The majority (82%) of real estate markets in Europe are underpriced, underscoring the "breadth of opportunity available to investors", according a report from Cushman & Wakefield.

C&W’s ‘European Investment Atlas’ report said this reflects a “rare alignment of attractive pricing and improving fundamentals”.

The firm added that the European prime real estate market is in a transitional phase where conditions are no longer deteriorating but it is not yet in full recovery, offering a strategic entry point for investors.

The combined analysis of C&W’s TIME score, which uses past market data and economic indicators to assess the current state of the cycle, and its Fair Value Index, reveals that the hospitality sector continues to occupy the sweet spot for investment, supported by solid fundamentals and favourable timing.

Meanwhile, the report highlighted that debt markets are fuelling investment opportunities, with lenders offering increasingly flexible and innovative structures. Loan-to-value ratios are rising and debt providers are expanding their footprint across Europe.

Despite concerns about asset refinancing, distress remains limited and financing accessible across core and value-add strategies, C&W reported.

David Hutchings, head of EMEA investment advisory at Cushman & Wakefield, said: “While fundraising has been challenging, capital availability is firming up; dry powder remains high and direct allocations, especially to core, are rising. Real estate continues to prove its value through strong current income and a solid historical track record.”

The firm said that as interest rates continue to ease and inflation moderates, investor confidence is expected to strengthen. It also anticipates further clarity on US policy, which should further buoy confidence later in the year.

The combination of underpriced assets, improving financial conditions and resilient sector fundamentals positions European real estate for a potential rebound in the second half of 2025, according to C&W.

Sukhdeep Dillon, head of EMEA forecasting at Cushman & Wakefield, said: “Stabilising fundamentals, combined with a highly liquid and increasingly innovative debt landscape, are creating a favourable environment for capital deployment in European real estate.

“As financing conditions continue to improve, investors with long-term conviction and a disciplined approach to risk are well positioned to capitalise on emerging opportunities across the region.”