European CRE values rise for fourth quarter in a row

Altus Group's Q2 2025 analysis of European commercial real estate (CRE) valuation data reveals a continued rise in property values for the fourth straight quarter.

Quarterly country sector appreciation

The report, which aggregates CRE valuation data across Europe, analyzed a dataset of pan-European open-ended diversified funds representing €29 billion in assets under management across 17 countries and various property sectors, including industrial, office, retail, and residential.
Key findings show a 0.6% increase in property values compared to Q1 2025 and a 2.8% rise year-over-year from Q2 2024. While cash flow gains have slowed to 0.5%, their lowest in four quarters, a steady yield impact suggests growing investor confidence amid a lower interest rate environment.
Improving investor sentiment and initial interest rate cuts positively impacted yields, adding 15 basis points to values, similar to Q1.
Despite variations in sector and market performance, the overall trend suggests a steady recovery in the European property market, which outperformed the US market's 0.2% value increase during the same period.
Phil Tily, senior VP at Altus Group, commented: “Four consecutive quarters of valuation improvements is a clear sign that market fundamentals are stabilizing across Europe. Despite mixed macroeconomic conditions across the region, the CRE valuation trends point to a real estate market that is regaining its footing and gearing up for the next phase of the cycle.”
Residential led the way among the four main sectors with a 0.9% value increase over Q1 2025, driven by strong cash flow performance despite rising yields.
Industrial ranked second, showing a 0.8% value increase over Q1 2025. Cash flow growth slowed slightly, but yields remained positive.
Office saw a modest 0.3% value increase over Q1 2025, with UK office properties increasing in value by 0.8%. Yields tightened, but largely unchanged cash flows limited overall growth.
Year-on-year, UK office values remained flat (0%), while Germany (-0.6%) and the Netherlands (-1.5%) saw declines, and France showed significant growth (+6.8%). Over the past three years, the office sector has faced the biggest challenges, with falling yields leading to value declines of 7% in the UK and 7.7% across Europe, placing it at the bottom of the rankings.
Retail remained subdued, with a 0.3% value increase over Q1 2025. Rising operating expenses and minimal rent improvements led to a net decrease in cash flow.
Alternative assets, such as student accommodation, outperformed the main sectors with a significant 1.9% value increase over Q1 2025.