Europe's Real Estate Dilemma: A Slow Road to Recovery

Europe's commercial real estate market is struggling to rebound as cautious investors keep property sales at near-decade lows.

Despite early 2025 optimism for a post-pandemic recovery, unpredictable U.S. trade policies and the appeal of higher returns elsewhere are deterring investments. Some investors and banks are opting to offload or restructure distressed assets but the 'extend and pretend' strategy remains prevalent. Commercial property sales in Europe were stagnant in early 2025, with significant year-on-year declines reported.

With a sluggish sales trend affecting various sectors, including the previously thriving data centers, experts express concerns about the 'zombieland' market conditions. The shift in sentiment is reflected in reduced cross-border investments, and heightened competition from other private markets like credit. As the largest economy in Europe, Germany is experiencing a particularly harsh property slump, adding to the challenges facing international investors and economic recovery.

(With inputs from agencies.)