December 11 2025 | Deals | Real Estate | Mergers and acquisitions
As we approach the end of 2025, the global real estate landscape is really starting to pick-up. This is good news for investors still reeling after COVID ruined all the underlying assumptions they had made around property M&A for decades or more.
According to Mergermarket data, so far this year there have been 829 deals worth $112.6 billion across the global real estate sector. This is a huge rise on the 64 deals worth $40.7 billion done in calendar 2024.
Europe led the way with 349 deals worth $36.5 billion, followed by North America, where there were 119 deals worth $29.5 billion. North Asia was also well represented, with 151 deals worth $14.0 billion.
Real estate investment trusts (REIT) dominate the deal landscape, with three healthcare REIT deals worth $5.3 billion done this year, followed by residential REITs, where two deals completed worth $3.7 billion and five industrial REIT deals worth $2.4 billion also finalised.
However, although the real estate sector has displayed enthusiasm and resilience, there have been lingering concerns over macroeconomic factors such as interest rates, GDP growth and fluctuating trade policies
An overall upward trend
Despite these challenges, the first half of the year saw a modest increase in global real estate deal volume, with a 3% rise compared to the same period in 2024, according to PwC’s data .
This growth was primarily driven by robust investment activity in the Americas and Asia Pacific, particularly in the US. Into the latter half of the year, deal volumes and values have shown signs of decline, reflecting a more cautious approach among investors.
The second half of 2025 has seen a recalibration of investor focus, with a growing emphasis on international markets as prime destinations for real estate M&A. A recent report from Preqin revealed a growing confidence among real estate and infrastructure investors in the transaction market, despite the prevailing uncertainties around interest rates and tariffs.
As PwC notes , one of the most significant themes influencing M&A activity in 2025 has been the end of the era of cap rate compression. Investors can no longer rely on declining capitalisation rates to drive returns, particularly in light of rising long-term interest rates in the US. This shift has made fixed-income alternatives more appealing, prompting a re-evaluation of pricing strategies.
According to PwC , with property values stabilising in sectors like office and select retail, investors are compelled to adopt a more proactive approach. This involves focusing on operational value creation, enhancing portfolio efficiency and implementing asset-specific strategies such as leasing optimisation and property repositioning.
Geographically, the landscape of real estate investment is also undergoing significant changes. Investors are increasingly prioritising asset classes and locations that exhibit strong fundamentals, supporting sustainable rent growth and resilient demand.
Deloitte’s research says Europe offers interesting potential . Retail real estate is experiencing a renaissance, particularly in high-quality, experience-led formats. After years of declining interest, prime locations in Europe are witnessing a resurgence in foot traffic, bolstered by properties that effectively integrate omnichannel strategies and consumer insights.
Conversely, according to PwC, the US office market remains mixed, with some areas struggling while others show signs of recovery.
New investor pools
The global real estate sector continues to attract interest from family offices, which value the resilience and stable income potential of the asset class.
Heddge funds and alternative investors are also responsible for recent expansions into underinvested real estate markets in Asia Pacific and South America, reflect growing confidence in these regions. Additionally, adjacent segments such as student housing and senior living are gaining traction, benefiting from similar structural fundamentals.
Meanwhile, changing trade alliances are prompting a reassessment of supply chains and industrial assets, with Deloitte’s research suggests the industrial property sector is at a turning point .
Deals in this part of the market have been ongoing since COVID, during which industrial assets were seen as a safe haven. They also benefitted from the online shopping boom. Although this is starting to slow, lack of land supply will continue to make these assets attractive.
Moreover, the ongoing expansion of data centres across Europe, coupled with shifts in US trade policy, is reshaping investor priorities in both traditional and emerging industrial assets.
Even better prospects in 2026
Historically, the US has been the focal point for real estate investment, but evolving trade and interest rate policies are encouraging a broader, more global approach. Investors are increasingly drawn to regions with favourable economic conditions, positive demographics, and strong growth potential.
The decoupling of global monetary policies is influencing capital allocation decisions, as investors seek markets with lower interest rates that promise better return profiles. Furthermore, the demand for residential and office properties in rapidly urbanising markets, particularly in Asia and the Middle East, is driving opportunities in supporting retail and industrial sectors.
Looking ahead, according to Deloitte , while there are signs of stabilisation in property values and a slight easing in debt capital availability, industry leaders remain vigilant about potential risks associated with capital, refinancing and regulatory shifts.
Investment sentiment is notably positive, particularly in sectors such as digital infrastructure, selective office spaces and alternative assets, with the US maintaining its status as a prime target for investment. To navigate the complexities of the coming 12 to 18 months, experts advocate for strategic partnerships, flexible capital commitments and robust risk management practices.
The focus will continue to shift towards data centres, logistics and specialised office spaces as key investment opportunities, while alternative asset classes like healthcare and telecommunications are increasingly being integrated into portfolios.
However, challenges remain, as Deloitte notes , particularly with loan maturities and rising borrowing costs complicating refinancing efforts. As the market evolves, leaders are encouraged to stress-test their portfolios, adopt consistent standards and maintain agility in their strategies to seize emerging opportunities.
While the current climate presents challenges, it also offers a wealth of opportunities for astute investors willing to adapt and innovate. The global real estate market is in a state of flux and those who can navigate these changes with strategic foresight will be well-positioned to capitalise on the next wave of growth as we move into 2026.
