European commercial real estate transaction activity dipped in the final quarter of 2025, but the year in aggregate is on a steadier footing than earlier headlines suggested. MSCI Real Capital Analytics updated Q4 and 2025 full-year figures show a market still weighed down by geopolitical uncertainty and uneven economic performance, but with notable signs of resilience beneath the surface. We see the potential for further acceleration in Europe, given its historical lagging relationship with the U.S.
Deal volumes reached €71.5bn in Q4, down 9% from the same quarter in 2024 and below the long-term fourth quarter average. However, earlier quarters were revised higher, particularly a stronger-than-initially-reported Q3, which shifted from a -3% estimate to +8% YoY. As a result, full-year 2025 volumes landed at €224.9bn, essentially flat compared with 2024 and it’s possible that future revisions may push volumes even higher.
Source: MSCI Real Capital Analytics, Principal Asset Management. Data as of February 2025.
That headline stability masks wide variation across markets and property types. The UK, France, and Sweden all posted year-over-year gains. The UK has moved into recovery territory, with rolling four-quarter volumes now above early 2023 levels, a rebound supported by industrial, office, and seniors housing activity. France benefited from a resurgence in office transactions and above-average volumes in industrial and apartment properties. Sweden, meanwhile, saw strong demand for apartments, where volumes rose 36%.
Another theme of 2025 was the continued rise of non-traditional sectors. Data centers, affordable housing, student housing, single-family housing, and healthcare collectively accounted for roughly 18% of total activity, about €45bn, up from 13–14% over the prior two years. These segments not only reached new highs in absolute terms but also continued to gain market share as investors sought differentiated sources of income and growth.
