EXPO: capital flowing again in expectation of a positive 2026

Sentiment is improving despite geopolitical challenges and market momentum is picking up again, experts agreed at Real Asset Media´s European Real Estate Trends & Investment Outlook briefing, which took place this week at the International Investors’ Lounge at EXPO Real.

¨Investors are coming back and picking up the phone to talk to us again instead of playing hide and seek¨, said Lars-Henning Stephan, Head of value-add strategies Germany, AEW. 

Transactions have been slow, but there are more in the works.

¨We are getting more requests from clients to do due diligence and prepare for potential transactions, so we expect volumes to increase¨, said Georg Gutfleisch, Attorney-at-law, CMS Austria. ¨This is still a year of consolidation and restructuring, with some difficulties on the financing and valuation side, but things are improving so prospects for 2026 are decidedly brighter.¨

There is a sense in the market that capital is flowing in because the expectation is that things are set to improve next year.

¨Occupier demand has been resilient, which for me is a really positive sign¨, said Sven Becker, Fund Manager, LaSalle E-REGI. ¨Core markets have stabilised and money is coming back to the market. We still see value-add investors and this will be a big topic in the next year.¨

There are many trends in the market that investors can focus their attention on, from digitalisation to decarbonisation and from tourism-driven hospitality to longevity and wellness.

¨The digital transformation is still ongoing, but in Europe we are struggling to have the right infrastructure¨, said Thomas Veith, Partner, Global Real Estate Leader, PwC. ¨Each data centre is at least 1 billion euros and not many people can deal with such a big ticket. We need to combine the riskier venture capital with institutional capital.¨

Big projects are a big trend and there is an ongoing blurring of the lines between real estate and infrastructure, but it is difficult to match ideas and capital and to bring projects to fruition.

¨The demand for digitalisation keeps growing and there is more interest in renewable energy projects, because energy regulations are getting tighter and that will incentivise new projects, that become viable from a business perspective¨, said Gutfleisch.¨At the moment they are expensive to build and to maintain. There´s also a need for battery storage, but it is difficult for private investors to get in.¨

Hospitality is not a new trend but it is definitely on the rise, he added.

¨It is picking up rapidly because it is seen as crisis-proof¨, said Gutfleisch. ¨We have seen a lot of institutional funds and investors enter the hospitality sector because the market has shifted.¨

The post-Covid increase in tourism has helped fuel the interest in hospitality, but it has also contributed to the revival of the retail sector after years in the doldrums.

¨Retail has come back after a decade, helped by tourism which is booming¨, said Veith. ¨Family offices are chasing high-street retail, and the shopping centre market is seeing signs of activity again. Retail has had a good bashing in the past, but now it is delivering good returns.¨

Another post-Covid trend is health, wellness and longevity, which is branching out in different directions.

¨There is a sports and entertainment trend which we are importing from the US and we are seeing in the Middle East as well as in China, which is leading to stadia and sports infrastructure being built, including retail¨, said Veith. ¨In Europe we have strong players in the longevity and wellness sector, but not focused REITs yet.¨