As an asset class, residential real estate has become more attractive across Europe. That said, for the majority of current leads, the maxim is "Back to the old markets." It is important to note European residential real estate markets manifest four cross-border trends at the moment that will influence developments in the years and decades to come.

The first trend is that the number of large portfolios being put on the market has rebounded - these are primarily the ones that changed hands during the boom years of 2004-07. Ernst & Young Real Estate, for instance, concludes in its Trend Barometer Real Estate Investment Market Germany that the average transaction size could grow along with the overall increase in transaction volume. Eight out of ten polled market players expect to see larger real estate deals, while two in three believe that portfolio deals will experience a comeback. Even spectacularly large transactions are said to be on the cards again.

Here is another trend: the increasing significance of energy efficiency will subject the European housing sector to extensive changes. Admittedly, there is as yet no uniform pan-European standard that governs the energy efficiency of residential properties and buildings in general. With its Energy Performance of Buildings Directive, however, the European Union mandates that all buildings built from 2021 onwards should be "near-zero-energy buildings." Implementing the Directive will have different ramifications for the European countries. New residential properties built in Germany, Switzerland and Austria, for instance, already satisfy high energy standards. The situation in the UK is somewhat different. Britain's BREEAM (British Research Establishment Environmental Assessment Method) was one of the first quality labels for environmentally sound construction when it was introduced in 1990, and it is widely recognised today. Yet compared with the requirements in Germany, its standards are lower, and the catch-up need in the UK remains comparatively high. For the time being, this reason alone makes German real estate particularly attractive for British investors. Investors coming to Germany principally acquire high-end buildings in terms of energy efficiency but also regarding fit-out and infrastructure connectivity. It is safe to assume for investors that no fundamental adjustments to energy standards are waiting in the wings - which is clearly a head start for investors buying German real estate.

This time benefit is also cited by players from other countries. Most Scandinavian investors, for instance, consider it one of their main investment criteria. And it does not always have to be a new building: existing assets with sound sustainability credentials are currently very much in demand among Scandinavian investors, too. Swedes and Norwegians, for instance, have Berlin high on their list of eligible locations. For now, though, this is as far south as they dare to go.

Trend number three: irrespective of the country that is being invested in - the focus remains on core property, then as now. Investors from both within and outside Germany choose residential real estate primarily located in metropolitan regions and good locations. This will eventually have an impact on the price trend and we expect to see price hikes for prime locations in Germany. Rising residential rents on the German housing market will be one of the key drivers of this trend. That said, increases in rents and prices are not about to check the historical stability of the German market. Germany is merely matching a development that the UK and the Netherlands have already experienced. It will hardly scare investors off - on the contrary. While they may be entering the market at a high level, there are great prospects for continued positive development, and this in turn will ultimately precipitate a rise in demand and further investments.

The expectation that the positive market development will continue is based on demographic trends in Europe, among other things. This leads to the fourth trend, which will have an essential impact on the housing sector in the coming years and decades: conurbations keep gaining in significance as investment locations due to ongoing urbanisation or re-urbanisation. The return of people to the cities will ensure a constant or indeed a rising demand for residential space in conurbations. Accordingly, only the metropolitan regions stand to gain from this trend, though.

There is admittedly no "single" European residential property market - instead, you need to differentiate between the various national markets. Yet the increase in major portfolio deals, the growing importance of energy efficiency in the housing and real estate economy, the search for core real estate and the demographic development is likely to define all of Europe's housing markets over the next few years.

Thomas Beyerle is head of CSR & research at IVG Immobilien AG