Housing prices are rising, construction materials are becoming more expensive, and the sales cycle for new units is getting longer. The trade war and global protectionism are turning the European real estate market into a battleground between developers’ interests, buyers’ affordability, and investors’ decisions. For some, it’s a warning sign; for others, it’s an opportunity for profits in the warehouse and logistics sectors.

From this article, you’ll learn that:

• Higher tariffs on raw materials and components could raise construction costs by up to 7%, posing a challenge for developers.
• European real estate as a “safe haven” – geopolitical uncertainty attracts capital to stable markets in Western Europe.
• Supply chain reorganization drives demand for warehouses, logistics centers, and industrial properties, especially in - Poland, the Czech Republic, and Hungary.
• Residential sector under pressure – rising construction and living costs extend sales times.
• A new strategy for investors – detailed risk modeling, diversification, and adaptation to heightened uncertainty are becoming essential.
• An opportunity to redefine business models – those who adapt to the changing reality may achieve above-average returns.
  

“Raising tariffs on imported goods directly translates into higher costs of construction materials. Steel, aluminum, electronic components, or specialized finishing materials—all these elements represent a significant share of development project costs. Industry estimates suggest that a 10–25% increase in tariffs could raise total construction costs by up to 7%, which, given current developer margins, is a significant burden,” explains Radosław Jodko, investment expert at RRJ Group.

On the other hand, Jodko stresses that geopolitical uncertainty linked to trade wars may paradoxically strengthen the position of European real estate as a “safe haven” for global capital.

“We are observing increased interest in core and core-plus funds, particularly in the stable economies of Western Europe. Class A office buildings, warehouses, or residential rental properties are attracting investors looking for predictable returns in uncertain times,” Jodko notes.

Supply Chain Transformation

He adds that funds also see opportunities in sectors directly affected by changes in supply chains. “Warehouses located near borders, logistics centers serving e-commerce, or industrial properties adapted for reshoring production are becoming more attractive investment-wise,” he explains.

Customs policy is accelerating the reorganization of global supply chains. “The just-in-time concept is giving way to strategies that increase resilience to disruptions, which requires larger storage space. Nearshoring and friendshoring are driving demand for industrial properties in our region, which has become an alternative production location for companies relocating from Asia,” Jodko adds.

That’s why Poland, the Czech Republic, and Hungary are recording record levels of industrial space absorption.

Residential Sector Under Pressure

The housing market is in a particularly difficult situation. “Looking at Europe as a whole, on the one hand, higher construction and financing costs limit new supply. On the other, rising living expenses and economic uncertainty weaken household purchasing power. As a result, we’re seeing a growing gap between asking prices and buyers’ financial capabilities, leading to longer sales times and pressure on developers’ margins,” he points out.

“Investors operating in the European real estate market must adapt their strategies to this new reality. Precise modeling of project sensitivity to cost changes and interest rates becomes crucial. Geographic and sectoral diversification can help assess the risks linked to local exposure to tariff policy effects,” Jodko explains.

“For some time to come, Europe will face the challenge of reconciling the protection of its own economic interests with maintaining openness to global capital and trade flows. For the real estate market, this means operating under heightened uncertainty but also the chance to redefine business models and find new sources of value. Investors who can successfully navigate this complex environment may expect above-average returns, while those who ignore the changes risk significant losses,” concludes Radosław Jodko, investment expert.

(Translated from Polish)

(WBJ)