Ahead of moderating a panel on the next market recovery at the IPE Real Estate Global Conference & Awards 2025 in Copenhagen, LaSalle Investment Management’s Daniel Mahoney set the stage by challenging the very premise of the session’s title – “This time it’s different” – while offering a more balanced take on the current real estate cycle.
Mahoney, who leads Europe research and strategy at LaSalle, began by acknowledging the “dangerous” nature of that phrase, echoing investor warnings about repeating past mistakes. He referenced its ironic use in the context of financial crises that do, in fact, repeat, underscoring the importance of learning from history.
He moved on to highlight unique aspects of the current situation, including unprecedented economic uncertainty and what her termed an expanded ‘Overton window’, where US President Donald Trump has managed to widen the range of conceiveable political ideas and outcomes.
Despite macro turbulence, Mahoney argued that real estate looked less vulnerable than it did in the aftermath of the global financial crisis, with real rental growth gaining speed despite weak GDP – driven by a supply-demand imbalance for sustainable space.
By looking at the trajectories of previous real estate market recoveries, Mahoney concluded that investors did not have to believe “this time it’s different” for there to be a healthy rebound this time.
Speaking on the panel, Damien Webb, head of international, deputy CIO at Aware Super, urged investors to ignore the “noise” coming from US politics and to focus on “the material tectonic shifts” taking place, particularly deglobalisation and its impact on portfolio construction. He said country and currency allocations now matter more than ever.
Markus Wickenträger, head of European institutional portfolio management at DWS, noted the market’s initial underestimation of the recent impact of US tariffs, leading to a strong counter-reaction. He said he expected continued volatility and the need for refined research themes, with potential shifts in global allocations away from the US.
The current market environment represents a “fundamental change,” Wickenträger said, adding that “diversification will matter 100%”.
He said: “We’ve seen the move into the eurozone on the bond markets”, indicating a shift in investor focus and potential opportunities arising from this volatility.
Smith said he expected a “flight to quality”, concentrating on high-order properties and potentially leading to a bifurcation in the market, with “stranded assets” on one side and high-demand properties on the other.
Alfonso Aramendía, partner, residential investments at Azora, agreed with the expectation of continued high volatility, calling for disciplined investment decisions focused on assets with strong underlying demand. ”If you look to just the data of GDP, inflation, it’s going to be very difficult to really find the right opportunities,” he said.
Instead, Aramendía said the focus must be “on the asset, focus on the real demand that is behind”, advocating for a highly disciplined approach to “invest only in the right locations, in the right products”.
Conference polls reveal shifting market sentiment
A poll of the audience revealed a a strong sentiment for reducing US real estate allocations in favour of Europe, while another showed a mixed outlook on global economic growth, with the largest group anticipating an international slowdown without a full recession.
Webb, supporting this view, pointed to established “guardrails” and potential moderation of the most extreme impulses. He acknowledged the uncertainty but noted positive growth in various parts of the world.
Smith affirmed real estate’s fundamental capability to deliver returns but stressed the need to identify assets with long-term core quality fundamentals that will sustain and grow income. He cautioned against purely yield-driven investments, advocating for a focus on occupier demand.
Aramendía drew parallels between 2025 and 2002, citing a potential economic slowdown. However, he noted key differences, such as increased defense spending.
| Expectation | Number of Responses |
|---|---|
| Global recession | 28 |
| US-only recession | 45 |
| Europe-only recession | 4 |
| Asia-Pacific-only recession | 0 |
| Cool down – no recession | 91 |
| Business as usual | 5 |
| Shift in Allocation |
|
| No change | 24 |
| More US | 2 |
| Less US, more Asia-Pacific | 15 |
| Less US, more Europe | 127 |
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