The European commercial real estate market has entered a defining moment, as 82% of tracked markets are now underpriced, according to the latest European Investment Atlas from Cushman & Wakefield. Investors eyeing strategic re-entry may find this to be a rare window where pricing and fundamentals align. The firm’s Fair Value Index (FVI) remains high at 91 out of 100, indicating strong return potential across 119 prime office, retail and logistics markets.
This level of mispricing is especially notable in Germany, where all sectors are flagged as underpriced after a significant correction. In parallel, logistics assets across the continent are being snapped up as demand outpaces supply, especially around major urban hubs and last-mile delivery corridors. It’s not just about pricing; Cushman & Wakefield's TIME Score shows the market is at an "inflection" point. This suggests conditions are stabilising, making now a strategic time to act.
“Stabilising fundamentals, combined with a highly liquid and increasingly innovative debt landscape, are creating a favourable environment for capital deployment in European real estate,” said Sukhdeep Dillon, Head of EMEA Forecasting at Cushman & Wakefield. With interest rates gradually easing and inflation cooling, the path is opening for confident capital flows, particularly in sectors with strong current income and recovery potential.
Hospitality remains a standout, benefiting from a surge in travel recovery and shifting consumer spending habits. The sector sits squarely in what Cushman terms the investment "sweet spot", driven by operational resilience, flexible redevelopment potential, and repositioning strategies that blend hospitality with lifestyle and mixed-use developments. Investors are taking note of underutilised city-centre assets that can be converted or repositioned, particularly in secondary cities showing strong tourism growth.
In a market once dominated by capital scarcity, lenders are now more open to strategic plays. Rising loan-to-value ratios, flexible deal structures and the proliferation of debt funds, often backed by institutional capital, have rebalanced the financing equation. What's largely gone unnoticed is the growing availability of structured credit for redevelopment projects, which could unlock significant value in obsolete office stock across Europe’s urban cores. This presents an unexpected advantage for developers ready to reposition properties exceeding 10,000 m² in cities like Milan, Amsterdam and Barcelona.
“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 David Hutchings, Head of EMEA Investment Advisory at Cushman & Wakefield. As macroeconomic visibility improves, especially with anticipated clarity from US policy in H2 2025, European markets could experience renewed momentum led by opportunistic investors and agile developers.
People mentioned:
Sukhdeep Dillon – Head of EMEA Forecasting, Cushman & Wakefield
David Hutchings – Head of EMEA Investment Advisory, Cushman & Wakefield
Companies mentioned:
Cushman & Wakefield
Image Source: AI generated
