The European commercial real estate sector remains stagnant, with no widespread post-pandemic recovery in sight.

In Q1 2025, the volume of commercial real estate transactions in Europe totaled €47.8 billion, remaining roughly unchanged from the same period in the previous year and less than half the volume recorded three years ago. Preliminary Q2 data indicates a decline in cross-border investment across the Europe–Middle East–Africa region by approximately 20%, down to €17.2 billion — the lowest figure for the April–June period in the past decade.

Sales volumes remain low across many segments, including office real estate and data centers, which were previously considered resilient. Liquidity remains limited, with many assets “stuck” on the market without buyers, creating what is now referred to as a “zombieland” condition.

Distressed cases include: Brookfield withdrawing its offer to sell the CityPoint tower in London, opting instead for debt restructuring; and in Frankfurt, the Trianon skyscraper is listed on the open market following the bankruptcy of its owner.

Investors are increasingly turning to private credit: corporate credit funds in Europe raised $39.9 billion in H1 2025 — nearly twice the amount raised by real estate funds (~ $20.6 billion). Investor confidence indices (INREV) saw their steepest decline in a year as of June 2025, amid low liquidity and market uncertainty.

Industry executives report that even in Germany, Europe’s largest economy, commercial property sales declined by an additional 2% in H1 2025 (CBRE data). Overall, only selective recovery is expected, limited to high-yield and less-exposed segments such as logistics, hospitality, and rental housing.

The European commercial property market remains focused on selective investment opportunities. Given elevated interest rates, a persistent buyer-seller expectation gap, and substantial liquidity risks, any recovery is projected to be gradual and fragmented.

Commentary from the investment division of M24 SunShine

Reuters data provides a clear snapshot of the current stagnation in the commercial sector. Liquidity is low, assets are stuck on the market, and distressed scenarios are multiplying. However, the concurrent growth of private credit funds shows that capital is still seeking deployment — just not in traditional assets. Selective recovery is possible, but only in niche segments with stable income.