European Real Estate Market Outlook 2026

European office markets have been reshaped by an excep­tional sequence of shocks in recent years. The pandemic accel­erated struc­tural changes in office demand, while the inflation surge and rapid rise in interest rates triggered a sharp repricing across real estate markets. In 2026, renewed geopo­litical tensions, higher energy prices and the return of infla­tionary pressures have added another layer of uncer­tainty. At the same time, investment activity is gradually recov­ering and cross-border capital is returning – yet the pace of recovery is far from uniform, with perfor­mance increas­ingly diverging from one market to the next.

Against this backdrop, two questions matter for investors today: where are office markets currently best positioned, and where is momentum starting to shift? To answer both, we developed the European Investment Performance Outlook, a forward-looking framework covering 22 major European office markets. It combines two comple­mentary perspec­tives: the Performance Index, which assesses relative expected investment perfor­mance over the coming 12 months, and the Momentum Index, which captures whether current market condi­tions are improving or deteri­o­rating. Together, they help position each city within the broader real estate cycle and highlight markets where favourable funda­mentals or potential turning points are emerging.

The report begins with the results of the European Investment Performance Outlook, providing an overview of where the cities currently stand in the cycle. It then examines the factors behind these positions, first through the European economic context and subse­quently through recent devel­op­ments in office occupier and investment markets. Finally, five city portraits take a closer look at contrasting investment profiles, from markets already in expansion to those only beginning to recover or still under­going adjustment.

The European Investment Performance Outlook assesses the relative attrac­tiveness of 22 major European office markets by combining expected perfor­mance over the next 12 months with recent market momentum. Drawing on a consistent set of real estate, macro­eco­nomic, and financial indicators, the framework uses machine-learning techniques and extensive back-testing to provide a data-driven assessment of current investment oppor­tu­nities (see method­ology section).

Results: European office markets at different stages of the cycle

The Performance and Momentum indices reveal substantial differ­ences in where European office markets currently stand within the cycle. Some cities already combine favourable expected perfor­mance with improving condi­tions, while others are only beginning to emerge from the recent correction or remain further behind in the adjustment process. The two dimen­sions should be read together, since perfor­mance and momentum do not always move in step: strong momentum can signal a turning market even where expected perfor­mance remains compar­a­tively weak, while strong expected perfor­mance paired with slowing momentum points to a funda­men­tally attractive market that has already captured much of its recovery, leaving less room for further re-rating.