European Commercial Property Price Index: April, 2025

In Search Of Direction

The Green Street Commercial Property Price Index, which measures pricing of a broad swathe of Pan-European commercial properties, was stable in the first quarter of ’25, leaving overall pricing in-line with its pre-GFC peak. Industrial, residential, and data centre assets outperformed, climbing c.1% QoQ thanks to gradual income expansion and stable yields. Meanwhile, office pricing retreated ~60 bps as negative embedded rent growth in B/B+ properties dragged cash flow lower. Retail and hotel pricing was largely stable, with the former’s pricing benefitting from re-based rents and the latter enjoying healthy – albeit decelerating – rental rate growth.

“Property prices have held steady year-to-date, but such a sense of stability is now up in the air following the unveiling of the U.S.’s Liberation Day policies.” said Marie Dormeuil, Senior Analyst at Green Street. “In the past few days, investors have been spooked by much higher tariff announcements than what was anticipated, and real estate equities have sold off somewhat, albeit they are outperforming other industries due to property’s relatively defensive nature. Property prices are unlikely to move much higher in the near term as the outlook for operating fundamentals has deteriorated given the real-time rising odds of a global recession. Yet, macro fears are simultaneously pushing inflation-adjusted “risk-free” yields lower, providing an important ballast for property cap rates even if we see our income growth forecasts needing to be revised lower in the months ahead.”