Christian LueThe European real estate market is at a defining moment with the next few months playing a crucial role in shaping the strength and sustainability of its recovery according to Cushman & Wakefield’s latest TIME Score.
Developed by Cushman & Wakefield’s EMEA Forecasting team, the TIME (Timing Investment Market Entry/Exit) Score utilises historical real estate market data and economic indicators to assess current cyclical positioning and signal conditions and directionality. Scores range from 1 (contraction) to 5 (expansion), with a reading towards the higher end suggesting that current conditions are favourable, signalling an opportune time to invest as most variables align positively.
In the Q1 2025 TIME Score, the All Property figure has remained steady at 3.0 since the previous quarter, maintaining its position at the critical inflection point. This phase signals a shift from decline or uncertainty to recovery and growth, marked by stability in prices, higher demand, and better economic indicators.
Our analysis shows that the market is on the cusp of an expansion phase, which suggests that now is an optimal time to deploy capital.
In this latest update, Cushman & Wakefield has observed a much-needed improvement in momentum indicators (liquidity, percentage of cross border capital, average deal size and economic sentiment). Momentum indicators are a vital factor in the continued recovery of the market and signals a rebound in investor confidence, suggesting that the market is beginning to stabilise and regain its footing.
Sukhdeep Dhillon, Head of EMEA Forecasting at Cushman & Wakefield, comments: “As we start a new market cycle, the decisions and developments over the next few months will set the tone for the future trajectory of Europe’s commercial real estate market. Our analysis shows that the market is on the cusp of an expansion phase, which suggests that now is an optimal time to deploy capital.”
James Chapman, Head of EMEA Capital Markets at Cushman & Wakefield, says: “With borrowing costs becoming more favourable and debt availability improving, we are witnessing a growing confidence among borrowers and lenders that property prices have largely recalibrated to the higher rate environment. Therefore, it is a good time to start deploying capital more aggressively into the CRE sector.”
Further improvement in the overall score was held back by a decline in both the cyclical and growth trajectories. This was caused by stubborn inflation and sluggish economic growth, contributing to REITs’ downward momentum at the start of the year. Additionally, the movements in the five-year swap rates due to volatility led to a more cautious market environment. The positive developments that are anticipated in these areas during the next quarter would likely result in a much improved TIME Score in Q2 2025.
Although there are still challenges, the recent positive momentum suggests a strong recovery is on the horizon, creating a favourable environment for well-timed investments.
“With inflation easing and economic conditions improving, investors are feeling more optimistic about the future,” adds Chapman. “Major investments, such as those by Modon in London and Blackstone in central Europe, indicate a strengthening market and it points to an active MIPIM this week. Although there are still challenges, the recent positive momentum suggests a strong recovery is on the horizon, creating a favourable environment for well-timed investments. Keeping a close watch on these changes will be essential to take advantage of emerging opportunities.”
Key recent deals include Blackstone’s acquisition of TPG Real Estate and Contera’s Central European logistics portfolio and Modon Holding’s venture with Broadgate REIT to develop 2 Finsbury Avenue, London.
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