Europe Luxury Residential Real Estate Market Size, Share, and Growth Forecast for 2025 - 2032

The Europe luxury residential real estate market size is predicted to reach US$ 173.2 Bn in 2032 from US$ 130.5 Bn in 2025. It will likely witness a CAGR of around 4.1% in the forecast period between 2025 and 2032.

Ongoing innovations in smart home technologies and the entry of several international developers in Europe are expected to spur the market. A recent report published in November 2024 found that nearly 1,623 smart home start-ups are operating in Europe. Companies, including Airthings, tado° GmbH, Tibber, and Assa Abloy AB are at the forefront of smart technologies in the region. They offer a wide range of products, including unique security systems, entrance automation, access control, and mechanical and electromechanical locking systems for luxury homes. Several renowned developers are also focusing on incorporating green building standards to attract environmentally conscious buyers.

Key Industry Highlights

• Villas/landed houses are anticipated to hold 57.3% share in 2025 as lifestyle migration trends are raising interest of buyers in secluded luxury over urban density.
• The U.K. is predicted to generate 34.2% share in 2025 due to key regeneration projects augmenting value in outer London and regional cities.
• Expansion into emerging hotspots such as Portugal’s Algarve and Croatia’s Dalmatian Coast is expected to open new avenues for growth.
• Increasing preference for turnkey smart homes with sustainable features will likely spur the market in Europe.
• Surging demand for second homes in scenic, low-density locations among high-net-worth-individuals is estimated to boost the market.

Driver - Ultra-high-net-worth individuals to boost demand for luxury properties

Increasing demand from ultra-high-net-worth individuals (UHNWIs), whose population has surged in recent years, is anticipated to bolster the Europe luxury residential real estate market growth. Knight Frank’s Wealth Report 2024, for example, stated that Europe accounted for more than 24% of the UHNWI population in the world. This surge in wealthy population has resulted in intense competition for sophisticated residential properties across major countries in the region, especially those providing high quality of life, cultural richness, and political stability.

Southern Europe has emerged as a new location for UHNWIs seeking lifestyle assets. Demand is estimated to remain high in areas such as Cascais and Lisbon, with the luxury segment witnessing a 10.5% price surge in 2023, revealed a recent study. Mallorca and Marbella in Spain are experiencing similar trends, with buyers from Scandinavia, Britain, and Germany dominating in terms of high-end transactions.

Restraint - Strict property taxation norms and high borrowing costs in some areas

Even though UHNWIs are showing an increasing interest in buying luxury residential real estate, a cautious sentiment has emerged. It is mainly evident in cities where ownership and property taxation norms have become restrictive. In 2024, Portugal’s Golden Visa program for real estate came to an end, significantly hampering the enthusiasm of foreign investors in Porto. As per a recent study, transaction volumes in the luxury segment in the city declined by approximately 18% year-on-year.

High borrowing costs across Europe are further poised to limit demand through 2032 to a certain extent. High interest rates have negatively affected investor confidence and lowered speculative purchases, even though some buyers purchase luxury properties without financing. In late 2023, average mortgage rates in the eurozone surged to 4.1%. It led to a cooling effect in hybrid luxury segments where properties serve both as income-generating assets and residences, such as in Amsterdam and Paris.

Opportunity - Revival of architectural landmarks spurs high-end housing opportunities

Adaptive reuse of historic buildings into luxury residences across Europe is speculated to create lucrative opportunities in the foreseeable future. This strategy is expected to not only revitalize architectural landmarks but also cater to a surging market for wealthy buyers demanding unique properties. A key example is The Old Forge in the U.K. It was converted from a 19th-century forge into a contemporary two-bedroom family home while retaining its original industrial features, including exposed roof trusses and large furnaces.

In Paris, the Morland Mixité Capitale project exemplifies large-scale adaptive reuse. The former Préfecture de Paris building, which was developed in the 1960s, has been reimagined into a mixed-use development that includes affordable and upscale housing, retail spaces, offices, and a hotel. The transformation was led by David Chipperfield Architects and has revitalized the building's presence along the Seine.

Type Insights

Based on type, the Europe luxury residential real estate market is bifurcated into villas/landed houses and condominiums/apartments. Out of these, villas/landed houses are anticipated to lead by holding a share of around 57.3% in 2025, finds Persistence Market Research. The surge of international buyers looking for second homes in less dense, yet scenic areas is assessed to drive the segment. Coastal areas such as Portugal, Italy, France, and Spain are seeing high demand for luxury villas. For instance, the Algarve region in Portugal witnessed a 6.5% surge in villa prices due to rising demand for lifestyle properties among buyers in North America and Europe.

