An analysis of past multifamily housing total returns underscores the importance of geographic diversification in Europe.

An analysis of past multifamily housing total returns underscores the importance of geographic diversification. However, further investigation reveals the importance of understanding regulatory environments when investing in the multifamily sector.

CBRE’s 2025 European Investor Intentions and Lending Intentions Survey found that the living sector was the most favoured among investors and lenders. The sector’s appeal is driven by factors such as growing urban populations, solid supply and demand fundamentals, and stable income. However, despite the sector’s appeal, its returns ranged from -4.6% per annum to 15.6% per annum between 2020 and 2024, indicating the importance of mitigating portfolio risk against market downturns.

Negative correlations exist between some Dutch cities and London and with other Western and Northern European cities. This highlights the potential impact different approaches to regulation can have on market performance. These markets have experienced stronger-than-average rental growth during the period due to more limited regulatory control and prevalent demand and supply imbalances. Spanish cities and Warsaw also posted strong returns with negative correlations with many markets. In Warsaw, the influx of migrants into Poland following the Russian invasion of Ukraine boosted rental growth. In Spain, strong GDP growth fueled demand. It should be noted that negative correlation does not guarantee better returns, but provides protection against idiosyncratic risks associated with a sector.

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