- European commercial real estate retains a score of 3 in the first quarter of 2025, remaining in a critical turning point phase
- As inflationary pressures ease and economic conditions gradually improve, the market is on the way to regaining its strength
The European real estate market is currently at a critical turning point. According to the latest TIME score from Cushman & Wakefield, the coming months will play an important role in determining the strength and sustainability of the recovery.
Tina Reuter, CEO Germany at Cushman & Wakefield: ‘As we stand at the beginning of a new real estate market cycle, decisions and developments in the coming months will set the tone for the future course of the European commercial real estate market. Our analysis shows that the market is on the cusp of an expansionary phase. This suggests that now is an optimal time to deploy capital.’
Developed by Cushman & Wakefield's EMEA forecasting team, the TIME (Timing Investment Market Entry/Exit) score uses historical real estate data and economic indicators to assess the current cyclical position and signal conditions and direction of development. The scores range from 1 (contraction) to 5 (expansion), with a high score indicating favourable current conditions and signalling a good time to invest, as most variables are positively aligned.
In the TIME score for Q1 2025, the all-property value remained stable quarter-on-quarter at 3.0, maintaining its position at the critical inflection point. This phase signals a transition from decline or uncertainty to recovery and growth, characterised by price stability, higher demand and better economic indicators.
In the latest update, Cushman & Wakefield has identified an improvement in the momentum indicators (liquidity, share of cross-border capital, average deal size and economic sentiment). Momentum indicators are a key factor in the continued recovery of the market and signal a resurgence in investor confidence.
Tina Reuter explains: ‘As borrowing costs become more favourable and their availability increases, we are seeing growing confidence among borrowers and lenders that property prices have largely adjusted to the higher interest rate environment. Therefore, it is a good time to invest capital more aggressively in the CRE sector.’
A further improvement in the overall score was slowed by a decline in both cyclical and growth trends. This is due to stubborn inflation and sluggish economic growth, which contributed to a downward trend in REITs at the beginning of the year. In addition, movements in five-year swap rates due to volatility led to a more cautious market environment. Positive developments anticipated in these areas over the next quarter are likely to lead to a significantly improved TIME score in Q2 2025.
‘With easing inflation and improving economic conditions, investors are more optimistic about the future,’ said Reuter. ’Large-scale investments, such as those made by Modon in London and Blackstone in Central Europe, point to a stronger market. Despite the challenges, the recent positive momentum suggests a strong recovery is on the horizon, creating a favourable environment for well-timed investments. Closely monitoring these changes will be crucial to taking advantage of opportunities as they arise.’
