Lower Rates, Limited Supply Creating European Opportunities: Brookfield

Asian investors upped their bets on European real estate during the first half of 2025 with one of the world’s largest managers of property investment funds expecting more deals to follow thanks to a confluence of lower borrowing costs and attractive prices for assets in the region.

Earlier this year joint ventures backed by Singapore’s GIC acquired nearly Euros 2.2 billion ($2.6 billion) in European properties, while purchases by SMFG, Mitsui OSK Line and the founder of Uniqlo helped push Japanese-driven deals to a record high in the first six months of the year, according to MSCI.

The upswing in deals has continued into the second half of 2025, with Brad Hyler, co-president and head of Europe with the real estate division of Brookfield Asset Management, seeing the health of economies in the region bringing more Asian visitors interested in European assets.

“We have seen an influx of some Asian investors and buyers coming into the market. There’s some differences in interest rates and carry trade involved, but I think there’s generally, perception of, of a great opportunity in Europe,” Hyler told Mingtiandi in an exclusive interview. “The economies have been pretty resilient and the supply demand fundamentals around real estate remained very strong.”

Rates Down, Yields Up

With the European Central Bank having begun raising borrowing costs in 2022, the fixed interest rate rose to 4.5 percent in 2023 before starting cuts in June last year. With that same fixed rate now down to 2.15 percent, at the same time that economies are looking healthier, Hyler sees the cycle having cut back on new development at the same time that sellers brought prices down.

“With interest rates having peaked, around a year ago and moderating, it’s really an attractive opportunity or entry point to come in and buy repriced assets at attractive yields and really benefit from that lack of supply as well as really strong demand in many of the sectors that are in favor at the moment,” Hyler said.

With Brookfield having built a track record in European hospitality, Hyler’s team in May agreed to acquire Generator Hostels, a London-based boutique hospitality operator for Euros 776 million, giving the company 15 properties across Europe which fuse hostel and budget hotel accommodation with community features for travellers to share experiences. 

Now Hyler’s team plans to put their expertise to work expanding Generator both through acquisitions and through managing locations on behalf of other owners.

“We think we can grow that business both by acquiring new assets and converting them into new Generator branded properties and we can also sign management agreements with existing owners who want to reposition their assets, whether it’s an existing hotel or converting it from a different use,” Hyler said.

After notching the largest sale ever of a Spanish hospitality asset in July this year when his team disposed of the Mare Nostrum hotel on Spain’s Tenerife island for Euros 430 million, Hyler sees a European travel industry which will support expansion of Generator hostels beyond its locations in 15 major European cities.

“It’s a pretty flexible model, in the way the rooms are laid out whether they’re single occupant or multiple occupants,” Hyler said. “And it’s one we think we can roll out across, most major cities in Europe.” The hospitality platform already counts 2,800 keys in Amsterdam, Barcelona, Berlin, Copenhagen, London, Madrid, Paris, Rome and Venice in its portfolio. 

German Expansion Lifts Neighbours

With Germany last week having approved a 2026 budget which includes a record increase in investment aimed at “future-proofing” the economy, Hyler sees a push to boost economic growth in Europe’s largest economy which can also act as an accelerant for its neighbours. 

“They’ve announced some pretty substantial, fiscal expansion plans, and they have capacity to do so. And that’s going to be frontloaded in infrastructure, in defense spending. And that’s really putting a lot of stimulus into the economy,” Hyler said.

While the German budget decisions have grabbed headlines, there is potential for the impact of this spending to be felt more strongly in nearby economies, according to the 20-year industry veteran.  

“Growth rates have been higher in some of the peripheral countries relative to Germany and France,” Hyler said. “So we’ve seen pretty strong demand and growth there, both on the occupier side as well as a renewed interest from investors. That’s probably where the most transaction activity has been, particularly in Spain, and we’ve taken advantage of that by monetising a number of opportunities there.” 

Finding Profitable Niches

In addition to its Tenerife hotel exit, Brookfield in June agreed to sell the Livensa student housing business in Spain and Portugal to CPPIB and its Nido Living unit for Euros 1.2 billion, after first acquiring the business in 2019. 

Now with geopolitics causing many international students to rethink their academic destinations, Hyler and his team see opportunities for student housing investments in more European locations, particularly as major universities in the region invest in international programmes with English-language curricula.

“At the moment, the European Union and most Western European countries, are quite open and encouraging of international students to come study there,” Hyler said. “We’ve seen a huge increase in English speaking programs across many large universities. It’s relatively affordable compared to some other places around the world, yet there’s still very little supply of housing.”

Hyler sees student housing opportunities in continental Europe paralleling where the UK market was one decade ago, with the markets in France, Germany and the Netherlands rapidly becoming more institutionalised, while Italy and Scandinavia grow in appeal. 

“So we think the opportunity is to create more purpose built student housing in a lot of those countries. And that’s something we’re focused on,” Hyler said.

Onward to Office

Having reaped returns from investments in hospitality and student housing this year, Hyler and his team are now returning their gaze to commercial assets, which have rapidly repriced at the same time that more employers are rediscovering the value of having their teams working together in the same physical space.

“I think office is going to be the most interesting (sector) to watch, particularly prime office in capital cities across Europe,” Hyler said. “The occupier market has continued to improve, and there’s actually a real shortage of high quality space now, either new build or newly refurbished space.”

European banks including UBS, Deutsche Bank and Santander this year have been pushing staff to spend more days in the office each week with the trend helping boost the area of office space leased in London during the second quarter to 16 percent above the 10-year average, according to Savills. 

In response, average rents for prime space in the City of London rose 44 percent in the April through June period from a year earlier to reach a record high, the property consultancy said. 

“Companies are expanding. Many companies that decided to downsize or thought they could get by with less office space a couple of years ago are now realizing their utilisation rates are much higher,” Hyler said. 

“Vacancy rates are very low in central London, in central Paris, in the major German cities, and there are a lot of investors who are now looking at that, see the opportunity for outsized rental growth over the next few years,” Hyler said. “And so we expect to see more trades, more transaction activity in the office sector. So that’s going to be an interesting one to watch.”