Capital Returns to European Commercial Real Estate Market Amid Recovery

The European commercial real estate market saw a significant rebound in the first half of 2026, with investments totaling 116 billion euros. This figure represents a 10% increase compared to the same period last year, according to estimates from the advisory firm CBRE. The three largest markets, the United Kingdom, Germany, and Spain, accounted for nearly 55 billion euros, or 47% of the total investment volume.

While the second quarter of 2026 showed a strong performance with 59 billion euros invested, it was still 8% below the 10-year average. Experts at CBRE highlighted that the persistent conflict in the Middle East continues to cast a shadow over the investment market's outlook. However, transaction volumes in 2025 ultimately exceeded expectations despite similar uncertainties, indicating underlying resilience.

Investor focus remains on assets that offer protection against inflation and provide high, stable incomes. Sectors such as healthcare and residential real estate are particularly attractive. The overall market recovery is expected to be gradual but should maintain its current momentum through the second half of 2026 and into 2027. "The first half of 2026 brought a clear recovery to the European commercial real estate investment market, despite ongoing macroeconomic challenges, inflationary pressures, and less clear expectations regarding interest rates," said Tasos Vezyridis, Head of EMEA Research at CBRE. "This shows that demand is spread across different sectors and markets, as real estate offers investors both stable income and portfolio diversification benefits."

In the second quarter, investors allocated the most capital to the UK (11.8 billion euros), Germany (7.5 billion), Sweden (7.3 billion), France (5.9 billion), and Spain (5.6 billion). European capital constituted 54% of transaction value. The living sector, encompassing build-to-rent apartments (PRS) and private student accommodation (PBSA), led the investment, attracting 15 billion euros. Offices and logistics/industrial properties each drew 11.4 billion euros, followed by retail at 9.5 billion, hotels at 6.6 billion, and healthcare at 1.1 billion. For the first half of the year, the living sector also led, with 29.9 billion euros invested, a 17% increase year-on-year. Offices attracted 22.6 billion euros, warehouses 19.2 billion, retail 18.1 billion, and hotels 11.8 billion.

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The first half of 2026 brought a clear recovery to the European commercial real estate investment market, despite ongoing macroeconomic challenges, inflationary pressures, and less clear expectations regarding interest rates. This shows that demand is spread across different sectors and markets, as real estate offers investors both stable income and portfolio diversification benefits.