Emerging Trends 2026: Diversification & data centres drive real estate

Despite global volatility presenting a "major test of nerve" for investors, real estate's inherent resilience is expected to shine through.

Emerging Trends in Real Estate Global Outlook 2026 - Front cover

This emerges from a new report, "Emerging Trends in Real Estate Global Outlook 2026" by PwC and the Urban Land Institute (ULI), which gathers insights from thousands of real estate professionals across Europe, the US, and Asia Pacific.

The report highlights the increasing importance of sector and country diversification in investment strategies.

The real estate industry is experiencing a new cycle, buoyed by greater stability in inflation and interest rates, and an increase in capital availability, leading to a sense of rebounding asset valuations and returning liquidity in major markets. However, ongoing geopolitical shifts and economic uncertainties demand constant adaptation from the industry, with concerns that these challenges could impact investment significantly in 2026.

Key Trends and Insights:

Due to global volatility, diversification across both sectors and countries is now considered essential for investment strategies. Attractive pricing in Europe and the Asia Pacific, coupled with healthy occupier markets, makes these regions appealing.

Select retail subsectors (especially grocery-anchored and local shopping centres), and offices are regaining investable status. Office deals, in particular, saw an 18% year-on-year increase to $195.8 bn (€181.8 bn).

Driven by AI demand, data centres are moving from niche to mainstream investment in Western markets, topping sector rankings for opportunities in Europe and North America. Asia Pacific also sees them as the most attractive niche property type. Challenges related to water/energy consumption and technological obsolescence are noted.

Senior housing, assisted living, industrial and logistics, private rented residential, student housing, healthcare, storage facilities, hotels, and affordable housing also rank highly.

ESG strategies are maturing. Asia focuses on measurable initiatives, Europe views ESG pragmatically, and the US prioritises asset resilience in response to climate change.

Private wealth is expected to have a lasting influence on global real estate investment. As institutional investment declines and competition from infrastructure and private credit rises, high-net-worth individuals, family offices, and private equity are becoming more prominent funding sources across all regions. Aggregated retail flows into real estate could represent trillions in potential global capital, requiring asset managers to adapt deal structures and investor communications.