European property values rose 0.8% in the first three months of the year in the third consecutive quarter of growth following nearly two years of consistent value declines, new data from Altus Group shows.
As central banks cautiously begin to lower interest rates, property yields — which had been rising for the past two and a half years— have started to decline. This small shift in yields added about 0.2% to property values in the last quarter, Altus said, which combined with a modest boost from improving cash flows, helped drive European commercial real estate values up for the third quarter in a row.
The Q1 2025 Pan-European Valuation Dataset: Expert Analysis report revealed that the positive performance follows an increase of 0.3% and 1% in the fourth quarter and third quarter of last year respectively.
On an annual basis, European property values are up 2%, reinforcing “cautious optimism” in the European real estate market, according to Phil Tily, senior vice president at data analytics platform Altus.
“We’re encouraged to see the slow but steady growth across all major property sectors for the third consecutive quarter,” said Tily, the author of the report, which covers funds representing €29bn in assets under management.
While macroeconomic conditions remain mixed, the stabilisation in yields and improved fundamentals point to a maturing recovery cycle across the region, which is however still down 15% compared to pre-decline property value levels three years ago, added Tily.
Looking at sector performance, the residential sector was the top performer in the first quarter with a 1.5% value increase over the fourth quarter of 2024.
The Netherlands was the strongest market in the first quarter, supported by increased market rents.
In the office sector, which saw regional value growth of 0.8%, France stands out with a 3% value increase in the first quarter.
Also, the UK overtook continental Europe with UK office values rising by 0.9%, slightly ahead of the European average of 0.8%. This marks a notable recovery for the UK, outpacing other major markets such as Germany (+0.3%), the Netherlands (-1.1%), and Spain (-1.2%).
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