The report talks about the promising case for aspects of the European property market, such as the logistics space.

Asian capital is pivoting away from positions in China and the Middle East towards real estate opportunities in European countries including the UK, France and Germany, according to a report from Columbia Threadneedle Real Estate. 

The shift happened straight after the pandemic, led by a divergence in five-year average total return profiles across asset classes, where the all-sector outlook for Asia-Pacific is about 3.25 per cent relative to 5.25 per cent (200 bps) in Europe.

The comments come in the firm's 2025 Global Real Estate Outlook. 

"Europe is attracting Asian capital as it shifts away from China and the Middle East. Having retrenched during the Covid years it is now looking to Europe for opportunities, in particular in the UK, France and Germany. North American investors are also recognising that there are opportunities to be had – for example in the Europe’s improving office sector that has not been as negatively impacted as the US office market has been," the report said. 

The report also warns that creativity and careful stock selection matter "more than ever before" to maximising returns. Examples of this creativity include targeting strategic land, securing permits for change of use, and refurbishing assets.

“Investors looking to seize these opportunities should focus on underlying real estate fundamentals more than ever before,” Joanna Tano, head of real estate research, Europe at Columbia Threadneedle Investments, said. “Gone are the days of simply buying a property and taking the income. Investors need to have a granular understanding of what occupiers want to maximise an asset’s true ‘functional relevance’ as well as the ability to actively manage assets to protect or enhance value through direct interventions.”

The global themes influencing property market decisions include demographics, digitalisation, changing supply chains, and decarbonisation. 

The report said the European logistics sector remains popular for investors.

“Demand is fuelled by the e-commerce boom and the need to build sustainable and resilient supply chains. This comes against a backdrop of historically low vacancy rates as demand for high-quality logistics space remains strong,” it said. “However, vacancy is drifting upwards as older stock is returned to the market and new space is completed. At the same time, deals are taking longer to complete as companies assess their needs in a complex marketplace.”