Real Estate M&A Activity in Europe, Middle East and Africa: a tale of two regions

Key Takeaways:

• European real estate M&A activity declined in Q3 2024, impacted by inflation, energy crises, rising interest rates and investor uncertainty.
• The Middle East and Africa showed signs of strong recovery and outperformed global averages, with 33% quarterly growth in deal volume, despite a year-over-year decline of 47%.
• Economic diversification and foreign investment are creating new M&A growth opportunities across the Middle East and Africa.
• European markets are shifting toward logistics and residential sectors, including multifamily, student housing, and co-living.
• Dealmakers should diversify portfolios across regions, focusing on more stable markets and sectors aligned with demographic and economic shifts.

EMEA real estate M&A activity in Q3 2024 exhibited a mixed performance. According to data in the Ansarada Deal Platform, while Europe experienced a significant decline in deal activity, with a 44% quarterly growth compared to Q2 2024 and a 26% year-over-year decline, the Middle East and Africa demonstrated remarkable resilience.

Speaking to the European figures, "We have seen a significant drop in deals, both in terms of volume and number of deals," observes Nicolas Damman, Director at PwC, Belgium. "Real estate investment markets will gradually recover in 2025, but challenges remain as the market adapts to investing and financing in a higher interest rate environment," he adds. 

This article provides a glimpse into the key trends shaping the EMEA real estate M&A market in 2025. For a more in-depth analysis, including global market forecasts, download our comprehensive 2025 Global Real Estate M&A Outlook Report. The report dives deeper into the factors driving deal activity, identifies emerging global opportunities, and provides valuable guidance for deal makers in the real estate sector.

European real estate M&A faces headwinds

According to Ansarada Deal Platform data, Europe witnessed a sharp decline in real estate M&A activity during Q3 2024, with a 44% quarterly growth compared to Q2 2024 and a 26% year-over-year decline. This significant drop contrasts sharply with the global average, which experienced a more modest year-over-year decline of 5%, indicating the European market could be facing unique challenges.

The European economy has been grappling with the ongoing energy crisis, high inflation, and the threat of recession. These economic factors have the potential to significantly impact investor confidence and dampen deal activity. Rising interest rates, implemented by the European Central Bank to combat inflation, increase borrowing costs for developers and investors, making it more expensive to finance projects and potentially reducing profitability.

As Nicolas points out, "Since 2022, there has been  a definite outflow of institutional funds from the real estate investment market into other types of fixed income assets such as bonds." This shift in investor preferences highlights the competitive pressure faced by real estate investments in a rising interest rate environment.

Furthermore, Damman notes that, “Since late 2022, this has translated into a strong expansion of property investment yields and declining capital values."

Niek van Genugten, Senior Transaction Manager at Fraser Property Industrial notes a different perspective, “I’m surprised to see the negative growth for Europe over the last 12 months, which is not in line with what we see in European Industrial & Logistics (“I&L”) investment volume where transaction volume (in EUR) increased both quarter-to-quarter as year-on-year.

“The difference could be explained by either lower investment volumes in other property sectors and/or higher average deal size per transaction in the last 12 months compared to the previous 12 months. The latter is supported by more portfolio deals that closed recently.”

Middle East and Africa: A region of growth and opportunity

In contrast to Europe, the Middle East and Africa region demonstrated remarkable resilience in the real estate M&A market. The region experienced a significant 33% quarterly growth in Q3 2024 compared to Q2 2024, and while year-over-year growth declined by 47%, it still outperformed the global average.

Several factors are driving this growth. Many countries in the Middle East and Africa are actively pursuing economic diversification strategies, with a focus on sectors such as tourism, infrastructure, and renewable energy. This has created opportunities for real estate investment and development. Rapid urbanization across the region is driving demand for housing, commercial space, and infrastructure development. 

This presents significant opportunities for investors and developers. Additionally, many countries in the region are actively seeking foreign investment to support economic growth and development. This has attracted significant interest from global investors, leading to increased M&A activity.

A divergent path for the EMEA region

The outlook for the EMEA real estate M&A market in 2025 is likely to remain diverse. Dealmakers may consider diversifying portfolios across the EMEA region, focusing on markets with stronger growth prospects and more stable economic environments. 

As Nicolas observes of Europe, "The market and its investors are not sure whether it is 'survive till 25' or 'survive 25', implying its uncertainty on the timing of when investment will ramp up again."

However, certain sectors in Europe are poised for continued growth. "Within asset classes, there is a clear shift away from offices and towards residential, for example, multifamily, student housing, co-living, and also a further increase in the logistics and semi-industrial asset class. This is clearly driven through demographic and societal change; i.e. remote work and e-commerce," Nicolas adds.

This shift in investor focus aligns with the findings of PwC's research, as Nicolas points out: "According to our PwC / ULI Emerging Trends report, the top 5 relate to data centres, energy infrastructure, residential (PRS & student housing) and logistics. Offices do not make the TOP20."

Niek’s perspective on the outlook is, “When it comes to investment volume for European I&L, I expect to see an upward trend in deal volume due to lower interest rates and an abundance of capital available to be deployed. However, some factors like land supply constraints, power grid congestion, longer development periods, and decreased occupier demand could slow this expected growth as the supply of newly built industrial and logistics properties will be limited.” 

“We have seen a rather wide bid-ask spread over the last 24 months, with lower deal volume as a result. The expected lower interest rate will likely lead to compressing property yields again, deal volume will likely get a boost in case the spread narrows again.”

Frequently asked questions

What is the M&A trend in the Middle East?

The Middle East is experiencing strong real estate M&A activity, driven by economic diversification, foreign investment, and rapid urbanisation. In Q3 2024, the region recorded a 33% increase in quarterly deal volume, outpacing global trends. Governments are actively attracting investors, particularly in tourism, infrastructure, and renewable energy sectors, to make the Middle East a hotspot for real estate development and M&A opportunities.

Which country has the most M&A deals?

Globally, countries like the United States and China typically lead in total M&A deal volume due to the size of their markets. Within the EMEA region, deal volume varies by quarter and sector, but traditionally, the United Kingdom, Germany, and France account for a large share of M&A activity. In Q3 2024, however, Middle Eastern nations, particularly Saudi Arabia and the UAE, saw a surge in real estate M&A.

What is the M&A outlook for EMEA?

The outlook for EMEA real estate M&A in 2025 is mixed. Europe faces ongoing challenges, including inflation and higher interest rates. However, specific sectors like multifamily housing and student accommodation show strong potential. In contrast, the Middle East and Africa are expected to continue attracting investors through government-led infrastructure initiatives and economic diversification. 

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