As 2025 comes to an end and we reflect on the market, locally and across the EMEA region, there are many common trends from an investor perspective.
Investor sentiment remains cautious, but easing inflation and a more stable geopolitical backdrop are creating a better platform for investor activity. Investors expect core capital to return, though the rebound has been slower than hoped. Expected increased investment across Europe is being underpinned by improving fundamentals, steady rental growth and more accessible debt.
Stabilising yields, repricing in non-core sectors, and continued capital flows point to a cautiously optimistic outlook for EMEA commercial real estate, despite lingering uncertainty. Overall, investors are more willing to act when fundamentals are solid and high-quality, strategically aligned opportunities emerge.
The average deal size across all commercial property sub-sectors in the year to date was €20.2 million, compared to €17 million for the same period in 2024 and €16 million in 2023. Irish investors were the most active, accounting for 29 per cent of overall spend and focusing primarily on office and retail opportunities. However, the two largest transactions were private rented sector (PRS) deals, both acquired by Ardstone, with a combined value of €256 million, or 16 per cent of total investment volume.
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French SCPI investors represented 19 per cent of total spend, or €312 million in the year to date, compared to 15 per cent or €183 million in the same period in 2024, concentrating primarily on offices and retail sectors.
Offices were the strongest-performing sector year-on-year, with a turnover of €508 million, or 31 per cent of total investment. Pricing appears to have stabilised, with yields now considered sustainable, supporting renewed investor confidence. Activity was heavily concentrated in the central business district (CBD), with Dublin 2 accounting for about 60 per cent of spend, followed by Dublin 4 at 13 per cent and 12 per cent in Dublin 1.
French SCPIs were the most active, deploying €231 million, some 45 per cent of the turnover in the year to date, up from €77 million, or 30 per cent, in the same period last year. With approximately a further €200 million of office transactions currently in legals, the sector is set to finish the year on a positive note, highlighting its resilience and renewed investor confidence. However, it should be noted in the majority of cases that the price achieved is below guide. Like all sectors, but particularly apparent in the office sector, once returns exceed 7 per cent the number of buyers is plentiful. However, with net initial yields coming in below 7 per cent, the pool of buyers is shallow. Core office product continues to remain untested in the market.
Investor appetite for industrial and logistics assets remains strong, where supply remains constrained. Demand continues to exceed supply. Investors are increasingly focused on modern, well-located warehouses and distribution centres. The outcome of the portfolios currently on the market will provide good pricing evidence.
The retail sector is showing signs of recovery, particularly in retail parks and dominant shopping centres. Retail parks are the darling of retail. Locally, Realty Income Reit invested approximately €350 million on the acquisition of the Oaktree portfolio (€220 million) and the Trinity Collection (€123.5 million), accounting for 70 per cent of the retail spend in the year to date, or 22 per cent of the total investment volume. Repricing has increased yields to levels that are generating renewed investor interest.
In the private rented sector market, we expect to see a substantial increase in the volume of transactions for the coming year, with a notable number of new entrants. Year-to-date spend amounts to just more than €1.6 billion, representing a 28 per cent increase on the same period in 2024.
Michele McGarry is a director and head of capital markets at Colliers
