Commercial Real Estate - Europe | Statista Market Forecast

The Commercial Real Estate market market in Europe is expected to reach a value of US$30.86tn by 2024.
This projection indicates a steady annual growth rate (CAGR 2024-2029) of 1.14%, leading to a market volume of US$32.66tn by 2029.
It is worth noting that in the global context, the United States will generate the highest value in the Real Estate sector, with a projected value of US$25.3tn by 2024.
In Germany, the commercial real estate market is experiencing a surge in demand for office space due to the rise of remote work and flexible working arrangements.

Definition:

Commercial real estate can be defined as properties that are used for business purposes, such as office buildings, retail spaces, warehouses, and industrial properties.

Additional information:

The commercial real estate market contains the value of commercial properties as a key performance indicator. This is the worth of all office buildings, retail spaces warehouses, and industrial properties for the timeline of our data coverage.

Office buildings
Retail spaces
Warehouses
Industrial properties

Residential real estate
Publicly owned buildings used by the local government
Buildings used for public health care services

Commercial Real Estate market in Europe is experiencing significant growth and development in recent years. Customer preferences, trends in the market, local special circumstances, and underlying macroeconomic factors are all contributing to this positive trajectory. Customer preferences in the Commercial Real Estate market in Europe are shifting towards modern and sustainable properties. With an increasing focus on environmental sustainability and energy efficiency, customers are seeking commercial properties that align with these values. This has led to a rise in demand for green buildings and properties with LEED or BREEAM certifications. Additionally, customers are also looking for flexible and adaptable spaces that can accommodate changing business needs and trends. This has resulted in a growing demand for co-working spaces and mixed-use developments that offer a variety of amenities and services. Trends in the market indicate a strong demand for commercial properties in major European cities. Cities like London, Paris, Berlin, and Amsterdam are experiencing a surge in demand for office spaces, retail properties, and industrial spaces. This is driven by factors such as urbanization, population growth, and the concentration of businesses in these cities. Additionally, the rise of e-commerce has also fueled demand for logistics and warehousing spaces, particularly in strategic locations with good transport infrastructure. Local special circumstances also play a role in the development of the Commercial Real Estate market in Europe. For example, Brexit has had a significant impact on the real estate market in the United Kingdom. Uncertainty surrounding the UK's exit from the European Union has led to a slowdown in investment and a cautious approach from both domestic and international investors. However, other European cities have benefited from this uncertainty, as businesses and investors seek alternative locations within the EU. Underlying macroeconomic factors are also driving the growth of the Commercial Real Estate market in Europe. Favorable interest rates and low borrowing costs have made it easier for businesses and investors to finance real estate projects. Additionally, economic growth and stability in the region have attracted foreign investors looking for attractive returns and diversification opportunities. The European Union's commitment to economic integration and the free movement of goods and services has also facilitated cross-border investment and increased market liquidity. In conclusion, the Commercial Real Estate market in Europe is experiencing positive growth and development due to customer preferences, market trends, local special circumstances, and underlying macroeconomic factors. The shift towards sustainable and flexible properties, the concentration of businesses in major cities, local factors such as Brexit, and favorable macroeconomic conditions are all contributing to the growth of the market.

Data coverage:

Figures are based on value of commercial real estate.

Modeling approach / Market size:

Market sizes are determined by a bottom-up approach. As a basis for evaluating this market, we use national statistical offices. Next, we use relevant key market indicators and data from country-specific associations such as share of industry, manufacturing, and services of the GPD, price level index, GDP. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the market, for example, exponential trend smoothing.

Additional Notes:

The market is updated twice per year in case market dynamics change. The impacts of the Russia-Ukraine war are considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

After a challenging period during the coronavirus pandemic, the European commercial real estate sector now faces additional pressures, including inflation, record-high interest rates, and sluggish economic growth. In 2022, these challenges were evident through contracting investment volumes in the two largest markets—the United Kingdom and Germany. Although the shifting economic landscape has impacted all commercial real estate subsectors, industrial and logistics—a property type that demonstrated incredible resilience during the pandemic—continues to be the most popular investment class. The performance of the sector is closely tied to the state of the economy, explaining why cities with flourishing capital markets garner the most interest from investors. In 2023, investors identified London, Paris, and Madrid as the three most attractive markets.

Growing demand for industrial and logistic real estate is prominent in Europe, driven by the increase in online retail sales rather than in-store. All the Nordic countries saw steady growth in their e-commerce sales during the past fifteen years and more, and the growth is expected to continue. Investments in the industrial and logistic real estate industry have generally been at a higher level during the last few years. The highest investment value among European countries in the first half of 2021 was in the United Kingdom, while Sweden topped the list among the Nordic countries, and was fifth in terms of industrial and logistics investment in real estate in Europe that year.