The European commercial property market witnessed a significant resurgence in 2025, with a dramatic increase in high-value office transactions, particularly in central London. Investor confidence returned to the sector, fuelled by expectations of a future shortage of top-quality space and anticipated rental growth.
London Leads the European Recovery
Data reveals a powerful rebound in major deals. By mid-December 2025, 21 transactions worth £100m or more were completed in central London, a substantial increase from just 12 during the whole of 2024. The scale of investment was even more pronounced at the higher end of the market, with nine office buildings sold for £200m or more, compared to only one such deal in the previous year.
According to the real estate agency Savills, these major sales accounted for 53 per cent of total central London sales volume by mid-December, up sharply from 27 per cent in 2024. Oliver Bamber, director for central London investment at Savills, observed that "investors are feeling more confident" about committing capital, with domestic funds and institutions being particularly active.
Investors Target Prime European Cities
While confidence is growing, the market remains highly selective. Capital is being channelled towards well-located buildings in premier global cities, with European hubs like London, Amsterdam, and Berlin attracting significant attention. Nick Deacon, head of office for Europe at Nuveen Real Estate, explained the rationale, stating that despite shifts in work patterns, "demand has stayed up, supply is looking really difficult, we’re all anticipating rental growth."
Lars Huber, head of Europe at Hines, highlighted several factors drawing investors to Europe. "The interest rate environment has improved, construction costs are moderating, there’s less top-quality office space and Europe provides geopolitical stability compared to other places," he said. This improved sentiment is being supported by traditional lenders, who are becoming more willing to provide finance, thereby adding crucial liquidity to the market.
Financing Fuels the Market Momentum
The revival in lending has been a key component of the market's recovery. Research from Bayes Business School shows that in the first six months of 2025, new commercial real estate lending in the UK totalled £22.3bn. This figure represents a notable 33 per cent increase compared to the same period the prior year, underlining the renewed flow of capital into the sector.
The collective data from 2025 paints a clear picture of a European office market in recovery. After a period of uncertainty, a combination of constrained supply, expectations of rental growth, and a more favourable financial climate has successfully reignited major investment activity, firmly re-establishing prime city centres as core targets for global capital.
