Housing prices are rising, construction materials are becoming more expensive, and the time needed to sell new units is lengthening. Trade wars and global protectionism are turning the European real estate market into a battleground between developers’ interests, buyers’ purchasing power, and investors’ decisions. For some, this is a warning signal; for others, it represents an opportunity for profits in the warehouse and logistics sector.
Rising tariffs on raw materials and components could increase construction costs by as much as 7%, creating a significant challenge for developers. Meanwhile, geopolitical uncertainty has paradoxically strengthened the position of European real estate as a “safe haven” for global capital. Supply chain reorganization is also driving demand for warehouses, logistics centers, and industrial properties, particularly in Poland, the Czech Republic, and Hungary.
At the same time, the housing sector is under pressure as higher construction and living costs extend sales times. For investors, this means the need for more precise risk modeling, diversification, and adaptation to a landscape of heightened uncertainty. Those able to adjust their business models may achieve above-average returns.
Rising Construction Costs
“Tariffs on imported goods directly translate into higher construction material costs. Steel, aluminum, electronic components, and specialized finishing materials are all critical elements of development projects. Industry estimates suggest that tariffs rising by 10–25% could increase total construction costs by up to 7%, which, given current developer margins, is a substantial burden,” explains Radosław Jodko, investment expert at RRJ Group.
At the same time, Jodko points out that geopolitical uncertainty linked to trade wars may paradoxically strengthen Europe’s appeal:
“We are seeing increased interest in core and core-plus funds, particularly in stable economies in Western Europe. Class A office buildings, warehouses, and rental housing attract investors seeking predictable returns in uncertain times,” he notes.
Supply Chain Transformation
Funds are also eyeing opportunities in sectors directly affected by supply chain shifts. “Warehouses near borders, logistics hubs serving e-commerce, and industrial properties adapted for reshoring production have become more attractive investment targets,” Jodko adds.
Customs policy is accelerating the reorganization of global supply chains. “The just-in-time concept is giving way to resilience-focused strategies, requiring greater warehouse space. Nearshoring and friendshoring are driving demand for industrial real estate in our region, which has become an alternative production base for companies relocating from Asia,” Jodko explains.
As a result, Poland, the Czech Republic, and Hungary are recording record-high absorption levels in the industrial property sector.
Housing Market Under Pressure
The housing sector faces particularly tough conditions. “Across Europe, higher construction and financing costs are limiting new supply. At the same time, rising living costs and economic uncertainty are eroding household purchasing power. This creates a widening gap between asking prices and buyers’ financial capabilities, leading to longer sales times and pressure on developer margins,” Jodko points out.
A New Strategy for Investors
“Investors in European real estate must adapt their strategies to this new reality. Precise modeling of project sensitivity to cost and interest rate changes is becoming crucial. Geographic and sectoral diversification can help mitigate risks linked to local exposure to tariff impacts,” Jodko explains.
“Europe will continue to face the challenge of balancing the protection of domestic economic interests with maintaining openness to global capital and trade flows. For the real estate market, this means operating under conditions of elevated uncertainty but also the opportunity to redefine business models and find new sources of value. Investors who can navigate this complex environment effectively may achieve above-average returns, while those who ignore ongoing changes risk significant losses,” concludes Jodko.
Source: CEO.com.pl
