Altus Group has released its Q2 2025 Pan-European dataset analysis, offering a detailed view into the performance of Europe’s commercial real estate (CRE) sector. The findings reveal that commercial property values rose for the fourth consecutive quarter, signalling a market that is steadily regaining confidence.
Covering €29 billion in assets under management, the dataset spans 17 countries and aggregates performance across diversified funds. By focusing on core sectors including industrial, office, retail, and residential, the analysis provides investors and stakeholders with an essential snapshot of how valuation trends are shifting across Europe.
In Q2 2025, values across the Pan-European dataset increased 0.6% from the previous quarter and were up 2.8% year-over-year compared with Q2 2024. While the pace of growth moderated, largely due to slower cashflow expansion at 0.5%, the lowest gain in four quarters, the overall sentiment remains optimistic. The resilience of yields, alongside improving investor outlook in a lower interest rate climate, continues to play a stabilising role.
Phil Tily, Senior Vice President at Altus Group, underscored the significance of the upward trend. “The four consecutive quarters of valuation improvements are a clear and reassuring sign that market fundamentals are stabilising across Europe,” he said. Despite uneven macroeconomic conditions across the continent, the dataset points to a real estate sector preparing for its next cycle of growth.
A closer look at the sector breakdown reveals important dynamics. Residential assets once again led the way, recording a 0.9% increase over Q1 2025. This strength was fuelled by solid cash flow fundamentals that outweighed rising yields. The industrial sector followed closely behind, with values up 0.8% quarter-on-quarter. While cashflow appreciation showed signs of slowing, positive yield impacts kept valuations trending higher.
The office sector delivered more modest growth, with values increasing 0.3%. Here, yield tightening helped offset largely stagnant cash flows. Similarly, retail properties managed only a 0.3% rise. Limited rent growth, coupled with higher operating expenses, constrained performance, highlighting ongoing challenges in a sector still adapting to shifting consumer behaviour.
Beyond the core categories, alternative property types also attracted attention. Student accommodation, for instance, saw values climb by a notable 1.9%, an indication that investors are seeking opportunities in areas supported by steady demand drivers. This diversification of asset classes reflects the broader strategy of market participants looking to balance risk with new growth avenues.
The dataset not only tracks numerical changes but also underscores the importance of long-term strategies. Market players are increasingly turning to valuation advisory services to better understand how shifting interest rates, rental performance, and cost structures may influence the trajectory of their assets. By centralising insights across multiple countries and asset classes, Altus Group provides a rare and empowering lens into regional variations that can guide investment strategies.
As Europe’s CRE market continues to build momentum, the steady value growth across four consecutive quarters points toward a sector that is not just regaining balance, but also showing promising signs of growth. For investors and property managers alike, the Q2 2025 analysis reinforces the message that stability is returning, even if the pace of gains is moderating. With residential and industrial assets leading the charge and alternative property types making strong showings, the landscape offers both challenges and fresh opportunities for the months ahead.