Offices to lead 2025’s ‘period of recovery and growth’: C&W
European real estate market is “poised for a period of recovery and growth” after what has been a challenging few years for the sector, according to Cushman & Wakefield.
“The stabilisation observed in 2024, coupled with a more positive macroeconomic outlook, improved business and consumer confidence, and easing interest rates, sets a strong foundation for the year ahead. The stage is set for the property sector to rebound more meaningfully going into 2025,” said Sukhdeep Dhillon, head of EMEA forecasting at Cushman & Wakefield on the launch of the firm’s EMEA Outlook 2025 report.
Economic indicators such as GDP growth are improving, labour markets are more resilient and together with more favourable financing conditions this is expected to provide positive momentum for the market in 2025, the firm stated.
“As market volatility moderates, we foresee a gradual compression of prime yields, signalling a positive outlook for capital growth and total returns and promising opportunities for investors willing to deploy capital strategically,” Dhillon said. She added that a second Trump presidency in the US is a wild card. “But worth remembering, European property proved to be very resilient under Trump’s first term. In fact, prime property values appreciated by 25% while Trump was in office.”
Office prime rental growth is expected to lead the field with Cushman & Wakefield forecasting average growth of 2.1% across Europe in 2025, followed by retail and logistics at 1.9%.
C&W pointed out that in 2024, over half of Europe’s office markets, including London, Brussels, Madrid, and Barcelona, registered solid demand and resilient occupancy, but driven by a preference for quality and prime locations. Grade A leases now make up over 50% of activity in leading cities, which was up from just over 40% in 2019.
Cushman & Wakefield foresees continued upward pressure on rental growth in the region of 2.1% in 2025 and 1.6% in 2026. Completions are expected to peak at 5 million sq m this year, before coming down slightly to 4.8 million sq m in 2025 and 3.4 million sq m in 2026.
Despite weak investment activity, representing just over 20% of total market activity in 2024, Cushman & Wakefield is seeing a marked increase in investors evaluating acquisitions and more product becoming available.
Beyond 2025, carbon reduction and climate risk will continue to shape long-term strategies and EU regulations are expected to further affect asset values, leasing terms and tenant demand.