European commercial property values rise for the fourth consecutive quarter.

European commercial real estate values edged higher in the second quarter of 2025, extending a run of quarterly gains that signals improving stability across the sector. Fresh analysis from Altus Group’s Pan-European dataset revealed that values rose 0.6% compared to the previous quarter, and are now 2.8% higher year-on-year.

The upward trend marks the fourth consecutive quarter of growth, suggesting that despite patchy macroeconomic conditions, market fundamentals are slowly regaining balance. Altus Group’s dataset tracks €29 billion of assets under management across 17 European countries, spanning offices, industrial, retail, residential and alternative real estate segments.

Phil Tily, senior vice president at Altus Group, described the steady rise as a sign of resilience: “Four consecutive quarters of valuation improvements are a clear sign that market fundamentals are stabilising across Europe. Despite mixed conditions, the CRE valuation trends point to a market regaining its footing and gearing up for the next phase of the cycle.”

Sector performance reveals shifting dynamics.

The residential sector once again led performance, with values up 0.9% in Q2. Stronger cashflow fundamentals underpinned the increase, even as yields rose. Industrial assets followed closely with a 0.8% gain, although cash flow appreciation slowed compared to earlier quarters.

Offices and retail, by contrast, remained subdued. Both sectors posted just 0.3% growth, highlighting the ongoing pressure from weak rental demand and rising costs. In retail, particularly, higher operating expenses offset limited gains in rents, restricting cash flow momentum. Still, the fact that values managed to nudge higher suggests that stabilisation is taking hold even in the most challenged segments.

Outside the core sectors, student accommodation stood out with a sharp 1.9% quarter-on-quarter increase, reflecting investor appetite for alternative property types that can provide more predictable income streams.

UK offices buck the continental trend.

Looking more closely at regional markets, Altus Group’s analysis showed UK offices outperforming their continental counterparts. Values in the UK office sector climbed 0.8% during Q2, compared to a European office average of 0.3%. That rise was attributed to favourable yields and ongoing rental growth, which helped sustain investor confidence.

Year-on-year, however, UK office values were broadly flat, while some continental markets lagged behind. German offices slipped 0.6% over the year, while the Netherlands recorded a steeper decline of 1.5%. France was the exception, posting an impressive 6.8% annual rise in office values.

Even so, UK offices remain under structural pressure. Over the past three years, valuations have dropped around 7%, underscoring the challenges posed by shifting occupier demand and higher vacancy rates.

Outlook and investor sentiment

Although growth slowed compared with earlier quarters, the 0.5% increase in cash flows was the lowest in a year; the broader picture is one of cautious optimism. Lower interest rates and tighter yields are helping to underpin values, and investor sentiment has become more positive as evidence mounts that the market may be entering a recovery phase.

For lenders, brokers and advisers, these incremental gains offer reassurance. As one industry observer noted, commercial real estate valuation services will welcome this news as they help clients navigate a market where prime assets continue to hold up better than secondary stock.

With the gap between stronger-performing sectors such as residential and weaker ones like retail becoming more pronounced, opportunities are emerging for investors willing to take a selective approach. After several years of uncertainty, four straight quarters of growth point to a European real estate market that may finally be stabilising and preparing for its next cycle.

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