Key Takeaways
- • Market sentiment has pivoted from cautious optimism (2025) to pragmatism for 2026, driven by macro headwinds and geopolitical uncertainty, yet most survey respondents expect debt and equity availability to increase in 2026.
- • Deglobalisation concerns have more than doubled, rising from 31% of respondents in 2024 to 70% in 2025, representing a structural shift in investor priorities as governments prioritize domestic interests over global capital flows.
- • US policy volatility is reshaping European investment strategy, with early-2025 tariff uncertainty initially disrupting momentum, but creating a bifurcated outlook: some investors are pivoting to Europe-focused deals, while others still view the US as more attractive than limited-growth European markets.
- • Historic tailwinds have reversed or moderated, including the era of low interest rates and globalization, forcing the real estate industry to redefine asset class value amid increasing competition from infrastructure and alternative investments.
- • The PwC-ULI Emerging Trends report (23rd European edition) reveals an industry in prolonged transition, adapting business models and investment thesis as geopolitical risks—including the Ukraine war and Middle East conflicts—continue to suppress capital markets confidence.
Summary
The European real estate market is entering 2026 in a state of pragmatic recalibration rather than renewed confidence. According to the 23rd edition of the PwC and Urban Land Institute's Emerging Trends in Real Estate: Europe 2026 report, sentiment has shifted from 2025's cautious optimism to a more measured assessment of opportunities and risks. Despite persistent macroeconomic headwinds and geopolitical uncertainty, the survey suggests that debt and equity availability are expected to increase in 2026, offering a potential pathway for renewed investment activity across the continent.
The structural challenges facing European real estate have intensified significantly. The report identifies the reversal of historic tailwinds—particularly the era of exceptionally low interest rates and globalization—as a defining constraint on market recovery. Simultaneously, real estate faces intensifying competition from infrastructure and other alternative investment vehicles for institutional capital. This reconfiguration requires the industry to fundamentally redefine the value proposition of real estate as an asset class in an environment where capital is no longer automatically abundant or cheap.
Deglobalisation has emerged as a dominant concern, with its perceived importance more than doubling over two years: 31% of respondents flagged it as a key issue in 2024, compared to 70% in 2025. This shift reflects a structural reordering of geopolitical priorities, as governments and regions increasingly pursue domestically-oriented economic strategies, creating friction in cross-border capital flows and deal structures that historically characterized European real estate investment.
Geopolitical risks continue to weigh heavily on market sentiment. The Ukraine war and Middle East conflicts maintain downward pressure on capital markets confidence, while recent shifts in US policy have created a dual-narrative among investors. Early-2025 tariff policies initially disrupted investment momentum, but some market participants view mounting US economic unpredictability as a rationale for increased Europe-focused deployment in 2026. Conversely, other investors maintain that the US economy remains more structurally attractive than the limited growth trajectories and political instability present in key European markets, suggesting capital may continue gravitating toward North America despite policy volatility.
The overarching message is that European real estate investors and operators must adapt to volatility as a structural feature of the market rather than a temporary phenomenon, while navigating competing macro narratives around deglobalisation, geopolitical risk, and relative capital deployment across regions.
The structural challenges facing European real estate have intensified significantly. The report identifies the reversal of historic tailwinds—particularly the era of exceptionally low interest rates and globalization—as a defining constraint on market recovery. Simultaneously, real estate faces intensifying competition from infrastructure and other alternative investment vehicles for institutional capital. This reconfiguration requires the industry to fundamentally redefine the value proposition of real estate as an asset class in an environment where capital is no longer automatically abundant or cheap.
Deglobalisation has emerged as a dominant concern, with its perceived importance more than doubling over two years: 31% of respondents flagged it as a key issue in 2024, compared to 70% in 2025. This shift reflects a structural reordering of geopolitical priorities, as governments and regions increasingly pursue domestically-oriented economic strategies, creating friction in cross-border capital flows and deal structures that historically characterized European real estate investment.
Geopolitical risks continue to weigh heavily on market sentiment. The Ukraine war and Middle East conflicts maintain downward pressure on capital markets confidence, while recent shifts in US policy have created a dual-narrative among investors. Early-2025 tariff policies initially disrupted investment momentum, but some market participants view mounting US economic unpredictability as a rationale for increased Europe-focused deployment in 2026. Conversely, other investors maintain that the US economy remains more structurally attractive than the limited growth trajectories and political instability present in key European markets, suggesting capital may continue gravitating toward North America despite policy volatility.
The overarching message is that European real estate investors and operators must adapt to volatility as a structural feature of the market rather than a temporary phenomenon, while navigating competing macro narratives around deglobalisation, geopolitical risk, and relative capital deployment across regions.
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