First quarter kicks off strongly for property investments

According to Savills, transaction volumes are expected to reach approximately €52 billion, marking a 6% year-on-year increase. While the recovery remains moderate, analysts generally agree that the market is gradually entering a phase of strengthening, with total investments projected to rise by 16% in 2026 and 17% in 2027.

At a country level, Finland, Ireland, and Poland stand out, with investment volumes expected to increase by more than 50% compared to the first quarter of 2025. Meanwhile, Europe’s major markets show signs of improving activity, with Germany returning to positive growth and the United Kingdom recording strong expansion. In France, activity is expected to be slightly lower than last year, primarily due to a high comparison base following an exceptionally strong 2025 performance.

Residential Sector Leading the Market
Among individual sectors, multifamily properties (residential rental units) account for the highest investments so far, largely due to large portfolio transactions. Hotels are also experiencing strong activity, while retail, logistics, and office sectors remain at stable investment levels, contributing to a relatively balanced sectoral distribution.

Return of Major Transactions
The return of large-scale investment is already visible through significant transactions. The largest so far is the €2.6 billion acquisition of a factory outlet portfolio in Italy, the Netherlands, and Austria by a consortium including AGP Group, Aware Super, and BNP Paribas Cardif.

There has also been a restart of transactions involving trophy assets, including:

The sale of an office building on Champs‑Élysées valued at €402 million by Icade

The acquisition of the Estel building in Barcelona by Criteria Caixa

The purchase of the Hotel Riu Plaza London Victoria by RIU Hotels & Resorts

The sale of the BHV Marais department store to Brookfield Asset Management

Improving Market Sentiment and Financing
Investor confidence is gradually returning, as reflected in market indicators. The Sentix Investor Index returned to positive territory in February 2026, reaching 4.2 from -1.8 in January, signaling improved investor sentiment after a challenging 2025.

At the same time, rental demand is increasing across most sectors, while limited new property development and low vacancy rates in key markets support the potential for rental growth.

Outlook for Yields and Liquidity
Financing conditions are expected to improve over the next 12 months, particularly for core and core-plus investments, while the availability of assets for sale is gradually increasing. Additionally, more distressed assets may appear on the market, which could further enhance liquidity and transaction activity.

Regarding yields, expectations for prime yield compression are strengthening in 2026. In some European markets, reductions of over 25 basis points are expected, mainly for retail properties on prime streets and shopping centers, while more moderate compression of 10–25 basis points is anticipated for logistics, retail warehouses, supermarkets, and prime office locations.

Overall, the recovery of the European real estate market is expected to be gradual rather than abrupt, with improving investment sentiment, easier access to financing, and increased investment opportunities supporting transaction growth over the next two years.