The real estate and infrastructure investment landscape is undergoing a transformative shift, as highlighted by the fifth annual global client survey from PATRIZIA, released on September 10, 2025. This extensive study, encompassing the views of 110 leading institutional investors who collectively manage nearly EUR 1 trillion in capital, reveals a striking resurgence of confidence following two particularly challenging years. For many, the data signals a pivotal moment, with a significant uptick in optimism surrounding asset valuations and expected returns, suggesting that the sector is finally turning a corner. Beyond mere numbers, the survey provides a deep dive into evolving investor sentiment, strategic shifts in asset allocation, and the growing interplay between real estate and infrastructure. Additionally, it underscores the persistent focus on sustainability as a core driver of investment decisions. As the industry stands on the brink of recovery, these insights offer a compelling glimpse into the forces shaping the future of real assets in a dynamic global market.
A Wave of Optimism Sweeps the Market
Investor sentiment in the real estate sector has taken a dramatic turn for the better, marking a significant departure from the caution of recent years. According to the latest survey, 39% of respondents now expect asset valuations to rise over the next two years, a sharp contrast to the pessimism seen just a couple of years ago. This renewed confidence is further evidenced by 80% of investors anticipating stable or increasing total returns, reflecting a widespread belief that the market has hit its lowest point. Mahdi Mokrane, Co-Head of Fund Management at PATRIZIA, attributes this shift to stabilizing valuations and a renewed focus on real estate strategies that align with structural growth opportunities. This growing optimism is not merely a fleeting sentiment but appears to be grounded in tangible market improvements, setting the stage for a more robust and active investment environment as stakeholders look to capitalize on emerging possibilities.
Alongside this brighter outlook, there is a clear expectation of heightened transaction activity in the near future. A substantial 73% of investors predict an increase in deal volumes over the next 12 to 24 months, indicating a strong desire to re-engage with the market after a period of restraint. This surge in anticipated activity is supported by a noticeable shift toward lower-risk investment approaches, such as Core and Core+ strategies, with 61% of respondents planning to increase allocations to these stable, income-focused assets. This preference highlights a strategic balance between caution and opportunity, as investors seek to mitigate risks while still positioning themselves to benefit from a recovering market. The focus on safer investments suggests a pragmatic approach, one that prioritizes steady returns over speculative gains in an environment still marked by some uncertainty, yet brimming with potential for those ready to act decisively.
Evolving Priorities in Asset Allocation
When it comes to asset class preferences, residential real estate emerges as the clear frontrunner, capturing the interest of 47% of survey respondents as the top investment choice. Following closely behind are modern living concepts, including student housing, senior living, and co-living arrangements, which appeal to 21% of investors. In contrast, more traditional sectors like offices and retail lag significantly, drawing far less attention. This distinct hierarchy reflects broader societal changes, such as rapid urbanization and shifting lifestyle demands, which are steering capital toward assets that promise both stability and alignment with contemporary needs. The emphasis on residential and innovative living solutions points to a deeper understanding of demographic trends, positioning these sectors as critical areas for growth in the current investment landscape, where relevance and adaptability are key to success.
Infrastructure, meanwhile, continues to solidify its status as a vital component of investment portfolios, with 35% of investors planning to ramp up allocations in this space. The appeal of infrastructure is largely driven by long-term megatrends such as energy transition and the expansion of digital infrastructure, including data centers and fiber networks, which are prioritized over more conventional areas like utilities. Graham Matthews, Head of Infrastructure at PATRIZIA, emphasizes the growing importance of co-investments and public-private partnerships in providing access to a broader range of opportunities and risk profiles. Often referred to as the “decade of infrastructure,” this era underscores the sector’s role in supporting societal and technological advancements, making it a cornerstone for investors seeking both profitability and impact. The sustained interest in infrastructure highlights its dual potential as a stable income source and a driver of future-focused growth.
Innovative Strategies and Sustainable Goals
One of the most notable trends emerging from the survey is the growing convergence of real estate and infrastructure, with 86% of investors viewing combined strategies in these areas as either attractive or worth exploring. This blurring of traditional boundaries signifies a shift toward more integrated investment approaches that leverage the stability of property alongside the growth potential of infrastructure projects. Such strategies are increasingly aligned with global megatrends like smart urban development and energy-efficient asset creation, which are reshaping economic landscapes. This trend toward hybrid models reflects a forward-thinking mindset among investors, who are looking to build portfolios that are not only resilient but also adaptable to structural changes, ensuring they remain competitive in a rapidly evolving market where innovation is becoming a critical differentiator.
Sustainability continues to hold a central place in investment decision-making, with 69% of respondents committed to deeper integration of environmental, social, and governance (ESG) criteria into their processes. A particular emphasis on brown-to-green transitions—upgrading environmentally underperforming assets to meet modern sustainability standards—demonstrates a dual focus on enhancing value while addressing ecological responsibilities. However, challenges such as regulatory complexity and inconsistent data quality remain significant hurdles, and opinions on the future relevance of ESG are divided, influenced by uncertainties around geopolitical dynamics. Edward Pugh, Head of Investment Management Sustainability at PATRIZIA, notes that ESG considerations are no longer peripheral but fundamental to assessing risk and long-term performance. This persistent focus on sustainability, despite obstacles, underscores its importance as a non-negotiable factor in shaping investment strategies for the future.
Looking Ahead to New Opportunities
Reflecting on the insights gathered from PATRIZIA’s fifth annual survey, it is evident that the real estate and infrastructure sectors have reached a critical turning point. Institutional investors have moved past years of caution, embracing a renewed sense of confidence as expectations for asset valuations and deal activity rise sharply. The strategic pivot toward stable, income-driven approaches and the sustained interest in infrastructure, fueled by societal and technological shifts, have redefined portfolio priorities. Moreover, the innovative blending of real estate and infrastructure, coupled with a steadfast commitment to sustainability, has laid a strong foundation for navigating the complexities of the market. As the industry looks to the future, the focus shifts to actionable steps—capitalizing on stabilizing conditions, exploring hybrid investment models, and addressing ESG challenges through improved data and regulatory clarity. These efforts promise to unlock new avenues for growth, ensuring that investors are well-positioned to thrive in the next phase of real asset investing.
