European Investment Atlas – Expansion of the recovery path and strategic opportunities in various sectors
According to the latest European Investment Atlas from Cushman & Wakefield, improved credit conditions, higher liquidity and clearer positive macroeconomic signals are opening up new strategic opportunities for investors. Structured and defensive approaches offer attractive opportunities across all sectors.
Cushman & Wakefield's cyclical positioning indicator, the TIME Score, rose from 3.0 in Q1 2025 to 3.2 in Q3 2025. This increase underscores the turning point in the European investment market and the broadening recovery across all sectors. Logistics, retail and hotels in particular remain in the "sweet spot" for investment thanks to robust operating metrics and rising demand. Rental prices and space absorption remain stable for ESG-compliant premium office properties, while portfolios in peripheral locations with quality and amenity deficits face structural challenges.
The Fair Value Index, also part of the Atlas, shows that 78% of the markets surveyed are undervalued. No market is considered overvalued; the dispersion highlights numerous, yet selective, opportunities. Logistics tops the list of market opportunities, supported by solid fundamentals.
The recovery is largely driven by the availability and willingness to allocate debt capital. Lenders are once again active in new business and are using refinancing and restructuring to increase liquidity, secure market share and establish new clearing prices. Increased competition is squeezing margins across asset classes and risk profiles, while flexible structures from new and established financiers are enabling access to capital and faster transactions.
Simon Jeschioro, Head of Capital Markets Germany & Investment Advisory at Cushman & Wakefield: "With short-term EURIBOR rates around 2% and long-term swaps between 2.4% and 2.8%, the interest rate environment has eased noticeably. This less volatile market environment supports investment in real estate, as investors can better plan and achieve their return targets with stable capital costs."
Germany: Transaction volume rises, new special funds focus on logistics and residential
Germany remains undervalued in all markets and sectors and is showing signs of an incipient turnaround in the investment cycle. Following a commercial transaction volume of €22.4 billion in the previous year and €16.1 billion in the first three quarters of 2025, Cushman & Wakefield forecasts growth of up to €24 billion for the year as a whole. The recovery is thus continuing and is likely to strengthen further in 2026, reaching €25 to €30 billion. Both domestic investors (53% share in the first three quarters) and international investors (47%) are taking advantage of the stabilised interest rate situation and attractive risk premiums to once again seize opportunities.
Germany is benefiting in particular from the high demand for modern office space in central locations, where prime rents remain stable and scarcity favours value-add strategies. At the same time, demand for logistics space is rising, driven in part by government investment in defence and infrastructure. Cushman & Wakefield Research identified a total of 16 German special funds with a planned volume of up to €5.95 billion between Q4 2024 and Q3 2025, which intend to invest primarily in logistics (€2.55 billion) and residential (€1.9 billion). The planned distribution yields of 4-6% are well above the risk-free interest rate and reflect the attractiveness of the market. Institutional investors are increasingly confident: fundraising for European commercial real estate had already reached €20.0 billion by August 2025 and is likely to rise to €30.0 billion for the year as a whole – a clear turning point compared to the declines of previous years.
Simon Jeschioro comments on developments in the German market: "Overall, the new market cycle is emerging in an environment in which real estate investments are regaining their appeal – albeit with greater selectivity and regional differentiation. The positive outlook is also reflected in the growing confidence of institutional investors. Special funds in particular are once again focusing more strongly on the residential and logistics asset classes. In addition, special funds are also seeing very good entry opportunities in office properties again, albeit selectively."
Europe on the upswing: debt capital drives transactions, focus on quality strengthens returns and confidence
With bid-ask spreads narrowing and liquidity improving, transaction volumes are also likely to rise in Europe. Cushman & Wakefield expects selectivity and a focus on quality to lead to above-average performance. Investors are aligning their strategies with core returns, diversification and ESG-compliant premium assets, while remaining flexible to take advantage of sectoral and geographical opportunities. The combination of stabilised interest rates, growing institutional confidence and specialised fund activities makes the German market a key driver of the European recovery. The residential and logistics asset classes are particularly in focus, while office space in prime locations continues to promise stable returns.
David Gingell, Co-Head of EMEA Debt Advisory at Cushman & Wakefield: "Debt capital is leading the recovery cycle by 12 to 18 months. Lenders are intensifying competition, compressing margins and increasing liquidity – debt capital is thus the key driver of European real estate transactions."
David Hutchings, Head of Investment Strategy, EMEA Capital Markets at Cushman & Wakefield: "The recovery is underway, confidence is returning and investors are adjusting their strategies. Fundraising is picking up again: managers are offering secure income mandates and increasing their flexibility through diversified, cross-sector approaches. Core capital is cautiously returning – with a disciplined pricing strategy and a focus on the quality of portfolios and locations. This sentiment-driven upturn is likely to strengthen until 2026. Against the backdrop of yield compression, buyers remain price-conscious."
Notes:
The Cushman & Wakefield Fair Value Index provides investors with insights into the relative attractiveness of current prices in prime office, retail and logistics property markets across Europe. The index ranges from 0 to 100; a value close to 100 indicates attractive yields (undervalued), while values close to zero indicate insufficient yields (fully valued).
Cushman & Wakefield's TIME score (Timing Investment Market Entry/Exit) uses historical property market data and economic indicators to assess the current cyclical positioning of the commercial property market and signal conditions and directions. It ranges from 1 (contraction) to 5 (expansion), with higher values indicating more favourable conditions for investment.
