Monday, 15 December 2025
Commercial real estate markets across Europe, the Middle East and Africa are entering 2026 with improving sentiment, following a period of caution and strategic adjustment over the past two years. Investors are gradually increasing activity, focusing on assets and locations that offer long-term resilience, operational efficiency and the potential for repositioning.
Capital that had previously been concentrated in domestic or North American markets is increasingly being redirected towards Europe. Market participants report that international investors are reassessing European cities as part of broader portfolio diversification strategies, supported by stabilising pricing expectations and clearer views on interest rate trajectories.
Office real estate, which lost favour during the pandemic years, is beginning to regain attention in several core European markets. Demand is primarily concentrated in well-located buildings that meet modern environmental and technical standards or can be upgraded to do so. Transactions are returning in major cities, particularly where landlords are willing to invest in refurbishment and energy efficiency. Investors are also showing a growing preference for partnership structures that allow closer involvement in asset management.
Industrial and logistics assets continue to play a central role in investment strategies. Demand remains underpinned by structural changes in supply chains, manufacturing reshoring and the ongoing growth of e-commerce. While established Western European markets remain highly competitive, Central and Eastern Europe is attracting increasing interest, particularly for portfolio acquisitions and assets with rental growth potential. Limited availability of prime stock and pricing pressure, however, are expected to moderate transaction volumes in some core locations.
Specialist property types are gaining prominence as investors look for diversification and higher returns. Digital infrastructure facilities are attracting significant capital, driven by the expansion of data-intensive industries, although development is increasingly shaped by power availability and regulatory considerations. Other niche segments, including self-storage and student housing, are also drawing attention in cities where supply remains constrained and demand fundamentals are strong.
Retail property is generally viewed as a more defensive allocation. Investor interest is concentrated on grocery-led schemes and prime urban retail streets, which continue to demonstrate stable occupancy and income performance. Secondary locations and formats face more limited demand, reflecting a cautious approach to consumer-facing assets.
Across all sectors, development activity remains constrained by elevated construction costs, operating expenses and regulatory complexity. Housing shortages persist in many European cities, but new supply is progressing slowly, particularly in residential segments subject to planning and affordability pressures. As a result, investors are increasingly prioritising acquisitions and asset repositioning over speculative development.
Looking ahead, the outlook for 2026 points towards steady but selective growth in EMEA commercial real estate. Assets that combine strong locations, operational efficiency and the ability to adapt to changing tenant requirements are expected to outperform. Investors with the capacity to actively manage portfolios, invest in upgrades and navigate regulatory frameworks are likely to be best positioned to capture opportunities as market activity continues to recover.
Source: Colliers
