BNP PARIBAS REIM’S INVESTMENT OUTLOOK FOR EUROPEAN REAL ESTATE IN H1 2026

A selective market with value creation driven by active management 

After a year of flat investment and macroeconomic divergence in 2025, Europe enters 2026 with signs of a gradual recovery. The eurozone is enjoying stabilised inflation and more predictable financial conditions despite ongoing geopolitical tensions. 

With liquidity tight and competition hotting up, value creation depends on effective drivers: clear allocation, focused investments and lease optimisation. The most robust prospects for the coming years lie in healthcare and hospitality, which are underpinned by lasting structural trends. Traditional sectors, such as offices and retail, are also among the top picks in many national markets.

Five key investment trends in 2026 

1 - European economies are proving resilient

After showing resilience, European growth is expected to pick up in 2026 as uncertainties surrounding trade policy fade and the financial environment fully stabilises. This acceleration is expected to be widespread, but especially dynamic in Germany, where structural changes in fiscal policy could lift the economy out of stagnation and give fresh momentum to the European market.

2 - An uneven recovery in European real estate

As the recovery in real estate markets gathers pace, national markets are taking different trajectories. Local dynamics play an important role, with sector drivers and growing expectations in terms of asset quality becoming decisive factors for investors and occupiers. Investment should rise in 2026, propelled by strong momentum in Southern Europe and an expected gradual improvement in Germany and the United Kingdom. France is likely to continue grappling with political uncertainty. Investors are focusing more on fundamentals and revenue growth. Against a backdrop of limited yield compression, performance will depend on active management.

3 - Private equity real estate to drive income and diversification  

Investors remain open to alternative assets, and real estate still has a solid presence. The recent repricing offers more appealing entry yields, even though valuations are still sensitive to any rise interest rates. Global real estate performance has been particularly dampened by North American offices since 2023. Conversely, European real estate has posted better total returns and has been gaining momentum since 2024. 

4 - The life cycle of asset categories requires meticulous planning 

Getting an early start in markets that are becoming more institutionalised has become a well-established investment strategy. Once considered ‘the next big opportunity,’ long-term investors have been reaping the rewards of offices, retail parks and logistics for some time now. They have become cyclical markets. The next generation of emerging sectors is set to go through similar growth phases before reaching maturity. Investors should be mindful of this life cycle when determining their exit strategy.

5 - Fundamentals take precedence over trends for 2026

Investment trends for 2026 will vary from country to country but will often diverge from the most popular sectors. The selection includes office and retail assets – some of which have been neglected for years – as well as an ongoing interest in healthcare and hotels. A common denominator is assets that combine solid fundamentals with high returns.

“The key to performance in 2026 will be the ability of assets to combine sustained income with quality of use and location. In this selective market, we prefer sectors driven by structural trends*, while taking an agile approach to more traditional sectors following the repricing.”, explains Laurent Ternisien, Deputy Global Head of BNP Paribas REIM.

*residential, healthcare, logistics

This is an advertising communication.

Past performance is not indicative of future performance and is not consistent over time. References to an award/a label do not prejudge the future results of the fund or the manager. In addition, the investor is warned that these investments vehicles present risks, including risk of capital loss that cannot be measured beforehand. For a more complete description of the risks, please refer to regulatory documents of each fund (key information document for the investor, prospectus / information note, annual report). Before investing, you must read the regulatory package carefully. This document must not be considered as an investment advice or offer to invest or conclude any operation on these investment vehicles and does not carry any contractual commitments from BNP Paribas Real Estate Investment Management.