Geopolitical tensions spark reversal in investor sentiment

New market research from INREV reveals a significant cooling of investor confidence as we enter the second quarter of 2026.

INREV

After reaching a record peak of 59.4 in December, the INREV Consensus Indicator has retreated to 54.7 in March.

Despite the dip in sentiment, the Q4 2025 Quarterly Fund Index delivered its most robust performance of the year at 1.24% (up from 1.02% in Q3). This brought the total annualised return for 2025 to 4.43%. Furthermore, European ODCE funds have now outperformed their peers in the US and Asia Pacific for seven consecutive quarters.

The economic sub-indicator plummeted to an all-time low of 42.4, while perceived investment risk shifted from a net -7% in December to a net 26% in March.

Concerns regarding trade tariffs, evolving US foreign policy, and heightened geopolitical instability are forcing a widespread repricing of risk across all asset classes.

In a surprising turn of events, Retail has emerged as the most preferred sector, reaching a net sentiment of 23%. This marks the first time in several years it has overtaken Residential, which saw its weakest reading since 2022.

The European landscape shows a widening gap between Southern Europe and the rest of the continent.

Spain continues to be the standout performer with a net sentiment of 39% and a Q4 total return of 2.69%, largely driven by its retail sector.

France recorded its lowest sentiment since the survey's inception at -15%, while Germany & Nordics remain stable with a net sentiment of 15%.

The sole area of improvement was financing, which remains the strongest sub-indicator at 70.4. Bank lending availability is currently at its highest level since tracking began, with 43% of respondents reporting better access to traditional credit. Additionally, many participants noted more flexible covenant structures and higher loan-to-value (LTV) ratios quarterly.