EPRA Real Estate Finance Summit: Cautious optimism for European real estate

The EPRA Real Estate Finance Summit, held recently in London, painted a largely positive, though cautious, picture for Europe's listed real estate sector.

Real estate

Despite potential rises in borrowing costs due to the Iran conflict, European real estate share prices have fully adjusted to current asset values, unlike private markets where pricing expectations still differ significantly, according to Svitlana Gubriy of abrdn.

Edoardo Gili of Green Street noted that European companies' returns are generally "compelling" compared to bonds, though they face stiff competition from other equities.

Bloomberg Economics Director Jamie Rush warned that a three-month closure of the Strait of Hormuz could push oil prices to $160−170 a barrel, adding 2 percentage points to inflation. While he doesn't foresee a global recession, higher energy costs and structural factors like China's treasury stance and increased defence spending will likely keep interest rates elevated. Schroders' Tom Walker highlighted interest rate uncertainty as the biggest risk in real estate capital markets.

In the M&A panel, LondonMetric CEO Andrew Jones suggested combining into larger platforms could cut expense ratios, while Thomas ten Hoedt of Van Lanschot Kempen argued that scale leads to efficiency, lower capital costs, and greater investment in Europe's listed real estate. Investors want development capped at 10% of gross asset value to protect income returns, according to Green Street's Gili, who also discussed recycling capital into under-managed properties.

Indurent CFO Tom Olsen plans to use AI to optimize processes and lower costs, stressing the need for clean data. Matt Bloxham of Bloomberg Intelligence shared survey findings: while AI might lead to immediate staff reductions, it's expected to increase headcount long-term as companies resource AI for sales growth and operational improvement.

The "death of the office sector" due to AI is likely overstated, as a Bloomberg Intelligence survey of 4,000 office workers showed strong demand for high-quality, transit-oriented office spaces. Heitman’s Jacques Perdrix advised concentrating on Grade A office space in tech-friendly European cities (London, Paris, Lisbon, Stockholm) for AI investment strategies.

The massive investment in data centres to power AI and cloud services faces a major hurdle: electricity availability, as noted by Segro's Andrew Pilsworth.

While leverage levels have improved, they remain high, especially in continental Europe, with predictions of more negative outlooks but fewer rating changes.

The summit was co-hosted by EPRA and Bloomberg Intelligence and represented a preview of the EPRA Annual Conference in Milan from 9 to 10 September 2026.