European operational real estate offers €1.2t opportunity

Eurazeo has released its second "White Paper" on Operational Real Estate (OpRE) in Europe, highlighting a vast investment opportunity exceeding €1.2tn trillion across the UK, France, Italy, Germany, and Spain.

Data centre - Eurazeo

The paper argues that OpRE is a highly attractive and dynamic segment of global real assets, blending real estate with private equity. It offers investors exposure to sectors driven by major long-term trends like an ageing population, digital transformation, the energy transition, and evolving consumer behaviours in how they live, use services, and experience spaces. Europe, particularly its five largest economies, offers some of the best OpRE opportunities globally.
Eurazeo focuses its OpRE activities on four key areas: Specialist Residential (student housing, senior living, co-living), Private Healthcare (hospitals, clinics, nursing homes), Hospitality & Leisure (hotels, resorts, entertainment), and Storage (data centres, self-storage, cold storage).
The firm believes OpRE is becoming a crucial category in real assets, offering sustainable, inflation-protected returns and a way to invest in essential societal changes. Unlike traditional real estate, OpRE's returns are tied to both the physical asset and the operating business, allowing for multiple ways to create value through operational improvements, pricing, digital tools, and ESG enhancements. This "dual-engine model" can deliver private-equity-like returns with better inflation protection and resilience.
Europe is uniquely positioned for OpRE growth due to its large population, dense real estate, and mature capital markets. Many OpRE sectors in Europe remain fragmented and dominated by smaller operators, creating significant opportunities for institutional investment and consolidation. Megatrends such as demographics, digitalisation, decarbonization, deglobalization, and the "experience economy" are further driving the demand for OpRE.
Eurazeo emphasises that specialist capabilities are crucial for success in OpRE, as it requires expertise beyond traditional real estate, including revenue management, operational KPIs, and digital platforms. Their private equity background gives them a competitive edge in identifying opportunities and building scalable platforms.
As the OpRE market matures, institutional demand is growing across various investor types, leading to diverse exit options and improved liquidity. Eurazeo concludes that Europe's OpRE market is rapidly becoming institutionalised, driven by strong structural forces, and offering a deep investment opportunity.