European real estate 2026 outlook

Author: Kim Politzer

Resilience as a source of return: Real estate investment for a volatile world

Originally published by Fidelity International

European real estate is entering the next phase of the cycle following a volatile first half of the decade. Valuations have reset, macroeconomic conditions are stabilising, and long-term structural themes support a renewed focus on resilience. While the operating environment remains challenging, conditions increasingly favour selective investment and active asset management, with performance driven by asset selection as markets adjust to structural change.

Key points

  • European real estate is moving into a recovery phase with reset valuations, stabilising macro conditions and supportive interest rates, but returns will depend on selective asset choice and active management rather than yield compression or broad market exposure.
  • Investment activity remains uneven as offices and retail continue to face weak demand, constraining overall market momentum, while capital remains focused on industrial and residential assets and selective UK opportunities as legacy pressures ease.
  • Structural themes are increasingly shaping performance, with sustainability driving refurbishment costs and obsolescence risk, technology reshaping demand through data centres and power intensive assets, and demographic change supporting long term growth in residential and alternative sectors such as senior living and life sciences.

 

Read article

Authors
Kim Politzer
Director of Research, European Real Estate
Kim Politzer is Director of Research for European real estate at Fidelity International. In this role, she is responsible for establishing the research, strategy and risk management processes for the Fidelity International European real estate funds.

Ms. Politzer joined Fidelity International in 2018 and has over 28 years of experience in European real estate markets. She has carried out extensive research supporting a wide range of investment styles and strategies in both commercial and alternative real estate sectors, having worked previously at Invesco and Atis Real.
Read more
Related content
Opportunity in volatility: Private Equity rides the waves
Fidelity Investments’ private equity experts say public market volatility and tariff uncertainty are creating timely opportunities in secondaries and long-term private equity exposure
Offering niche alpha and diversification
Convertible arbitrage can offer asset allocators the opportunity to diversify traditional and alternative exposures, tap into idiosyncratic sources of alpha, and potentially take advantage of market volatility.
European real estate: A new cycle in focus
A line appeared to be drawn under tariff uncertainty at the end of July, with the U.S.-E.U. trade deal being struck – just as the European real estate market entered its traditional summer lull. As real estate investors returned to their desks in September, many were pondering the question: where do we go from here?

Insights library