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eglobalisation worries have risen sharply among European real‑estate leaders, pushing the industry from last year’s cautious optimism to a more pragmatic stance, according to PwC and ULI’s Emerging Trends in Real Estate Europe 2026 report. Seventy per cent now fear deglobalisation’s impact, while 90 per cent cite political instability, 86 per cent global conflict, and 77 per cent Europe’s growth outlook as major concerns. Business confidence dipped to 45 per cent from 50, yet 50 per cent now expect better profitability by 2026.
Capital flows are shaped by geopolitical and economic uncertainty and a sustained high‑rate environment. Core real‑estate competes with infrastructure and bonds, widening the bid‑ask spread on returns. Debt is increasingly preferred for its risk‑return profile, especially in core assets, while equity comes increasingly from private equity, high‑net‑worth individuals, and family offices.
The report highlights resilience and innovation as key opportunities, though sustainability perceptions are shifting. Leaders see the sector’s relevance as a chance to reshape its value proposition amid changing market realities.
Country selection is now a priority, favouring mature markets with liquidity, growth prospects, and stable governance. London, Madrid, Paris, and Berlin remain top investment cities for the fourth straight year, also topping MSCI transaction volumes. German cities hold strong positions but have slipped slightly due to economic uncertainty; Berlin remains the strongest German city, buoyed by liquidity and international appeal. Amsterdam climbs to fifth, Milan stays seventh, and Barcelona re‑enters at eighth.
Niche sectors—data centres, new‑energy infrastructure, and student housing—dominate investment rankings, drawing long‑term interest despite lower capital than core office. These sectors align with demographic shifts, digitisation, and decarbonisation trends.
Artificial Intelligence is a rapid growth driver: 75 per cent of respondents now use AI or machine learning, up from 51 per cent last year. Over the next 18 months, AI is expected to be deployed across marketing, leasing, property management, planning, design, operations, and asset management.
ESG remains a long‑term priority, but its perception has shifted. While 85 per cent still view ESG as important (down from 89), only 21 per cent see it as a decision driver over five years, down from 40. Asset managers are clarifying ESG’s link to value and performance amid macroeconomic uncertainty.
Finally, the report explores real‑estate’s strategic role in boosting European competitiveness. Geopolitical uncertainty forces a focus on risk and resilience, redefining real‑estate from a passive asset to dynamic infrastructure essential for Europe’s technological transformation, skills development, and economic growth.
