European Investment Atlas reveals a commercial real estate market with compelling value opportunities across EMEA
Amid persistent macroeconomic uncertainty, the firm’s proprietary Fair Value Index, which assesses the relative pricing of 119 prime office, retail, and logistics markets across Europe, remains elevated at 91. Notably, 82% of tracked markets are currently underpriced, underscoring the breadth of opportunity available to investors. This reflects a rare alignment of attractive pricing and improving fundamentals.
The European prime real estate market remains in a transitional phase, highlighted by the steadiness in both the Fair Value Index and TIME scores—the latter of which identifies cyclical turning points in commercial estate. This stability reflects a market that is no longer deteriorating, but not yet in full recovery, thereby offering a strategic entry point for investors. The combined analysis of TIME score and Fair Value Index reveals that the hospitality sector continues to occupy the 'sweet spot' for investment, supported by solid fundamentals and favourable timing.
Sukhdeep Dillon, Head of EMEA Forecasting at Cushman & Wakefield, said: “Stabilising fundamentals, combined with a highly liquid and increasingly innovative debt landscape, are creating a favourable environment for capital deployment in European real estate. As financing conditions continue to improve, investors with long-term conviction and a disciplined approach to risk are well positioned to capitalise on emerging opportunities across the region.”
Widespread Fair Value
The Fair Value Index, which assesses the relative pricing of real estate markets based on expected returns and risk-adjusted benchmarks, slipped only marginally from 92 to 91 in Q1 2025. Rising government bond yields were the main drag to the index, which was offset by resilient risk premiums, and recalibrated return expectations that are collectively creating a favourable environment for long-term capital deployment and strategic re-entry.
Germany continues to stand out, with all tracked sectors remaining underpriced following a significant repricing phase. Meanwhile, logistics assets across Europe remain particularly attractive, supported by strong demand fundamentals and limited supply.
Debt Markets Fuel Opportunity
The current cycle is defined not by capital scarcity, but by strategic deployment. The debt environment remains highly liquid, with lenders offering increasingly flexible and innovative structures. Loan-to-value ratios are rising, and debt funds (often backed by institutional capital) are expanding their footprint across Europe. Despite concerns around refinancing walls, distress remains limited and financing accessible across core and value-add strategies.
Market Timing Signals Stabilisation
Cushman & Wakefield’s TIME Score remained in the “inflection” stage for the second consecutive quarter. This suggests the market has moved past its low point but has yet to enter a clear recovery phase. The consistency of the score reinforces that conditions are stabilising, with early signs of renewed momentum expected to build through the second half of 2025.
Looking Ahead
“While fundraising has been challenging, capital availability is firming – dry powder remains high and direct allocations, especially to core, are rising. Real estate continues to prove its value through strong current income and a solid historical track record,” said Simon Jeschioro, Head of Capital Markets & Investment Advisory at Cushman & Wakefield.
As interest rates continue to ease and inflation moderates, investor confidence is expected to strengthen. Further clarity on U.S. policy, which has elevated uncertainty broadly, is also anticipated, which should further buoy confidence later in the year. The combination of underpriced assets, improving financial conditions, and resilient sector fundamentals positions European real estate for a potential rebound in the second half of 2025.
With the Fair Value Index signalling broad-based opportunity and the TIME score indicating continued stability, Cushman & Wakefield forecasts that investors who act with discipline and foresight may be well placed to benefit from the next phase of the cycle.
