CBRE IM: Selective liquidity and bifurcated office market

Although the real estate market is not yet seeing a return to the peak capital scales of 2021, the wheels of liquidity are beginning to turn more smoothly across Europe.

Bas Tiemstra

Speaking to CRE Media Europe in Cannes, Bas Tiemstra, head of Continental Europe – Direct Strategies at CBRE IM, noted that the ability to transact has improved significantly since the stagnation of 2023 and 2024. "There is more liquidity, but it's selective," Tiemstra observed. "It’s much more about 'where' and 'which asset' than it used to be."

Residential and the Power of Scale

Residential remains a "huge theme" for CBRE IM, though Tiemstra warned that the sector is still in its "infancy" from an institutional fund perspective. He highlighted the necessity of pan-European strategies to capture the "free lunch" of diversification, particularly as a hedge against shifting local regulations.

"The challenge for residential from an institutional investor's perspective is that it is heavily susceptible to regulation," Tiemstra explained. "If you diversify your investments across countries, that risk of regulatory impact can be managed relatively well."

Senior Living is also a major focus for 2026, driven by undeniable demographic trends. Tiemstra noted that while Southern Europe remains more family-dependent, Northern European markets show a clear, growing demand for independent community living for seniors.

A Bifurcated Office Sector

The office sector continues to experience a dramatic bifurcation, with occupier demand concentrated almost exclusively on the highest quality, sustainable, and amenity-rich spaces.

"The world is almost schizophrenic. If you own what we would define as legacy office, I think people are quite desperate... occupiers don’t want to be in those locations anymore," Tiemstra said. In contrast, prime offices—particularly in Central London and Paris—are showing near-zero vacancy and growing rental income, often bolstered by integrated food and beverage (F&B) offerings.

The Retail Resurgence

Tiemstra highlighted the surprisingly strong operational performance of the retail sector, which has managed to absorb high inflation effectively. CBRE IM is particularly eyeing Southern European shopping centres (Spain, Portugal, and Italy) where yields remain high and performance is stable. There is also emerging interest in CEE retail, where Tiemstra noted "the numbers look really, really good," despite a current lag in liquidity.

Regional Outlooks

Germany: Despite soft pricing in some areas, Germany is viewed as a market with a "very good outlook" for residential and logistics, partly due to reduced competition from local capital sources.

UK: Single-family housing is an emerging category that Tiemstra believes offers a "promising business case," even when accounting for higher interest rates.

Southern Europe: Focus remains on retail assets that are difficult to replicate and offer stable, long-term cash flows.

Branislav Pekic