PATRIZIA, a leading partner in global real estate assets, today shared the results of its fifth annual client survey, which included participation from over 110 institutional investors representing nearly one trillion euros in capital. The survey reveals that 73% of investors expect an increase in real estate transactions over the next two years, up from 64% recorded in 2024.
The survey highlights a return of confidence in the real estate sector, driven by a rebound in valuations and investor sentiment. In this regard, institutional investors increased their expectations for valuation growth to 39% over the next two years, compared to 2% and 27% in 2023 and 2024, respectively. Optimism also extends to returns, with 80% of respondents expecting total returns to rise or remain stable, continuing the upward trend from 64% last year and 45% the year before.
Mahdi Mokrane, Co-Head of Fund Management and Head of Real Estate Fund Management at PATRIZIA, stated: “The rebound in confidence marks a true turning point. After more than two years of caution, confidence is returning as valuations stabilize and even begin to increase, and interest in certain real estate strategies is growing. In this new cycle, investors are advised to seize structural growth opportunities driven by trends such as digitalization, urbanization, energy, and housing.”
As market conditions stabilize, lower-risk strategies regain appeal, with 61% of investors planning to increase their allocations to Core or Core+ strategies, up from 40% last year. This shift indicates growing interest in secure, income-generating assets, as well as a broader return to the market.
The residential segment emerges as the most valued asset, with 47% of investors ranking it first, followed by ‘modern living’ strategies such as student housing, senior living, and co-living (21%). The logistics segment continues to attract interest (16%), ahead of offices (9%), hospitality (5%), and retail (3%).
Operational improvements are also gaining appeal. Three out of four investors prioritize ‘brown-to-green’ transitions and renovations, highlighting strategic interest in sustainability and asset enhancement as key drivers for long-term value creation.
The Decade of Infrastructure Continues
Investors continue to increase capital allocations to infrastructure, confirming a sustained trend over several years that reflects the growing strategic importance of this asset class. 35% of institutional investors plan to increase their infrastructure holdings, while 57% expect to maintain their current allocations. This growth is supported by improved investment opportunities: 80% of investors state that there are better infrastructure investment opportunities today than in previous years, up from 48% in 2023 and 73% in 2024. This optimism is further reinforced by performance expectations: 44% of respondents foresee infrastructure valuations rising over the next two years, while only 10% expect a decline.
The increase in infrastructure allocations is supported by long-term trends increasingly influencing investment decisions. Nearly 40% of respondents focus on assets related to the energy transition, while 37% focus on digital infrastructure, such as fiber-optic networks or data centers, surpassing traditional sectors like utilities (10%) and transportation (10%).
A growing trend is the convergence of the real estate and infrastructure sectors, with more than 86% of investors now viewing combined strategies across these sectors as attractive or being willing to explore them. This reflects increasing interest in integrated, sustainable, and intelligent investment approaches, and signals a broader view that the boundaries between real estate and infrastructure are blurring as investors seek holistic solutions aligned with long-term structural trends.
Graham Matthews, Head of Infrastructure at PATRIZIA, comments: “The decade of infrastructure continues, driven by strong investor interest in modernizing smart real estate assets in line with trends such as digitalization, urbanization, energy, and housing. Co-investments and public-private partnerships provide broader investment options across all risk profiles and deal sizes. The convergence between real estate and infrastructure is no longer just a vision—it is gaining momentum.”
Investors Continue to Commit to ESG Criteria Despite Challenges
Despite current challenges, 69% of institutional investors plan to integrate more ESG criteria into their investment processes. The most frequently cited barriers remain regulatory complexity and lack of high-quality standardized data, identified by 64% of respondents as significant obstacles to expanding sustainable investment strategies.
Looking ahead, investor opinion is divided: 45% believe ESG criteria will become even more important in the coming years, while 37% expect their influence to decrease. Only 13% think that global political developments will have no impact on ESG criteria, highlighting the increasing complexity of the relationship between sustainability and geopolitics.
Edward Pugh, Head of Sustainability, stated: “Even amid this uncertainty, there is a clear message: ESG criteria are no longer a secondary concern but a fundamental factor through which risk, value, and long-term performance are reassessed. Investors who adapt most quickly will be best positioned to lead the next cycle of real asset investment.”
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