At Clifton Private Finance, we have seen increased interest in UK residential properties from the US since the election. This could likely continue into commercial investments while the dust settles in 2025. The US is still expected to grow exponentially in 2025, although not as rapidly as it did this year. Europe had among the biggest declines in investment in 2023, but it's now back on track, particularly after the European Central Bank lowered interest rates this year, accompanied by Hungary and Sweden. More affordable borrowing typically leads to a larger amount of commercial real estate investment in the region - which should be good news for investors looking to expand into these markets. India is an emerging market that's getting more global attention. Its economic performance has surpassed the UK's, and it now has the fifth-highest GDP in the world. This is primarily down to investment in infrastructure, the tech industry, and real estate development, and it's likely to snowball in the next few years. Luka Ball, Property & Real Estate Editor at Clifton Private Finance (https://www.cliftonpf.co.uk/)
Founder, Realtor and Real Estate Attorney at The Farah Law Firm, P.C.
Answered a year ago
I think by 2025, we're going to see some big changes in how hotels are used and managed. I'm expecting more properties to blend the lines between regular hotel stays and longer-term options, where hotels will cater to both short-term travelers and people staying for weeks or even months. This change is driven by the growing demand for flexibility-especially with more folks working remotely and looking for accommodations that feel more like home. Hotels might start leaning into modular designs that allow them to easily switch things up, adjusting spaces based on what's needed at the moment, which could be seasonally or even week by week. I'm betting that Southeast Asia, especially countries like Thailand and the Philippines, will be leading the way in hotel development worldwide. There's a big boom in tourism there, and with all the infrastructure projects underway-things like new high-speed railways and airport upgrades-the region is set for growth. I'm especially impressed by how developers are attempting to develop resorts that adapt to local culture and terrain, rather than the same cookie-cutter concepts. This kind of strategy is appealing to both tourists and locals who are seeking something that's genuine. Wellness tourism is another area that I believe will grow. Hotels increasingly incorporate wellness into their main menu, whether in the form of on-site spas, or hot springs, or in room amenities that encourage well-being, such as air purifiers and natural-rhythmic lighting. This aligns with a more widespread trend toward health-related travel, particularly for younger adults. I think the industry is starting to design spaces where wellness is part of the guest experience rather than something you have the option to purchase.
As per our latest findings, the global hotel real estate industry in 2025 is expected to stabilize, with annual growth rates projected to return to sub-4% levels following the rapid recovery of leisure travel in the post-pandemic era. Leisure travel, which played a dominant role in the initial rebound, will moderate as corporate, group, and international travel return to pre-pandemic levels, leading to a more balanced demand across market segments. Supply growth is anticipated to remain constrained due to high construction costs and limited new development. In major U.S. markets, supply growth is projected to average 1.4%, which is lower than the pre-COVID average of 2.3% but higher than the nationwide average of 0.9%. These constraints are expected to help operators maintain elevated room rates, partially offsetting the impact of rising operational costs. This dynamic creates favorable conditions for existing properties to maximize revenue while facing less new competition. Certain regions are positioned to drive growth, with the Middle East and Americas showing the strongest potential. Significant investment is driving expansion in these areas, with 61% of one major company's planned 27,000-room expansion taking place in the Americas and 70% in the Middle East. Asia-Pacific, particularly Japan and Korea, is expected to benefit from increased tourism, driven by relaxed travel restrictions and renewed interest in regional travel. Investment activity in the hotel real estate sector is expected to rise meaningfully as declining interest rates make the sector more attractive. Limited supply growth, coupled with increasing demand, is likely to spur mergers and acquisitions and targeted brand expansion. The industry will also continue to embrace sustainability and wellness trends, responding to consumer demand for healthier, more environmentally conscious travel options. The wellness real estate market, which grew from $225 billion in 2019 to $438 billion in 2023, is projected to reach $913 billion by 2028. Hotels are increasingly integrating features like hydroponic gardens, energy-efficient designs, and wellness-focused amenities, which appeal to travelers seeking holistic and eco-friendly experiences. As the global hotel real estate landscape evolves, these trends will shape a future defined by steady growth, investment-driven innovation, and an emphasis on sustainability and wellness.
