Altus Group Releases its Q2 2024 Pan-European Dataset Analysis on CRE Valuation Trends

Each quarter, Altus Group centralizes and standardizes CRE valuation data for the European market, pulling insights into the factors driving commercial property valuations. The Q2 2024 aggregate dataset included Pan-European open-ended diversified funds, representing €29 billion in assets under management. The funds cover 17 countries and primarily span the industrial, office, retail and residential property sectors.

“Property values across the Pan-European valuation dataset remained largely unchanged in Q2 2024, registering a slight sequential decline of only -0.06% over Q1 2024,” said Phil Tily, Senior Vice President at Altus Group. “This marks the smallest downward revision since values began declining in Q3 of 2022. Over this eight-quarter period, the property values within this dataset have dropped by a total of 16.5%. The minimal decrease in Q2, coupled with the recent interest rate cut, points to more stability ahead as value declines are moderating significantly.”

Despite the European Central Bank's 25 basis point cut in the base interest rate in June, yields continued to move out for a ninth consecutive quarter, putting further downward pressure on values though at a moderating pace. Low single-digit yield increases were recorded across all sectors and accounted for -0.7% value change across the dataset. Factoring in the ongoing slight improvement in cashflows, appreciation levels finally crossed the divide, turning positive in each of the main sectors except office.  

Key highlights by sector include:

• Industrial: continues to be the strongest performer with values up 0.5% over Q1 2024. Cashflow gains for this sector added 1.1% to values, balancing out a relatively small negative yield impact of -0.5%. 

• Office: a minor downward revision in projected cashflows, along with a larger than average yield increase, resulted in further write-downs with values declining by 0.8% over Q1 2024.

• Retail: values turned positive in the second quarter, up 0.2%, but with mixed results across property types. Parks and warehouse properties were the top performing with values up 3.1%, followed by supermarkets (0.3%). There were minimal write-downs among shopping centres (-0.6%) and high street assets (-0.1%).

• Residential: cashflow upside of 0.6% cancelled out a comparatively minor yield offset of -0.4%, resulting 0.3% increase in value over Q1 2024.

For detailed review of the sector trends by asset class, please visit Altus Group’s insights articles