Residential real estate: an asset class shaped by demographic shifts

Demand driven by structural needs

Access to housing is now one of Europe's key economic and social challenges. In many countries, property prices have risen faster than household incomes, while higher interest rates have weighed on individuals’ purchasing power and borrowing capacity. These developments highlight a persistent imbalaDemand driven by structural needsnce between housing supply and demand⁽²⁾.

At the same time, new housing builds are struggling to meet demand, hampered by land scarcity, rising construction costs and increasingly stringent regulations. Although population growth is expected to slow over the coming decades, housing needs are likely to remain substantial. In France alone, nearly 4 million additional primary residences may be required by 2050, equivalent to around 133,000 new homes per year under the central scenario⁽³⁾.

Demographic trends are reshaping housing needs

Beyond population growth itself, changes in household composition are playing a major role in reshaping housing demand. Across Europe, nearly 76 million households are now occupied by a single person, representing an increase of more than 19% since 2016⁽⁴⁾. At the same time, population ageing is continuing to accelerate, with people aged 65 and over now accounting for almost 22% of the European population.

These trends are expected to strengthen further in the coming decades. In France, 3.4 million of the additional households projected by 2050 could consist of people living alone, including 2.1 million senior citizens⁽³⁾.

This shift is not only generating greater demand for housing but also changing the nature of that demand. Smaller homes, well-located properties, proximity to services and housing adapted to different stages of life are becoming increasingly important, supporting the development of segments such as student housing, senior living residences and various forms of shared housing.

Residential real estate: a long-term investment theme

Residential real estate is attracting growing interest from institutional investors thanks to the visibility offered by this asset class. Driven by a persistent housing shortage, strong rental demand and broad diversification of tenant risk, it has become the most sought-after asset class in Europe according to CBRE’s European Investor Intentions Survey 2025⁽¹⁾.

The energy transition also represents a major challenge. Buildings account for almost 40% of Europe’s energy consumption, and around 85% of the European real estate stock was built before 2000⁽⁵⁾. In this context, refurbishment and energy-efficiency upgrades are emerging as key drivers of value creation.

Beyond the construction of new homes, the optimization of the existing housing stock also offers significant opportunities. In France, close to 600,000 long-term vacant homes could potentially be brought back onto the market⁽³⁾, while refurbishment and repurposing projects are expected to play an increasingly important role in the sector’s development.

However, opportunities are unlikely to be evenly distributed across regions. Japan’s experience illustrates how demographic ageing can lead to rising residential vacancy rates in certain areas, while major metropolitan centers continue to attract residents, jobs and capital. This highlights the fact that favorable demographic trends do not automatically benefit all real estate markets. In France, the 16 most attractive employment areas could account for nearly 49% of household growth by 2050, compared with 30% today⁽³⁾.

In this environment, location alone is no longer sufficient. Analyzing local demographic dynamics has become an essential criterion for identifying the most promising markets.