European Investment Atlas Q1 2026

The European commercial real estate market entered 2026 on a stronger footing, with recovery broadening across sectors and investor confidence supported by improving fundamentals. This momentum has since been tested by geopolitical developments, which have reintroduced volatility into interest rates, widened inflation expectations and slowed transaction activity.

Financing conditions have become less favourable, weighing on sentiment and delaying repricing. However, occupier fundamentals remain resilient across most sectors, underpinned by healthy labour markets, constrained supply and continued rental growth in prime assets and locations.

The latest data reflects a more complex environment. The European All-Property TIME Score eased to 3.0, remaining within the stabilisation phase, while the Fair Value Index declined to 74 as higher risk-free rates reduced the scope for yield compression and softened capital growth expectations.

Despite this shift, more than half of European markets remain underpriced, indicating that selective opportunities continue to exist.