Foreign Capital Returns to European Office Property

Cross-border investment accounted for 39% of European office transactions so far in 2026, compared with 36% during the full year 2025. At the same time, average prime central business district office yields moved out by 13 basis points in the third quarter, reaching 5.1%. Savills released the findings on 21 October. A greater share of international buyers does not by itself demonstrate a recovery in asset values, particularly when financing costs are pushing required yields higher.

International buyers are taking a larger share

The 39% figure is based on RCA transaction data covering the year to date, while the 36% comparison refers to all of 2025. These are shares of deal volume rather than total acquisition values. A few large transactions can therefore move the measure significantly, especially in a market where many potential buyers are delaying decisions.

Savills points to Alecta's €451 million acquisition of a Stockholm office portfolio as a notable example. Czech and Hungarian investors have also been looking beyond their domestic markets, while French SCPI funds are studying additional Central European and Scandinavian opportunities. German insurance and pension capital is selectively reappearing in bids for prime properties.

The cross-border share of European office investment: 36% for 2025 and 39% for 2026 year to date. The average Q3 2026 prime CBD yield was 5.1%. Source: Savills / RCA.

Office yields diverge between European cities

Savills estimates that the average prime CBD yield rose by 13 basis points during Q3 to 5.1%. Warsaw, Paris CBD, Brussels, London City, London West End and Manchester each recorded a 25-basis-point outward move. Germany's six largest office markets moved out by 10–20 basis points, Lyon by 50 basis points to 6.0% and Lisbon by 40 basis points to 5.0%.

Stockholm moved in the opposite direction, with yields falling by 15 basis points to 3.75% as domestic institutions competed for prime assets. Rising yields often indicate lower capital values relative to rental income, but the precise relationship depends on leases, property quality and transaction evidence. The 5.1% average is a market valuation measure, not a guaranteed cash return.

Central Europe is competing on income quality

The attraction of Warsaw, Prague and selected other CEE markets is closely connected to the limited supply of modern city-centre space. Corporate tenants are prioritising quality and accessibility, while high building costs continue to constrain development. International Investment's earlier examination of CEE offices showed why strong rental demand in central districts can coexist with substantially higher citywide vacancy, particularly in weaker submarkets.

Investors nevertheless need to assess whether contractual rental growth can offset debt costs and refurbishment expenditure. International Investment's wider European property investment review documented how capital has moved selectively toward CEE and Nordic markets rather than abandoning Western Europe. The latest Savills data contribute a new cross-border investment share and a clearer picture of office yield repricing.

The outlook for transactions in 2027

Savills expects demand to remain most resilient for well-located offices with strong occupiers and limited competing supply. Financing costs, however, may continue to slow deals involving very large buildings, while smaller assets can attract a broader buyer pool. Those are forward-looking market judgements, not committed transaction volumes.

A recovery in prime office leasing should not be confused with a recovery across every building or location. Investors must evaluate the lease profile, refurbishment budget and entry price before extrapolating market-level indicators to an individual asset.

Frequently Asked Questions (FAQ)

How large is the cross-border share of European office investment? Savills puts the 2026 year-to-date figure at 39%, compared with 36% for 2025.

What was the average prime office yield in Q3 2026? The Savills estimate reached 5.1%, up 13 basis points during the quarter.

Why did Stockholm differ from other cities? Domestic buying supported the market and prime yields fell to 3.75%.

Is 5.1% a guaranteed return on an office investment? No. It is a market valuation benchmark for prime assets, not a promised return.