Investment volumes in Q4 2024 reached €12.0 billion, surpassing final quarter volumes in 2023 and 2022, respectively. Q4 2024 represented an increase of 38% compared to the previous quarter and 18% higher than the same period in 2023.

This brought total investment volumes in 2024 to €37.9 billion, an increase of 14% compared to the same period in 2023 and just behind 2019 as the fifth strongest-ever year of investment. It’s widely accepted that the investment volumes in 2020–2022 are an anomaly, so all in all, we would consider this a very strong result for a “normal” year.

Quarterly comparisons in smaller markets have remained highly volatile this quarter. Comparing Q4 2024 against Q4 2023, the largest increases in annual terms have been in Austria (+1760%), Poland (+324%) and Norway (+248%). Of the core markets, the largest increases were Germany (+41%), the Netherlands (+40%) and the UK (+32%). The markets seeing the greatest decreases were Ireland (-73%), Denmark (-50%) and Sweden (-37%).

Looking at the year as a whole, the standout performers were Romania (+420), Belgium (+177%) and the Czech Republic (+125%). The markets that saw the weakest performance were Greece (-73%), Ireland (-43%) and Austria (-24%). Notably, most markets were on an upward trend this year, with 12 out of 19 reporting annual growth in investment volumes.

The industrial and logistics sectors accounted for 23% of investment in 2024, second only to Offices. After increasing sharply between 2018 and 2022, from 13% to 24%, logistics has successfully retained its share of investment even as the investment volumes have declined. The share of office investment volumes continued to decline in 2024 and fell from 26% to 24%, with the gap between the two sectors now at its narrowest ever level.

With the eurozone economy stagnating, the ECB cut interest rates for a fifth time in early 2025, reducing rates by 25bps in February to 2.75%. This should help stimulate the economy and put further downward pressure on prime yields in Europe. The average prime yield across Europe fell by 3 bps in Q4 2024 to 5.27%. Savills is seeing a return of core capital targeting best-in-class assets, which we expect to bring in prime yield evidence in core markets.

The final quarter of the year provided further evidence for our thesis that prime yields have peaked and the market is turning. Yields tightened in Milan (-25 bps), Barcelona (-25 bps), and Madrid (-25 bps). Notably, there were no outward movements in prime yields across Europe.

With investment volumes expected to grow in 2025, we may see further movements in prime yields as more evidence comes to the market. Crucially, investors are increasingly aligned on pricing. In our UK-focused logistics census, we found that 55% of surveyed investors expect prime yields to settle between 4.51–5.00%, and a further 29% answered 4.00–4.50%. By contrast, last year, 10% expected prime yields to settle at 4.00–4.51%, 40% expected between 4.51–5.00%, and 43% between 5.00–6.00%. Investors coalescing on one answer suggests that there is greater certainty in the market, which may reflect the bid-ask spread between buyers and vendors narrowing.

While investment volumes have undeniably started to improve, we would highlight that the market is characterised by a high level of caution and a sharp focus on sentiment and requirements. We expect investment volumes to decline in Q1 2025 as the market cools following a standout quarter and seasonal variations in activity lead to a lull. Investors remain focused on the trajectory of take-up and net absorption, and the underperformance in these metrics is hampering a stronger increase in investment volumes. Well-located, long-income assets, underwritten by strong tenant covenants, are garnering significant interest. Additionally, ESG credentials and the availability of power remain top priorities for investors and occupiers.

While the investment market has started the year on a solid foundation, several factors could derail a recovery. Investors are faced with significantly greater uncertainty as the US economy moves to a more protectionist footing and geopolitical tensions continue to bubble. With that said, after a year of stabilisation in 2024, we expect investment volumes to continue to grow as investor certainty improves, and tentatively forecast growth of 10–15% in 2025.

_{Read the articles within Spotlight: European Logistics Outlook – Q4 2024 below.}