What’s going on here?
European office property sales plunged to their lowest levels since 2009, reaching just €42.4 billion in 2024. A report from MSCI underscores the decline, citing tough economic conditions and the shift toward remote work.
What does this mean?
Europe’s commercial real estate market is feeling the pinch, particularly in the office sector, hit hard by rising borrowing costs and the ongoing shift to remote working. Large offices, such as London’s CityPoint and the ‘Can of Ham’ towers, are struggling to attract buyers, unless they feature eco-friendly designs – the sole bright spark in demand. Yet there’s a positive note: total commercial property sales in Europe rose by 4% to €188.8 billion, buoyed by interest in industrial, apartment, and hotel properties. This reflects investors’ changing focus, as shown in an INREV survey highlighting a move towards residential, industrial, and student accommodations. Still, the market remains unpredictable, clouded by financial uncertainties post-Donald Trump’s second presidency, as noted by MSCI’s Head of EMEA Real Assets Research.
Why should I care?
The bigger picture: Rethinking real estate priorities.
The drop in office sales points to a broader reassessment of property investment strategies in Europe. As companies adapt to new work environments, demand for residential and industrial properties is poised to increase. The focus on sustainable, innovative spaces could reshape urban landscapes, influencing where and how we live and work.
For markets: Shifting sands in real estate.
The European property scene is evolving, mirroring changing priorities that are transforming market dynamics. Investors are turning towards residential and industrial sectors, seeing them as safer bets amid economic vagaries. With an emphasis on sustainability and versatility, the market is gravitating towards sectors promising resilience and growth as 2025 approaches.