A total of €224.9bn (£194.9bn) was transacted in Europe’s commercial real estate market in 2025, virtually unchanged from 2024, MSCI’s latest quarterly Europe Capital Trends report shows.
Geopolitical instability, lacklustre economic growth and property sector-specific factors put a hoped-for recovery in deal volumes on hold, MSCI said.
However, alternative property types outside the traditional office, retail and industrial sectors accounted for a record 18% of European real estate deals in 2025.
MSCI said this reflected the appeal of data centres and social infrastructure assets including senior housing, student accommodation, healthcare facilities and affordable housing.
The office sector continued to recover in 2025, with deal volumes up 10% on 2024, at €52.7bn (£45.6bn), and the strongest quarterly sales for three years in Q4.
Deal activity was mainly focused on the prime end of the market, with pricing firming in the key markets of central London, Paris and Germany’s main cities.
The year’s largest single-asset deal was Blackstone’s €700m (£606.8m) purchase of the Centre d’Affaires Paris Trocadéro office complex in Paris.
The UK remained Europe’s top investment market in 2025, accounting for more deals by volume than next-placed Germany and France combined, as volumes edged up to €65.5bn (£56.79bn) over the year, driven by a 21% year-on-year gain in Q4.
The UK’s strength reflected the fact it was the first major market in Europe to recover from the rapid rise in interest rates that depressed activity from the second half of 2022, MSCI said.
UK office deals recovered to a three-year high in 2025, while industrial deals were powered by portfolio and corporate entity sales.
Ireland’s commercial real estate market experienced a strong Q4, but this didn’t offset weaker activity for 2025 as a whole, as volumes fell 16% from 2024 to €4.1bn (£3.5bn).
Dublin ranked eighth in Europe’s top investment destinations, although activity fell 19% compared with 2024.
Tom Leahy, head of EMEA real assets research at MSCI, said: “Europe’s real estate investment markets remained in a holding pattern in 2025.
“Low liquidity and modest returns persisted in the context of geopolitical volatility, a subdued outlook for some larger European economies and a more competitive environment for capital raising.
“Even so, pockets of outperformance have emerged and the much-anticipated rebound in office investment is now under way, albeit focused on a subset of high-quality assets.”
Recent Property Week analysis revealed that industry players believe recovery and revival will be the key investment themes in the year ahead.