2025 on the Horizon

Q·Advisers Team Predictions for 2025 and beyond

Following the economic challenges of recent years, 2024 saw a mix of persistent difficulties as well as signs of resilience. The global economy faced ongoing inflationary pressures, high interest rates, and significant geopolitical uncertainties fuelled both by war as well as key elections in the US and EU.

However despite these challenges, there have been indications of economic stabilization with central banks bringing down interest rates and strong growth in some areas, such as the Magnificent Seven and those buoyed by growing AI boom.

As we approach 2025, many call for ‘cautious optimism’ for the year ahead so we asked our team for their predictions on what silver linings might be on the horizon, what challenges might remain persistence and their general predictions for the year ahead.

Read on below:

Please note that this is a compilation of individual views and predictions and does not reflect the opinion of Q·Advisers or represent any form of investment advice.

 First. Let’s talk numbers. Key market predictions for 2025:

• Crude oil price falls below USD 50 as a function of oversupply produced by the US
• BTC tops out at $150-175k level putting the end to this crypto market cycle
• Nasdaq advances by 15%+

Equities strong, the bubble inflates further and War in Ukraine Ends

After a volatile start to the year, US Equities will move up 15% in 2025 as investment-flows focus again on the winners of 2024. Europe will profit in 2025 from the enormous valuation gap and will be clearly higher again (+20%) with the rebound of the cyclical industries after the end of the Ukrainian war, which could end in Q2 2025 with a ceasefire and a divided country. Overhyped stocks in the defence-industry will crash again. “Meme stocks” like social investing and crypto will be strong performers under the populistic regime in the US in 2025.

AI and Technology to Re-Shape the Global Economy – Especially Healthcare

I believe that in 2025, technological innovation will drive significant economic change, particularly through advances in biotechnology and AI, which will reshape healthcare by emphasizing prevention and transforming the industry’s economic model. Telemedicine and AI-driven diagnostics will improve healthcare access and efficiency for broader populations, while AI will also speed up drug discovery, clinical trials, and healthcare decision-making. Personalized medicine based on genetic profiles will become more prevalent, and systems biology combined with AI will deepen our understanding of dietary phytonutrients and their impact on health. At the same time, industries that fail to keep up with innovation will face significant challenges, including losses and layoffs, highlighting the need for widespread reskilling and upskilling of the workforce. In addition, the rapid pace of technological progress could increase economic inequality, making it critical to implement strategies that ensure equitable access to these new opportunities.

Europe moves further Right

German elections will bring a government between conservatives with the right-wing parties which will start to change the European landscape with regards to immigration, protectionism, taxes and social policy. The right wing will join the government in France.

An in Depth Spotlight on Real Estate 2025

The real estate market is at a critical juncture as we move toward 2025. While the challenges of recent years – such as inflation and high interest rates – are beginning to subside, international political instability, sluggish European economic growth, and increased regulation are among the main challenges facing the European real estate industry in the coming year.

Better Days Lie Ahead

On a more positive note, the outlook for financing costs has improved. Following interest rate cuts by the European Central Bank we are gradually entering a new cycle of market recovery, which promises more favorable conditions for developers and investors. In addition, demand for residential remains exceptionally strong across Europe. Populations in several European countries are projected to increase significantly through 2040, particularly in urban areas where growth is most concentrated. This provides a significant boost to both the prospects for a recovery in capital values and the potential for improved medium-term supply.

However, perseverance will remain crucial. The market recovery will proceed only slowly.

2025 predictions for the real estate sector:

• Shortage of affordable housing

Most European cities are suffering from a lack of affordable housing and housing inflation has consistently outpaced wage growth over the past decade, which has gradually driven down homeownership rates. In 2024, construction activity has significantly decreased and in the short term, I see little evidence that European housing supply will increase enough to close the gap with demand in the coming year. During this delay, the increased demand can only be met through the absorption of existing vacancies driving rental growth.

• Sustainability will become a key value driver

Sustainability is not yet being taken into account in valuations and still not factored in by banks, it will be in the long term. I expect to see more developers and investors incorporating sustainable practices into their properties. This includes everything from energy-efficient applications and solar panels to green building certificates. There is definitely a preference for buildings meeting the latest ESG standards and staying well-informed is key to making strategic decisions that align with the future requirements.

• Financing is becoming a bottleneck in the future

Real estate investments are largely financed by external capital due to the high capital requirements. Accordingly, market development is highly dependent on the lending policies of banks and due to stricter equity regulations financing is increasingly becoming a bottleneck in 2025.

• Alternative Sectors as Growth Drivers

In light of economic uncertainties, investors will increasingly focus on alternative sectors such as data centers or modern energy infrastructures. These segments not only offer promising returns but also promote digital transformation and sustainable development as a crucial advantage for long-term investment strategies.

Another View on Real Estate: Big Trades, residential revival, luxury stalls

Tougher regulation will force Austrian Banks to start selling real estate portfolios to financial investors on steep discounts to NAV. In spring, lower interest rates clearly will create some new demand for residential properties. Luxury and high-end properties have another weak year.

And of course, Trump’s America 2025:

Governments become “Nation Inc.”

Trump 2.0 is overthrowing the way countries are run and this is a precedent for other countries around the globe. Bringing in entrepreneurs and successful managers from the private economy to improve the efficiency, reduce complexity, regulations and costs for the public administration is changing fundamentally the historically known and grown structures. Applying a corporate like approach proves successful in the short run, as there are a lot of low hanging fruits when it comes to efficiency improvements and cost savings in the US (like in many other countries, such as Argentina where Milei has already shown that such a strategy can work. The US is going to the next level. With political shakeups and elections in many countries in 2025 (first and foremost Germany) on the agenda, more countries may follow a similar path.

As a sovereign state is not a profit-oriented corporate, there are potentially several mid-/long-term issues with such a strategy: The corporate world lives from competition between players and occasionally ends up in (consented) mergers or hostile take-overs. On a sovereign level, especially the latter however, this can mean: war.

No crack in the big TECH companies?

The planed crack on the Magnificent Seven (Nvidia, Meta, Alphabet, Amazon, Microsoft, Apple & Tesla) companies of the antimonopoly movement under the new Trump administration will be much slower and more marketing than real results. As money finds money, the new US political elite will arrange themselves with the bowing owners of the former left Tech Giants.

Green Investment Grows Despite Trump

In 2025, green energy investments will continue to evolve, driven by a complex interplay of market forces, technological innovation, and global sustainability goals. Despite potential political headwinds coming from Trump’s re-election, the sector will see continued growth as climate change concerns intensify, technology advances and private sector innovation and investment picks up momentum.