Catella has published its House View – March 2026, outlining its expectations for the European real estate market as it moves beyond a prolonged period of repricing and limited transaction activity.
According to the report, European property values declined by approximately 25 percent on average between mid-2021 and late 2023. Since the end of 2023, values have recovered modestly, rising by around 6 percent, suggesting that price discovery is largely complete and that markets are entering a new phase of the cycle.
Stabilising Rates and Early Liquidity Recovery
The outlook highlights changes in monetary policy as a key driver for 2026. The European Central Bank has reduced its deposit rate to 2.0 percent following multiple rate cuts, easing financing conditions and improving the relative attractiveness of real estate debt structures.
Investment activity has also shown initial signs of recovery. Around €225 billion of direct real estate transactions were recorded across Europe in 2025, representing a 5 percent year-on-year increase. Liquidity remains selective, but transaction volumes are gradually improving, particularly in residential and niche sectors and in major markets such as London and Paris.
Housing Supply Constraints Support Rents
Residential fundamentals remain central to Catella’s investment thesis. European residential rents have increased by an average of roughly 6 percent annually over the past five years, supported by limited new supply and low vacancy levels. In many markets, rental growth has outpaced inflation, particularly for newly built and energy-efficient properties.
The report points to an estimated shortfall of four million affordable housing units across Europe by 2030. Over the past decade, migration has added around 20 million people to the EU, reinforcing demand in major metropolitan areas including London, Paris, Madrid, Berlin, Amsterdam and Stockholm.
In regulated markets, rents on new leases have increased at roughly twice the pace of existing contracts, creating a widening gap that has limited mobility and reinforced demand pressure for new housing stock.
Affordable Housing as a Structural Priority
Within this context, Catella identifies affordable housing as a core long-term investment theme. The segment is characterised by persistent demand, near-full occupancy and constrained development pipelines due to land availability and regulatory factors.
Cities such as Madrid, Amsterdam, Utrecht, Rotterdam, Copenhagen, Munich and Düsseldorf are highlighted as facing particularly strong affordability pressures.
Operational Living Gains Momentum
Operational living formats — including student accommodation, co-living, micro-living, serviced apartments and senior housing — are also identified as high-conviction sectors. These formats benefit from demographic change, urbanisation and evolving lifestyle preferences, as well as shorter lease cycles and active management models.
The report estimates that Europe will require approximately two million additional senior housing beds by 2050, representing a 70 percent increase in supply to meet the needs of an ageing population.
Development partnerships and long-term operating structures are viewed as effective ways to access these segments, particularly in dense urban areas across the Nordics, Spain and Germany.
Selective Tactical Opportunities
Beyond residential strategies, Catella identifies selective opportunities in retail and logistics.
Retail parks focused on grocery and non-discretionary tenants have shown improving vacancy trends and stabilising rental performance in markets including Spain, Portugal, the UK, Germany, Poland and the Nordic countries.
Logistics, after rapid growth during the pandemic period, has entered a more moderate phase. However, structural drivers such as e-commerce expansion, supply chain reconfiguration and near-shoring continue to support long-term demand. Northern Italy, the Rhine-Ruhr region, Frankfurt, Amsterdam and regional Polish cities are identified as markets with potential.
Cautious Approach to Offices
The report notes that prime, well-located office assets in central business districts continue to benefit from a flight-to-quality trend. Buildings meeting sustainability standards remain comparatively resilient in cities such as London, Paris, Madrid, Frankfurt, Munich and Stockholm. However, the report suggests that office strategies carry higher execution risk and require careful capital expenditure planning.
Income Focus in the Next Phase
A key theme in the outlook is the shift from reliance on yield compression to a focus on income stability and operational performance. Catella suggests that returns in the current cycle are likely to depend more on net operating income growth and active asset management.
Overall, the report concludes that 2026 presents selective entry opportunities, particularly in sectors aligned with demographic trends, supply constraints and sustainability requirements, as European markets continue to stabilise.
