EMEA capital markets regain direction in Q4 2025

Colliers EMEA Capital Markets Q4 2025 Snapshot reveals a market gradually regaining its footing after an extended period of adjustment. 

EMEA offices - Colliers

While some areas show clear signs of stabilisation, clearer pricing, and renewed momentum, others are still recalibrating. 
Q4 showed clearer signs of a European office market recovery, led by increased transaction volumes and larger deal sizes in London, with early momentum in Paris and parts of Germany. Investor confidence is improving as pricing stabilises and leasing fundamentals strengthen. Rental growth is robust in central business districts and expanding into selected secondary submarkets, indicating deeper demand. Previously overlooked "tower" markets are seeing renewed interest in specific micro-locations that meet occupier needs for quality, connectivity, and amenities. The overall trend is positive, though recovery varies by city and asset quality.
Despite strong investor demand for logistics in core European hubs, Q4 was characterised by a persistent lack of investable supply. Many owners are retaining assets, leading to transactional activity being largely off-market. The UK, Benelux, Paris, and Rhine-Ruhr show the most transactional evidence, with Barcelona emerging as a compelling, albeit supply-constrained, regional distribution hub. On the occupier side, some areas are experiencing slight softening as rental growth normalizes. With low development pipelines, the supply-demand imbalance continues to support prime logistics values, while secondary locations face greater pressure.
The retail sector continues to attract selective capital, with retail parks and grocery-anchored formats remaining investor favourites due to their resilience. High street retail is more complex: prime locations attract a broader buyer pool, including private equity, family offices, and owner-occupiers seeking flagship stores. Sale-and-leaseback activity is also increasing, particularly in grocery and DIY, as retailers monetise real estate for operations or expansion. In contrast, shopping centre activity remains subdued despite stabilisation signals in 2025. Luxury high street assets are assessed on a case-by-case basis, as softer trading conditions for some brands influence investment decisions.
Hotels remain a highly liquid sector, supported by resilient travel demand and strong average daily rate (ADR) growth in key gateway cities and leisure markets. Investors are focusing on prime assets and value-add opportunities with clear repositioning potential, as well as defensive formats like limited-service and extended-stay. Financing is more readily available for stabilised, cash-flowing hotels, while secondary locations and capital-intensive properties face wider bid-ask spreads and slower deal momentum.
The living sector continues to attract significant interest, with PBSA prominent but showing signs of moderating growth compared to earlier momentum. Uncertainty regarding international student flows and policy is dampening sentiment in some markets, leading to a more cautious underwriting approach. Activity is concentrated in Anglo-Saxon markets and Madrid, with Italy lagging and investors remaining selective in emerging markets like Poland, despite supportive fundamentals. PBSA has benefited from attractive yield spreads, drawing capital; the key now is whether other living subsectors reprice to offer comparable relative value and enable broader capital rotation across multifamily/Build-to-Rent.
Alternatives continue to drive growth, with data centres being the standout theme in Q4. Fundraising and capital concentration in this sector have accelerated, with investors increasingly seeking exposure through development-led strategies such as land acquisition, joint ventures, and separate accounts, rather than solely stabilised asset purchases. While this supports a strong pipeline, challenges remain in matching deployable capital with deliverable sites and grid capacity, and the debt market's ability to absorb large financings. 
Q1 2026 is expected to see a potentially stronger start, mainly driven by transactions rolling over from late 2025 completions. However, caution is advised against extrapolating early-year activity into a sustained recovery, as momentum could moderate in Q2 once the overhang clears. Opportunities are clearest where fundamentals are transparent, the stock is genuinely prime (or can be repositioned effectively), and financing is accessible. The overall outlook is cautiously optimistic, with recovery broadening but still highly dependent on market selection, asset quality, and the depth of buyer pools in each segment.