As global stock markets remain very volatile, many investors are grappling with where to allocate their capital. Despite the turbulence, certain sectors in Europe have shown remarkable resilience, with real estate standing out as one of the strongest performers. A Reuters article from April 3, 2025, highlights that, even amid fears of escalating tariffs, investors have found a safe haven in real estate, a sector that continues to exhibit stability in uncertain times.
While global economic uncertainty and sector-specific volatility persist, the World Property Business Association (WPBA) is encouraging real estate professionals to leverage the industry’s enduring resilience. The WPBA’s latest guidance notes a surge in investor interest in real estate as a stable alternative to more volatile markets. This trend is creating new opportunities for brokers, developers, and financiers across residential, commercial, and industrial sectors. With interest rates trending downward, financing has become more accessible, boosting both buyer and renter demand and allowing mortgage professionals to offer more competitive terms.
Real Estate: An Increasingly Attractive Investment Class
The broader economic instability has made real estate a more appealing investment class. As stock markets face significant downturns, property offers a relatively stable option for wealth preservation, particularly in markets with high demand or those benefiting from geopolitical shifts. For instance, the luxury real estate sector, especially in cities like Manhattan, has seen a 49% increase in sales of properties valued over $5 million in Q1 2025. Affluent buyers continue to view real estate as a safe haven in times of economic uncertainty.
This chart of European sector performance from last week published in the Reuters publication, shows that real estate and utilities are the biggest gainers, while banks and luxury sectors have seen the largest declines.
Real Estate: A Flight to Safety
In times of economic volatility, investors often seek safe-haven assets, and real estate is no exception. While sectors such as manufacturing and retail are under pressure due to tariffs, real estate, along with utilities, has gained favour for its long-term value. The ongoing decline in interest rates plays a key role, making real estate even more attractive. Lower borrowing costs are driving demand for both residential and commercial properties, offering yields that are more appealing than those from stocks or bonds.
The Impact of Global Tariffs and Economic Instability
As the global economic landscape faces increasing instability, the effects of tariffs and shifting international trade dynamics are also impacting the property market. The imposition of tariffs between major economic players—such as the U.S., China, and the EU—has resulted in higher construction costs, driven by rising prices for raw materials like steel, lumber, and other building supplies. These escalating costs are being passed on to buyers and investors, contributing to higher property prices and reducing affordability for both residential and commercial buyers.
What Does the Current Situation Mean for Buyers, Sellers, and Investors?
For potential buyers and sellers, the ongoing economic instability is creating uncertainty. High tariffs and unpredictable international trade policies are causing hesitation in cross-border transactions, particularly among international buyers who may face higher import taxes or more expensive investment projects.
For investors, the volatile global trade environment presents both risks and opportunities. While some markets may experience a slowdown in foreign investment due to increased costs and uncertainties, others—particularly in emerging markets—may benefit from the devaluation of certain currencies due to global tariffs, offering more affordable property prices for foreign buyers.
What This Means for Real Estate Professionals
The WPBA stresses the importance of strategic portfolio diversification, advising members to guide clients toward real estate assets as a reliable hedge in turbulent times. Citing the sector’s proven ability to withstand shocks, such as tariffs, the association underscores real estate’s role as a long-term, low-risk investment. In this climate, real estate professionals are well-positioned to offer valuable guidance, helping clients navigate market dynamics and make informed, strategic decisions.