Market Analysis

The commercial property markets in France and Germany continued to struggle in the second quarter of 2024, as transaction volumes dropped, according to data released by MSCI Real Assets on Thursday.

Europe’s commercial real estate sector has faced significant challenges due to rising debt costs, declining property values, and increased vacancies in post-pandemic offices. This has led to eight consecutive quarters of decreasing property sales.

However, MSCI’s data indicates that the rate of decline eased in the April-June period, with European sales falling by just 2% year-over-year to 44 billion euros ($48 billion), a marked improvement from the 26% drop observed in the previous quarter.

The increase in deal volumes was largely driven by a 26% annual rise in sales in the UK, reaching 14.2 billion euros, suggesting that the UK market might be recovering.

In contrast, France and Germany continued to face challenges. French property sales plummeted by 45% to 3.9 billion pounds, while German sales fell by 22% to 7 billion pounds.

"It's premature to claim the worst is over, despite some signs of improvement since mid-2022," said Tom Leahy, head of EMEA real estate research at MSCI. "The office sector remains weak, and there is still a significant gap in price expectations between buyers and sellers in markets like France and Germany."

Paraphrasing text from "Reuters" all rights reserved by the original author.