Luxury condominiums/apartments, on the other hand, are speculated to showcase a decent growth rate in the forecast period. Demand is estimated to remain high in prime urban centers, backed by a rising desire for low-maintenance second homes among international buyers. Luxury apartments and condominiums are attracting buyers seeking proximity to culture, premium services, and commerce, specifically those who divide their time across multiple global cities. Hospitality brands, including Rosewood, Six Senses, and Mandarin Oriental are introducing luxury condominium projects across Europe, providing hotel-style services to affluent buyers.

U.K. Luxury Residential Real Estate Market Trends

The U.K. is projected to hold around 34.2% of the Europe luxury residential real estate market share in 2025. In Prime Central London (PCL), as of 2024, property prices remain nearly 20.7% below their 2014 peak, pointing to a decade-long correction in the luxury segment. Certain areas such as Earls Court have experienced even steeper declines, with prices dropping by up to 26.3% since 2014. Despite these price adjustments, transaction volumes surged in 2023, exhibiting a 31.1% year-on-year increase in sales. In addition, nearly 76% of properties sold in 2023 traded below their asking price, indicating a price-sensitive yet active buyer market.

International buyers, mainly those from the U.S. and the Middle East, have been drawn to London real estate due to the weakening pound as they perceive it as a value investment. Outer Prime London areas, including Shoreditch and Hackney, on the other hand, are attracting professionals and families looking for spacious homes with access to various amenities and large green spaces. Demand in these areas highlights a gradual inclination toward neighborhoods providing a balance between residential comfort and urban living.

Germany Luxury Residential Real Estate Market Trends

After a long period of price corrections, Germany is currently showing signs of stabilization in the field of luxury real estate. Advertised purchase prices for both new and existing apartments fell by just 0.8% in the second half of 2024, which is a significant improvement over the 7.5% reduction that was observed in the previous year. This trend indicates that the price adjustment period is almost over and that the market for homeownership is becoming more appealing, mainly in cities such as Düsseldorf.

With a rising demand in the luxury segment, Munich remains one of the most expensive cities in Germany. The city has become a significant zone for investors as demand for sophisticated properties shows no signs of dampening. Frankfurt is also experiencing steady growth. The Four Frankfurt project, for example, which is a luxury mixed-use skyscraper, is expected to transform the city’s skyline. The project is anticipated to be completed by 2025, and the complex would feature 600 residential apartments, with top-floor penthouses selling for up to 20 Mn Euros.

Italy Luxury Residential Real Estate Market Trends

Italy will likely witness an influx of buyers from the United Arab Emirates, Switzerland, and the U.S. This is attributed to the country’s favorable tax regimes, stable property laws, and cultural appeal. Milan is considered a key location for luxury residential real estate, contributing 16% to Italy’s stock. In 2024 alone, the city marked a 2.3% surge from the previous year in high-end real estate transactions. The Quadrilatero della Moda district is poised to command premium prices, reaching 16,800 Euros per meter square.

Demand for ready-to-move-in properties featuring eco-friendly solutions and smart home technologies is further estimated to remain high in Italy. Demand for such sophisticated properties rose by 7 to 10% in 2024 compared to previous years, and sales timelines shortened by 20%. Buyers are showing an increasing interest in historical mansions in Rome and luxury villas in Tuscany, which is predicted to spur the market.

The Europe luxury residential real estate market is highly competitive and fragmented. It houses several international and local companies. Pricing and competition are increasing in the market as new developers and investors are making their way, resulting in a high demand and supply of real estate. A few key players are focusing on developing innovative projects in posh areas to attract a new client base. Emerging companies are striving to join hands with renowned developers to market their luxury apartments or villas.

Key Industry Developments

• In April 2025, entrepreneur Claudiu Diaconu introduced a new boutique project called App Town Exclusive by Ima to strengthen his position in the field of real estate. With an investment of around 15 Euros, the project is located in an exclusive area in Pipera in Romania.
• In April 2025, Ghelamco introduced a regeneration project worth 140 Mn Euros with a 24-storey residential tower in London’s Battersea waterfront. The HiLight is expected to be a mixed-use development comprising 113 luxury apartments all with a sensory rooftop garden, cinema, outside space, viewing platform, fitness and wellness studio, and a club room.
• In April 2025, Fisher German, a property consultancy based in Birmingham, announced that it was recently appointed as an agent on the city’s new luxury apartment scheme. The company plans to host a launch event providing an exclusive first glimpse. It is anticipated to market the brand-new apartments at Boulevard, Southside.