European Commercial Property Price Index: January, 2025

Humming And Hawing

The Green Street Commercial Property Price Index, which measures pricing of a broad swathe of Pan-European commercial properties, stalled by year end ’24 (+0.2% in 4Q), tempering its earlier steady upward path (+1.8% for the full calendar year). Amongst sectors, hotel, residential and data centre pricing moved up in the last three months due to unequivocally solid operating fundamentals. Conversely, the industrial sector moved backwards (-1% in 4Q), as rent expectations for B/B+ quality stock were recalibrated. Meanwhile retail has benefitted from improved sentiment amongst buyers and lenders throughout ’24, manifesting in higher investment liquidity.

“Property prices grew in the final quarter, but the momentum was somewhat more tepid” said Marie Dormeuil, Senior Analyst at Green Street. “A renewed level of concern is seeping into commercial real estate investors’ outlook with regards to pricing prospects as the recent sell-off across bond and equity REIT markets implies a less robust outlook for ’25 than what was the case only 30 days ago. Amongst the observed market volatility, public market signals favour the retail and hotel sectors, whilst being quite negative of industrial and office.”