HIC’s 5 Trends for 2025
Adam MacRae 
December 11, 2024
Adam MacRae
December 11, 2024 As we move on from what was a turbulent 2024, the project finance landscape looks set to be defined by a combination of 5 equally important forces. From the growing influence of international investment in Central and Eastern Europe (CEE) to the rapid expansion of climate technologies and AI-driven infrastructure, the year ahead promises both challenges and rewards. This briefing highlights the trends in detail that will come to define 2025, offering actionable insights for those seeking to secure funding, drive development, or identify transformative assets.
Following the litany of scandals that plagued COP29 in Azerbaijan, the world is resetting its focus on the real work to address climate change: capping emissions and building the infrastructure to get us there. For these two reasons, the world’s attention will turn to China.
According to the latest IPCC report, in order to hit our climate targets, global emissions have to peak in 2025, then rapidly decrease afterwards. This, in part, comes down to China, both a global leader and laggard in emissions. Starting with the bad, in 2023, over 47.4 GW of coal power came online in China which accounted for two thirds of global coal power capacity, an astonishing amount. This building frenzy will have to slow down dramatically.
As for the good, most people are familiar with the fact that China is installing more renewable energy projects than the rest of the world combined. The total energy generation aside, there are other knock-on benefits. The first order of impact is the steep fall in the price of PV solar panels which has made it financially viable to deploy around the world which has been visible for quite some time. The second order of impact is the world of grid-scale energy storage solutions. To support their booming renewables sector, China has been investing heavily in the energy storage sector to ensure energy stability.
Starting in 2025, we should expect to see the start of the same global impact on energy storage solutions including utility scale battery storage and smart metering solutions.
The European commercial real estate market is navigating a complex landscape. On the one hand, grade-A office spaces in prime locations (London, Paris, Berlin, Madrid and the like) are expected to perform well due to a few main drivers. First, the overall health of the corporate environment has reduced vacancy rates, employers are mandating employees to return to the office, and constrained development pipelines will likely drive rental growth. Similarly, hotel assets are poised for strong performance, bolstered by increasing leisure and business travel with global tourism numbers expected to rise above pre-pandemic levels in 2025.
On the other hand, refinancing challenges loom large. Many loans originating during the era of ultra-low interest rates are reaching maturity, leaving borrowers to contend with elevated refinancing costs. Debt-service coverage ratios (DSCRs) are under pressure, and tighter collateral requirements from traditional banks are making refinancing more complex. Lenders are increasingly demanding additional guarantees, interest reserves, or asset pledges.
However, the rise of non-bank lenders offers a lifeline to borrowers. These lenders, stepping in to fill the gap left by traditional financial institutions, provide greater flexibility and competitive alternatives. For asset owners, proactive engagement with non-bank financing options is critical to navigating these challenges.
The explosive growth of generative AI (gen AI) is reshaping the world of software and hardware with some even saying that using Google to search is the new dividing lines between the young and the old.
For the world of hardware and global infrastructure, this is felt most in energy demand and data centers. Big tech companies such as Amazon, Google, and Microsoft are scaling up their AI capabilities, with next-generation technologies requiring enormous power capacity and advanced cooling solutions.
This surge in demand has created opportunities for infrastructure investors to fund energy-efficient data centers and the renewable power projects that supply them. For asset owners, this trend underscores the importance of aligning portfolios with technological advancements.
Securing capital to develop next-generation facilities will be critical for staying competitive in the rapidly evolving digital economy. The numbers are staggering with expectations of investments in the sector north of $200 billion in 2025 and potential contributions to the global economy of $15 trillion by 2030 according to PwC.
Central and Eastern Europe (CEE) continues to make its case as a hotspot for international capital, particularly in real estate and infrastructure. While institutional investors like pension funds and sovereign wealth funds have long been active, 2025 is expected to see increased participation from private debt providers and smaller institutions.
This shift is driven by the region’s attractive yields and robust fundamentals. Logistics facilities, data centers, and high-quality office buildings are among the asset classes demanding substantial investment. In markets like Poland, tightening bank lending criteria are opening doors for non-bank lenders to support projects that traditional financing models can no longer accommodate.
For developers and asset owners, international capital offers a vital source of funding to launch or expand projects. For investors, the opportunity lies in financing high-growth sectors with strong demand fundamentals. As the CEE market matures, partnerships between local developers and global financiers will be key to unlocking value.
Inflation is expected to stabilize near central bank targets in 2025, offering some respite from recent volatility. However, geopolitical tensions—particularly U.S.-China trade conflicts—pose risks to cost structures and supply chains. Proposed tariffs on Chinese imports, alongside restrictions on semiconductor technology, could disrupt global markets and introduce new layers of complexity for infrastructure, energy, and real estate projects.
For asset owners, developers and investors, these risks emphasize the need for financial agility and geographic flexibility. Diversifying supply chains, exploring local manufacturing options, and exploring potential new geographic focuses will be key strategies to mitigate the impact of the potential political instability and inflationary risks.
At Holocene, we specialize in aligning capital with opportunity. Whether you’re seeking funding for a transformative project or identifying high-potential real estate assets, our expertise positions you to navigate the complexities of 2025 with confidence.