News / From the associates

In the third quarter of 2025, the European commercial real estate market continued its recovery, despite an economic slowdown in the middle of the year, partly due to U.S. tariffs. Year-to-date investments reached €111.3 billion, marking an overall increase of 4% year-over-year: a result that confirms a gradual but structural recovery. This trend reflects a market phase driven by expectations of acceleration in the latter part of 2025 and in 2026. From a sectoral perspective, the retail sector stood out as the most dynamic, with €25.3 billion invested (+13%) and renewed confidence in the value of this asset class. Offices, with €29 billion, show a slow but steady recovery from previous lows, while logistics remains stable with investments of €28.5 billion (-2%) and hospitality continues to attract capital, reaching approximately €15 billion and a 14% market share. Foreign capital accounted for 42% of the total, with intra-European investments rising (+5%) and U.S. investments falling (-8%), reflecting a more cautious approach in an economic environment that remains uncertain. Prime yields remain largely stable: demand is not yet sufficient to compress them further, but the end of monetary tightening has reduced the risk of new rounds of yield compression. Geographically, the three main markets—the United Kingdom, Germany, and France—account for approximately 52% of the total volume, amounting to nearly 60 billion euros in the first nine months of 2025. Performance remains mixed: the UK saw a 10% decline compared to the previous year, Germany a slight dip (-2%), while France recorded 5% growth, driven by the strong performance of the office sector, which accounted for 37% of the total invested in the country. Among other European markets, Spain stood out with nearly €9 billion in investments, thanks to a particularly strong second quarter. Italy, along with Spain, is also the only European country to report investment volumes above the five-year average, confirming structural resilience and growing interest from international investors. Overall, the gradual reduction in negative investor sentiment is supporting growth in various markets, confirming the trend of consolidation in commercial real estate across Europe.

Read the report: https://www.realestate.bnpparibas.com/sites/default/files/2025-10/Europe_Capital_markets_REview-Q3-2025.pdf