, one message is clear: ESG is no longer a peripheral concern, it is a central lens through which risk, value and long-term performance are being reassessed, and the investors who adapt fastest will be best positioned to lead in the next cycle of real asset investing.”
Contact
Matthew Richards
+44 7471 999746
Matthew.Richards(at)patrizia.ag
PATRIZIA
PATRIZIA has been providing investment opportunities in smart real assets for institutional, semi-professional, and private investors for more than 40 years, focusing on real estate and infrastructure. PATRIZIA’s investment solutions are driven by the “DUEL” megatrends – digital, urban, energy and living transitions – and capitalise on the opportunities arising from these transformative global shifts. PATRIZIA currently has over EUR 56bn in assets under management (AUM) and employs approximately 900 professionals across 26 locations worldwide.
PATRIZIA has been committed to making a positive impact since its founding. In 1992, the company began collaborating closely with Bunter Kreis (“Colourful Circle”) in Germany to provide aftercare for children with severe diseases. Since 1999, the PATRIZIA Foundation has provided more than 750,000 children and young people worldwide with access to education, healthcare and a safe home, enabling them to live better, self-determined lives.
[1]The online survey was conducted globally among institutional investors by PATRIZIA from May to July and had 110 participants.