Global real estate market activity picked up in 2025, but capital returned unevenly. Deal value reached $873 billion, up about 12% year-over-year, while the number of transactions stayed flat.
According to the McKinsey Global Private Markets Report 2026, the volume increase stemmed mainly from larger deals rather than a broad surge in activity, signaling a more selective market environment.
Asset selection accounted for roughly 70% of performance differences against national benchmarks in 2025, a rise from under 50% between 2020 and 2022. Investors are now weighing sub-market, tenant profile, capital structure and building characteristics more heavily than merely choosing a country or sector.
Specialized assets gain share
Specialized properties—including data centers, senior and student housing, and flexible industrial space—expanded their share of transactions. In 2025 they represented 14% of total deal volume.
Data-center transactions jumped 37%, making the segment one of the fastest-growing globally.
Even within high-demand categories, the choice of individual assets remains decisive, according to McKinsey. In data centers, the availability of power is reshaping investment geography.
In the United States, about 8 GW of leases in 2025 were signed in secondary markets, as hyperscalers and artificial-intelligence workloads chased available electricity.
Consequently, investors now assess power access, tenant mix, site location and financing structure alongside sector exposure.
The current emphasis on asset quality mirrors the post-2008 office recovery, when investors moved from broad geographic bets to premium locations with stronger cash flows. That shift also raised barriers for lower-grade properties, a pattern repeating today.
Office Class A leads capital return
McKinsey notes a flight to quality in the office segment, favoring Class A, well-located buildings, while older, less amenable assets continue to face vacancy and rent pressure.
Global office deal volume grew about 17% in 2025, with U.S. Class A transactions up 34% year-over-year.
Tenants are redesigning spaces, adopting modular layouts, cutting private desks and adding technology and collaboration zones.
McKinsey projects that collaborative space within Class A offices could exceed a 20% increase by 2030.
Fundraising for closed-end real estate funds rose roughly 16% to $146 billion in 2025, still about half of the pre-pandemic peak.
This uneven recovery is particularly evident when comparing different investment strategies. Capital raised by value-add strategies decreased from $93 billion in 2022 to approximately $27 billion in 2025. In contrast, fundraising for opportunistic strategies increased by 65% annually, as investors sought to take advantage of existing market dislocations.
AI and operational efficiency
The transformation of the market is not limited to where to invest but is also changing how assets are operated. McKinsey estimates that agentic artificial intelligence could generate between $430 billion and $550 billion in annual value in the real estate, construction, and development sectors globally.
Real estate and infrastructure convergence
Traditionally associated sectors with real estate, such as data centers, student housing, and logistics, represented 25% of global infrastructure transaction activity in 2025. Additionally, the target allocation for infrastructure within institutional real estate allocations also increased, from approximately 32% in 2023 to 36% in 2025.
The global real estate market has moved past part of the adjustment of recent years, but McKinsey data show no return to the previous cycle. While transactions and capital raising advanced in 2025, both remain conditioned by financial costs, valuations, and greater dispersion among assets.
The difference lies in where capital is concentrated. Data centers, specialized properties, and Class A offices show greater activity, while asset selection and the ability to operate them acquire greater importance in investment performance. For developers, operators, and capital managers, the scenario places the focus less on obtaining general exposure to a sector and more on the quality of the property, its location, financial structure, demand, and management capability. The new real estate cycle, according to McKinsey findings, is defined by selection and execution at the asset level.