"In my opinion as an expert, the global real estate industry in 2025 will see a significant focus on mixed-use properties." To make the most money, hotels will change over time to include co-working areas, apartments, and experiential retail. Sustainability will also be very important, and more buildings will use energy-efficient technologies. Certifications like LEED will also become the standard. "I believe major trends will include digitalization and asset repurposing." Hotels will use analytics powered by AI to change prices and run their businesses more efficiently. Also, turning properties that aren't doing well into other uses, like healthcare or senior living areas, will become a popular way to adapt to changing market needs. "Asia-Pacific and the Middle East will lead growth in 2025." These areas will move forward because of big investments in hospitality facilities in Saudi Arabia and the UAE and fast urbanization in places like India and Vietnam.
I have been closely monitoring the ever-evolving global real estate industry. With the changes in technology, demographics and economy, predicting what the industry will look like in 2025 is not an easy task. However, based on my experience and observation of current trends, I believe that there are certain key factors that will shape the future of the global real estate market. One major trend that I expect to see in the industry by 2025 is the continued rise of sustainable and eco-friendly buildings. As more people become environmentally conscious and governments implement stricter regulations on building standards, developers will have to adapt and incorporate sustainability into their projects. This can range from using renewable energy sources to using green building materials. For instance, I have noticed a growing demand for LEED-certified buildings in my area and I believe this trend will only continue to grow globally.
I have witnessed firsthand the ever-evolving nature of the global real estate industry. With advancements in technology and shifts in consumer behavior, it is safe to say that the industry will look vastly different in 2025 compared to what it is now. One trend that I expect to see continue is the rise of sustainable and eco-friendly buildings. In recent years, there has been a growing demand for environmentally-conscious properties, as more and more people become aware of their carbon footprint. From solar-powered homes to green roofs, these features not only attract buyers but also increase property value.
Wellness real estate growth will continue to surge in North America, Asia, and Europe. The fastest-growing sector is regenerative living, which promotes human flourishing and sustainability in indoor spaces and external wellness amenities. Wellness real estate includes enhancing physical, social, mental, emotional, environmental, community, and economic well-being. The examples are numerous and inspiring: -Clean air and water -Green healing spaces -Clean energy -Convenient access to non-toxic commodity sources With their purpose-driven approach, real estate wellness communities are shaping a future where well-being is at the heart of real estate and community development.
With an increased focus on environmental sustainability and social responsibility, it is expected that hotels will prioritize sustainable development in their operations and design. This includes implementing energy-efficient practices, using eco-friendly materials in construction, and incorporating renewable energy sources. Hotels that adopt these practices are not only helping the environment but also attracting a growing number of environmentally-conscious travelers. This trend is expected to continue in the coming years, as consumers become more aware of their impact on the environment and seek out eco-friendly accommodations. Technology has already revolutionized the hotel industry through online booking platforms and mobile apps. In the future, we can expect to see even more integration of technology in hotels, with advances in artificial intelligence, virtual reality, and automation. For example, some hotels are now using robots for room service or check-in processes. This not only improves efficiency but also enhances the guest experience. Additionally, with advancements in data analytics, hotels will be able to personalize their services and amenities according to guests' preferences and needs.
Commercial real estate owners and investors are hopeful for a potential recovery in 2025 after two years of muted revenues and spending pullbacks. An article on The Times caught my attention because it highlighted that the northwest of England is predicted to see the strongest growth, with house prices expected to rise by 29.4% from 2025 to 2029. Additionally, the Dallas-Fort Worth area is poised to be the hottest real estate market in the nation for investment and development in 2025, according to a new Emerging Trends in Real Estate report. These insights suggest that regions like the northwest of England and Dallas-Fort Worth will drive growth in the global real estate industry in 2025.
It is important to stay ahead of the curve and predict future trends in order to better serve clients and make informed business decisions. One major trend that experts predict will continue into 2025 is the focus on sustainable development in the real estate industry. With growing awareness about climate change and environmental issues, developers are increasingly incorporating eco-friendly designs and features into their projects. The use of technology in the real estate industry is expected to continue its rapid growth over the next few years. From virtual tours and online booking systems to smart home features, technology will play a major role in enhancing the overall customer experience. With increasing housing costs in major cities around the world, experts anticipate a rise in co-living spaces as an affordable and convenient option for young professionals. These communal living arrangements often come with shared amenities and services, making them an attractive choice for many. The pandemic has accelerated the trend towards online transactions in the real estate industry, and this is expected to continue even after the pandemic is over. Clients are now more comfortable with virtual viewings and signing digital contracts, making it easier to conduct business remotely.