Real estate deals in Europe fell through in their highest numbers since the global financial crisis in the first quarter of 2024, data firm MSCI Real Assets said on Thursday, as economic uncertainty in the region continues to loom large.

Europe’s commercial property sector has been hammered in recent years by a punishing rise in debt costs and tumbling prices, exacerbated by some offices and high streets emptying after the pandemic.

Investors globally are rethinking when they expect central banks to start cutting interest rates, cooling hopes for a rapid rebound in rate-sensitive sectors like real estate.

The MSCI data showed the number of property deals worth more than €5-million ($5.4-million) terminated and for-sale properties withdrawn from the market in the quarter spiked to 110, the highest since 2010 when the sector was still gripped by the fallout from the global financial crisis.

The total value of European commercial property sales also slumped by 26 per cent in the first quarter compared to the prior year, to €34.5-billion, the lowest since 2011 and the seventh straight quarter of annual declines.

“After a very slow 2023, there were hopes that European property investment would start to pick up …(but) the market remains a difficult place in which to transact,” said Tom Leahy, Head of EMEA Real Assets Research at MSCI.

“Buyer and seller price expectations have diverged and until interest rates start to come back down or the growth prospects for European economies improve markedly, the price gap is likely to remain in place.”