The Wealth Report 2025: A Reality Check on Global Real Estate Trends
by ELLIMAN INSIDER TEAM
May 2025
From the 2025 edition of the Douglas Elliman | Knight Frank Wealth Report. View the complete report.
From the rise of online shopping to the post-pandemic work-from-home trend, shifts in real estate markets are fueling assumptions that could lead to missed opportunities for investors. We separate the myths from the reality.
The office is dead
Post-pandemic, more people are working from home and office occupancy is falling
Far from being obsolete, the office is evolving to meet the demands of modern work and shifting employee expectations. Hybrid working is driving companies to rethink office spaces, emphasizing flexibility and purpose. As businesses adapt, the office will transform into a dynamic hub for meaningful workplace experiences and a strong organizational culture.
Retail is history
The rise of online has made retail real estate uninvestable
Retail remains a key driver of global economic growth, fueled by population increases and rising per capita spending. Online sales still represent a small share of global retail, and multi-channel models are outpacing online-only, with store- based ecosystems outperforming. After past corrections, retail has reclaimed top asset-class status in some markets including the UK, delivering total returns in 2024 of 8.2% vs 5.1% for all property.
ESG is no longer relevant
Governments around the world are placing less emphasis on ESG, and investors should do the same
This argument is flawed for several reasons. COP29 brought a renewed
focus on climate action, making it risky to downplay ESG concerns. Institutional investors, key drivers of green building progress, are unlikely to abandon sustainability for short-term political shifts. Additionally, legislation and public demand for sustainable investments can quickly rebound, leaving those acquiring non-compliant buildings with no clear mitigation strategy and vulnerable to illiquidity.
There’s no place for data centers in a sustainable investment strategy
High energy use conflicts with environmental goals
While they remain major consumers of energy and water, data centers are transitioning towards renewable energy sources with many also adopting more sustainable practices such as using recycled water for cooling and selecting sites to minimize ecological disruption. Data centers also enable environmental efficiencies by deploying technologies such as AI and big data analytics, which enhance energy and resource management. Cloud computing infrastructures reduce the need for physical hardware, cutting waste and supporting virtual services that lower carbon footprints.
Geopolitical tensions are bad for supply chains
Demand for logistics real estate will suffer as a consequence of instability
Geopolitical upheaval can disrupt trade routes and sourcing strategies, affecting warehousing needs. However, it also creates opportunities. Companies may shift production closer to consumers, shortening supply chains, or hold more stock to safeguard against disruptions. Both strategies boost demand for local industrial and logistics facilities.
AI is stealing our jobs
Demand for office space will plummet as a result of technological advances
Fears that AI will eliminate jobs oversimplify its impact. AI is reshaping work by augmenting roles, not erasing them, and could solve the productivity puzzle. Rather than reducing the workforce, AI drives innovation and creates dynamic career opportunities in a changing economy.
Repurposing is the answer for every challenged asset
Changing use is an easy way to enhance value
Building obsolescence comes in many flavors: regulatory, functional, physical and financial. When these limits are reached, the call to “repurpose” grows louder. But one size does not fit all. We identify five types of renovation: from light-touch retrofitting, all the way to full-scale redevelopment. The key to identifying the appropriate action is viability. Simply put, an approach that is financially viable in one location may not stack up in another.
It’s all about the Next Big Thing
The key to success in real estate investing is to be at the forefront of the latest trends
For a class of assets with a potentially indefinite lifespan, the world of commercial real estate can seem oddly fixated on the new. Riding these waves can be one way to generate attractive returns. But an almost universal truth in commercial real estate is that income trumps capital growth over the longer term. That means some of the most attractive performance might, in fact, come from resolutely unexciting real estate sectors.
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