One of the prominent trends of the European real estate market in 2024 was the rise of specialist real estate platforms. While this development has been apparent for years, momentum picked up last year; importantly, it has continued to accelerate in 2025.
For limited partners (LPs), specialist real estate platforms can offer an enhanced proposition in an era of increased complexity as well as easier access to underlying opportunities, particularly in the context of niche sectors such as data centres, self-storage, life sciences and purpose-built student accommodation.
On top of this, many of today’s platforms are offering LPs something more: LPs are not only using platforms to access investment opportunities but are, increasingly, co-investing in them too. This strategy aims to enhance returns in high-conviction themes and provide greater control.
The returns can be compelling. Anecdotally, investors are, we estimate, underwriting an additional 2%-5% on the internal rate of returns through a theoretical value uplift in their share of the platform.
Recent deals underscore this trend
Several deals have highlighted the current trend. In January this year, AustralianSuper, Australia’s largest superannuation fund, and Oxford Properties Group announced a strategic partnership to build an industrial and logistics venture across Europe, managed by M7 Real Estate.
AustralianSuper acquired a 50% stake in Oxford’s circa. A$1.4bn (€786.8m) European industrial and logistics portfolio, as well as in M7, a European investment and asset management business acquired by Oxford in 2021.
In October last year, Aware Super, another Australian superannuation fund, announced a strategic partnership with Delancey Real Estate to invest up to an initial £1 billion in UK property. Aware Super already owns a 22% stake in Get Living, the UK’s leading owner and operator of large-scale build-to-rent neighbourhoods, founded by Delancey.
A historic period of change and innovation
Europe’s real estate market has experienced a historic period of change and innovation. Interest rate rises combined with secular changes such as work-from-home, sustainability demands, and the rise of AI have led to a dramatic increase in complexity and in understanding risks and opportunities.
As investment managers have become more specialised, major fund houses such as Blackstone, Brookfield and Invesco have developed specialised platforms. ESR Europe has itself responded by becoming a vertically integrated in-house specialist with expertise focused on logistics, data centres, offices and credit, and including the addition of a public market platform (Regional REIT in the UK).
The benefits of a specialist vertically integrated platform model in tackling the challenges of recent market changes can be substantial if developed and funded correctly.
Smart investors recognise that a vertically integrated “platform” model offers deeper insights into the underlying real estate alongside the opportunity for meaningful participation in high conviction sectors.
Asset management is carried out in-house with direct responsibility, access and accumulation of investment expertise with real time review of the impact of decision making. As a platform grows, it can raise third-party funds, with the fund management business becoming both a profit centre and source of capital to sustain operations.
Important considerations for LPs
For LPs, there are important considerations to keep in mind. While some have attempted to build new platforms themselves, this process is capital and time intensive. In practice, platforms require dedicated expertise and significant scale to be net positive; until they achieve this scale, they can be a drag on returns and not accretive.
Potential for conflicts between the platform and the seed investor, as well as subsequent investors, needs to be managed carefully. Additionally, key person risk within a senior management team could be higher for operational real estate and niche, emergent sectors.
Looking ahead, a strong tailwind for specialist platforms
As the real estate sector tentatively recovers after a challenging few years, growth and performance are again top of mind for LPs and investors.
Over the past two years, assets under management levels have plateaued after decades of strong growth and robust institutional capital allocation. There is now a stronger focus on the business case for real estate, across all sectors. This environment provides a strong tailwind for specialised real estate platforms and supports their continued growth and role in the industry.
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