European property values were up 0.6% in Q2 2025, marking the fourth consecutive quarter of improving values according to Altus Group’s Pan European Valuation report.

Breakdown of value movements
Infogram

The Q2 report, seen exclusively by Property Week, revealed that the pace of improvement eased slightly as cashflow gains continued to slow, dropping to 0.5%. This was the lowest level in four quarters – reflecting a general level of uncertainty surrounding the wider macroeconomic backdrop.

Altus said that as part of this reduced cashflow effect, market rent increases – which had been running at a rate in excess of 1% per quarter through 2022 and 2024 – slowed to just 0.4% in Q2.

The positive yield impact reflects a “steady rise” in investor sentiment, aided by the move to lower interest rates, the group said. This added 15 basis points (bps) to values similar to the level of upside in the opening three months of the year.

Values across all market sectors rose during the quarter with ‘other’, which includes student accommodation, seeing the biggest rise at 1.3%. This was followed by residential properties with an increase of 0.9%, placing both sectors at the upper end of the hierarchy.

Industrial properties also recorded above-average results for the quarter as values were up 0.8% because of improved yields and cashflows. According to Altus, there was a mixed set of appreciation results in the sector, with comparatively strong gains in the Netherlands (1.3%), Spain (1.1%) and Germany (0.9%). These were tempered by more modest results in the UK (0.4%), France (0.2%) and Sweden (0%).

The office and retail sectors were the most subdued, each registering a comparatively small increase of 0.3%.

Phil Tily, senior vice-president, head of performance analytics at Altus Group, said: “Over the last three years, reversing back into the period of decline, the office sector has undergone a more significant structural reset, experiencing the largest negative yield impact and remaining at the bottom of the rankings with values down 7.7% year over year.”

Meanwhile, in the retail sector, most subtypes registered some increase in values, except supermarkets, where values remained unchanged over the quarter.

Tily added: “High street retail, including some luxury stores, has recorded some of the strongest gains in the last year. This is due to yields now trending back in, having previously corrected out further, and with values being more adversely affected during the recent market turndown.”