Real estate and infrastructure assets are set for significant growth in 2025, with fund managers expressing increased optimism about the fundraising environment.
This is according to a new survey of over 120 UK and European fund managers by Gen II Fund Services, an independent private capital fund administrator.
Real estate fund managers expect 2025 to bring a resurgence in the asset class, with innovation and demographic changes driving new opportunities. Areas such as strategically located logistics hubs, reimagined office layouts and specialised real estate like senior living communities and healthcare facilities are set to see increased demand as investors seek stability and long-term growth in the coming year.
The survey, entitled the Core Alternative Managers’ Mood Index (CAMMI), recorded a score of 58.87, reflecting growing confidence amid interest rate stabilisation and rising institutional investor demand for stable, inflation-hedged assets.
Real estate managers are particularly focused on residential housing and logistics opportunities, supported by urbanisation trends, demographic shifts and sustainability initiatives. The residential sector is seeing heightened attention due to policy initiatives addressing housing supply constraints and opportunities presented by rising rents and increased urbanisation.
“Interest rate cuts with low to moderate inflation are helping make real estate increasingly attractive,” said Alex Le Quesne, Head of Real Assets, Europe at Gen II.
“With major economies expected to hold or lower rates further in 2025, we anticipate fund managers seeing more opportunities within real assets and institutional investors committing to deals more quickly than they have in the past year.”
Mixed economic growth forecasts are influencing investors to focus on stable assets in stronger regions, while some seek good value in alternative regions. Currency fluctuations, demographic changes, and a growing emphasis on sustainability continue to shape investment decisions across property types. In particular, demand for specialised real estate such as healthcare facilities and senior living communities is being driven by aging populations.
“Demographic shifts, urbanisation, and a global focus on sustainability are driving new opportunities,” said Michael Johnson, Chief Commercial Officer, Europe. “Real assets are proving resilient in economic uncertainty, with renewed potential for stable cash flows and long-term appreciation. As rates continue to decline, these dynamics will make the asset class even more appealing through 2025.”
Additionally, supply chain reconfiguration has spurred demand for industrial assets in key global locations, while high prices in prime markets have prompted some investors to explore secondary cities and alternative sectors for better yields.
Real estate managers in the UK are optimistic that recent government efforts to reform planning laws could unlock land supply and address housing shortages, further supporting residential market growth.