Real Asset INSIGHT’s CEO Outlook 2026: European investors shift from caution to capital deployment as pricing stabilises

European real estate investors are preparing to shift from capital preservation to new investment as prices stabilise and borrowing conditions improve, according to Real Asset INSIGHT’s CEO Outlook 2026 report.

The report brings together insights from 43 CEOs and senior executives and six industry associations across Europe, showing cautious optimism as yields improve, borrowing costs ease and occupier demand holds up, alongside continued warnings over uneven market conditions.

Contributors to the report point to improving pricing alignment between buyers and sellers, stronger income visibility and a gradual return of liquidity in core and core-plus segments, particularly in logistics, living and prime offices.

However, many also stress that capital remains highly selective, with investors prioritising asset quality, location and balance sheet strength, while remaining cautious around secondary assets, development risk and geopolitical uncertainty.

Andy Rofe, managing director at Invesco Real Estate, said European markets were offering attractive entry points.

“We believe continental European real estate yields are at levels which offer accretive returns over financing costs — in contrast to some other global real estate markets — which further supports liquidity,” he said. “In a global real estate context, Europe is seen as an attractive market given the accretive returns and lower new supply pipelines resulting in lower vacancy and stronger support for rental levels.”

Financing conditions have normalised following two years of elevated rates, creating a clearer macroeconomic backdrop for deployment.

Timothée Rauly, global head of fund management at AXA IM Alts, said: “The macro outlook has become clearer for the year ahead — the cost of real estate finance has normalised to bring leverage back to an accretive level and occupier fundamentals have remained robust.”

He added that increased transaction volumes in late 2025 were “a clear signal that investor sentiment is improving”.

John O’Driscoll, global head of real assets at AXA IM Alts, highlighted strong occupational fundamentals in prime segments.

“Looking across our portfolio, we are seeing very positive rental growth for highly sustainable Grade A properties across almost all sectors in the strongest locations in Europe,” he said.

Christina Ofschonka, head of portfolio management at AEW, said value adjustments were largely complete and sentiment was improving.

“Solid occupier fundamentals, accretive debt funding, and improved manager sentiment are key factors supporting this trend, and will likely lead to a tangible improvement in investment volumes in 2026,” she said.

Alex Jeffrey, chief executive officer of Savills Investment Management, stressed the importance of discipline amid market noise.

“We are tuning out the background noise and focusing on sectors and assets featuring a combination of sound long-term fundamentals and resilient operational dynamics,” he said.

Living, logistics and prime offices emerged as core areas of focus across the report, alongside renewed interest in selected retail formats.

Raj Kotecha, managing partner at Amro Partners, said institutional capital was increasingly targeting housing-led strategies with specialist operators.

“As institutional investors scale up their allocations, we see them increasingly wanting to partner with living sector specialists, rather than generalists, and preferably those specialists that are vertically integrated with a presence in multiple geographies,” he said.

Crispin Gandy, managing director at Argo Real Estate, highlighted continued demand for repositioning strategies in supply-constrained sectors.

“Patient investors have been waiting for the right opportunities, and sectors supported by strong structural tailwinds – such as urban logistics – look well-positioned to benefit from new capital inflows,” he said.

In retail, Otto Ambagtsheer, chief executive officer of VIA Outlets, said confidence was returning to the sector.

“We do see that retail investment in Europe is rebounding, with outlets gaining traction as investor confidence grows in the outlet business model,” he said.

Several contributors cautioned that the recovery is likely to remain selective, with capital gravitating towards income-producing assets and discounted repositioning opportunities.

Steffen Szeidl, chairman of Drees & Sommer, said: “In real estate, we have not yet seen a meaningful turnaround.”

He added: “Instead, we are likely to see slow, gradual growth, driven by selective projects and well-capitalised owners.”

Nick Pink, managing director at Barings Real Estate, said volatility had become embedded in market behaviour but capital was returning.

“Market participants have become more used to volatility generated by factors outside of their control and have a more realistic view of the shape of the recovery phase in this cycle, which is beginning to encourage more activity and pragmatism,” he said, adding that 2025 had marked “a return of significant inflows of new capital, led by core”.

Paul Hampton, chief executive officer of Evonite, said capital was rotating towards needs-based assets and discounted offices as market pressures intensified on overleveraged owners.

“Pricing has adjusted for the most part, the debt markets are more vibrant and the pressures on existing owners who have over-run exit plans are also now significant. Of course, while challenges remain – particularly around the impact of AI – the opportunity for well-capitalised investors focused on standing investments, traditional asset management and growth is clear to see,” he said.

Bas Tiemstra, head of European investment at CBRE Investment Management, said Europe was entering 2026 in a relatively strong position compared with other global markets.

“In our view, Europe offers the most compelling mix of income stability, capital growth, and relative value globally, positioning it as the preferred region for diversified strategies entering 2026,” he said.

While geopolitical risk, regulation and cost pressures remain key concerns, the CEO Outlook suggests a growing willingness among investors to deploy capital as the gap between pricing expectations and financing costs narrows.

For full access to the CEO Outlook 2026 report, visit: