Real Estate M&A in EMEA: A tale of two regions

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 is definitely an 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 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 own research, as Nicolas points out: "According to our PwC / ULI Emerging Trends report, the top 5 relates to data centers, 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 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 that spread narrows again.”