The UK office sector is helping to drive a rebound in European real estate flows amid a cautious transaction market, Colliers said in its first-half Global Capital Flows report.

The UK was the top global destination for cross-border capital in the 12 months to June, with office assets at the centre of that activity. Europe, the Middle East and Africa is the only region globally where office investment has overtaken multifamily and industrial, marking a decisive break from global trends.

Spain and Italy also outperformed their five-year averages, while the Netherlands lagged, highlighting uneven recovery across the region.

The UK also ranked third globally as a source of investment, contributing 9.5% of cross-border flows in H1, behind only the U.S. and Canada. France and Sweden also featured, reinforcing Europe’s dual role as capital importer and exporter.

Global fundraising totals hit $111B in the first half, or 85% of 2024’s full-year level. In Europe, allocations have concentrated on the office and industrial sectors. The multifamily sector also showed early strength in the first quarter, while data centres are seeing the biggest expansion in fundraising, attracting 35% of new funds raised. This is significantly above the 15% average from 2020 to 2024.

Monetary policy has also helped add momentum, despite the more recent slowdown in rate cuts. The eurozone’s inflation rate held at 2% in July, meeting European Central Bank targets, while UK inflation rose to 3.8%. The Bank of England recently cut rates by 25 basis points, but yield spreads in the region remain more attractive than in the U.S., Colliers said.

Colliers added that the trends in the first half of the year did not represent a broad recovery but what it described as a selective repositioning.

“EMEA’s sector dynamics are shifting,” Colliers Head of Research for Global Capital Markets and EMEA Damian Harrington said in a statement. “The resurgence of office investment reflects targeted confidence in core assets, while industrial continues to deliver steady returns.”