Altus Group releases its Q4 2024 Pan-European Dataset Analysis on CRE valuation trends

“The latest data across the Pan-European valuation dataset suggests that real estate markets in parts of Europe are entering a recovery phase, with values now rising for two consecutive quarters after two years of declines,” said Phil Tily, Senior Vice President at Altus Group. “The industrial and residential sectors led the rebound in the fourth quarter of 2024, with yield stabilization and improving cashflows signalling a more positive market outlook moving forward.”

Commercial property values across the Pan-European valuation dataset increased for the second consecutive quarter in Q4, rising 0.8% over Q3, with all sectors seeing gains, albeit with a mixed set of results from a yield and cashflow perspective. Values rose 0.4% overall in 2024, as gains in Q3 and Q4 offset declines from the first half of the year, driven mainly by industrial, residential, and other property categories.

Key highlights by sector include:

• Industrial: The industrial sector was the top performer in Q4 with a 1.0% value increase over Q3 2024 and 1.6% annually. The improvement was supported by a positive pricing adjustment with yields declining, although cashflow fundamentals eased as rental growth slowed during the back end of the year. The largest valuation gains were reported in Germany.

• Residential: Residential values rose by 0.9% in Q4 and 1.4% for the full year – both above average. The improvement was driven by comparatively strong cash flow fundamentals with above-average rent growth. Values in the two largest residential markets in the dataset, the Netherlands and Germany, continued to strengthen, increasing 1.0% and 0.8% respectively in the quarter.

• Office: Office values rose 0.8% over Q3 2024, up for two consecutive quarters now. Further yield expansion, reflecting ongoing investor caution towards the sector, was counterbalanced by strengthening cashflow resulting in office values continuing to rise over the quarter. Sweden was the standout performer in this sector in Q4.

• Retail: After leading performance in Q3 2024, the retail sector saw only modest growth in Q4, with values still rising 0.3%. Rising yields held back values for high street stores and shopping centres, while falling yields for retail warehouses helped boost values by 1.9%.

• Other: Outside of the main sectors, hotels had another strong quarter, with positive investor sentiment driving yield improvements and above-average value growth.