European CRE sees 1.9% value increase in 2025

European commercial real estate (CRE) values saw a 1.9% increase throughout 2025, signalling a solid recovery, according to Altus Group's Pan-European valuation dataset.

European property sector - Altus Group

However, the fourth quarter experienced a slight slowdown, with a 0.4% rise, following six consecutive quarters of growth. This deceleration in Q4, down from Q3, might indicate growing investor caution due to broader geopolitical complexities.
The 1.9% annual increase in CRE values in 2025 recovered only a fraction of the 16.8% decline experienced during the preceding two-year downturn.
The office sector lagged in 2025, with a minimal 0.1% increase in values. This subdued performance was influenced by increased capital expenditure requirements for specific assets. The sector even saw a dip of -1.4% in Q2 before ending the year with a modest 0.2% uplift in Q4.
The residential sector was the leading performer throughout the year, with values rising by 0.6% in Q4 2025 and a substantial 3.7% over the full year – a significant 2.5% improvement compared to 2024. This growth was largely fueled by strong cash flows resulting from above-average increases in market rents, although the pace of these increases tapered off in the latter half of the year.
The industrial sector also delivered strong results, consistently gaining between 0.5% and 0.7% each quarter of 2025. This led to an impressive 2.6% annual increase in values, marking a full percentage point improvement over its 2024 performance (1.6%). Investor confidence in industrial properties remained high, as evidenced by valuation yields tightening more than any other major property type throughout the year.
The office sector showed minimal growth, with a slight 0.1% increase in values. It experienced a dip of 1.4% in the second quarter of 2025, but recovered slightly with a 0.2% rise by the end of the year. France (up 4.9%) and the UK (up 3.7%) led the recovery, benefiting from market rent increases exceeding 3%. In contrast, Germany and the Netherlands saw office values decline over the year, with market rents growing by less than 1%.
Retail sector values increased by 1.6%, which is below the average. Cashflow growth was slow, with market contract rents rising only 0.6% and 0.8% over the year. High street shops led the sector with an above-average 2.5% increase in values, including a 0.7% rise in the last quarter of 2025, driven by declining yields.
Phil Tily, senior VP at Altus Group, commented: "The latest data from Altus' Pan-European valuation dataset shows sustained improvement in values across allEuropean market sectors. In what was a closely contested quarter across the sectors, industrial and residential topped the rankings with the largest cashflow gains, both registering a 0.6% increase in values in the fourth quarter of 2025, while office and retail saw a more muted increase at 0.2% each.”
The Q4 2025 aggregate dataset included Pan-European open-ended diversified funds representing approximately € 29 bn in assets under management. The funds cover 16 countries and primarily span the industrial, office, retail and residential property sectors.