European real estate poised for pivotal 2026

The European real estate market is poised for a pivotal year in 2026, as sentiment shifts from cautious optimism to a more pragmatic outlook. 

Emerging trends in real estate - PwC

Despite persistent macro headwinds and geopolitical uncertainties—including the ongoing conflict in Ukraine, tensions in the Middle East, and volatile US trade policies—there's an anticipation of renewed investment activity. Most industry professionals surveyed expect both debt and equity availability to increase in the coming year, fuelled by emerging investors such as European and US family offices, high-net-worth individuals, and private equity funds.
The sentiment emerges from the 23rd edition of the "Emerging Trends in Real Estate: Europe 2026" report, a joint publication by PwC and the Urban Land Institute (ULI), based on extensive interviews and survey responses from several hundred industry professionals.
The industry is navigating a prolonged period of transition, adjusting to the reversal or moderation of historic tailwinds like low interest rates and globalization. Faced with increasing competition from infrastructure and other investment options, real estate leaders are being compelled to redefine the value proposition of the asset class itself. Deglobalization, in particular, is emerging as a significant concern, with the proportion of respondents viewing it as a key challenge more than doubling from 31% in 2024 to 70% in this year’s survey.
Changes in US policy, including rapidly evolving tariff policies, initially interrupted investment momentum in early 2025. While some suggest this unpredictability will encourage more Europe-focused deals in 2026, others believe the US still compares more favourably against the limited economic growth and instability observed in key European markets. As one investment head at a global real estate fund noted, "We are operating in an environment where we regard volatility as a feature, not a bug. That means trying to see through cycles and take positions that we feel offer growth and duration."
Despite the challenges, the real estate industry remains resilient, with leaders recognizing the necessity of confronting market realities to prosper. Beyond short-term volatility, there's a growing emphasis on long-term secular trends: demographics, digitalization, and decarbonization.
ESG remains a priority, although strategies are being refined in response to economic uncertainty. Climate risk is identified as the second most important ESG credential for accessing finance, after energy efficiency. Digitalization is accelerating rapidly, with 75% of professionals now reporting the use of AI/machine learning in their real estate activities, a significant jump from 51% last year. 
While attracting relatively little capital today, niche operational sectors are dominating investment rankings, with data centres, new energy infrastructure, and student housing continuing to lead the way.
In terms of geography, investors are becoming more selective, focusing on cities and regions that combine liquidity with the strongest prospects. London, Madrid, Paris, and Berlin lead the city rankings for investment and development prospects for the fourth consecutive year, with Amsterdam also joining the top five. This popularity is reinforced by their perceived depth, transparency, and liquidity. However, interviewed professionals made a clear distinction between the strong economic growth of these specific cities and the more mixed outlook for their respective countries.