Europe
North America
Asia Pacific
Middle East
Europe outlook 2026
Lydia Brissy, Director, European Research
2026 is set to mark a turning point for Europe’s real estate markets, with improving business confidence supporting occupier and investor activity.
Occupiers move into expansion mode
Occupiers are expected to shift from optimising existing space to cautiously expanding their footprints in 2026. While cost control will remain a priority, increasing business confidence should encourage broader demand across sectors.
At the same time, persistent viability challenges are likely to constrain development, keeping vacancy rates low in prime submarkets and supporting rental growth. These dynamics will gradually push occupier activity beyond traditional prime areas as competition for well-located space intensifies.
Improving sector prospects
Office leasing is forecast to rise by around 3%, led by Central and Eastern Europe (CEE). Limited prime stock and rising city-centre rents will encourage occupiers seeking more space to look beyond central business districts (CBDs). Prime office rental growth is expected to reach 3% in 2026, driven by Southern Europe, CEE and central London.
Retail recovery will continue, led by flagship high streets as international brands pursue experience-led concepts. Consumer resilience and constrained development pipelines will support this trend, particularly in cities such as Madrid and Amsterdam.
Logistics demand is also set to improve, with 47% of occupiers planning to expand their footprints over the next three years, supported by e-commerce expansion, supply-chain resilience and defence-related needs.
Living sectors (including mainstream rental housing, senior and student housing and other forms of residential) continue to benefit from structural undersupply and demographic pressures. But in 2026 living sectors face a pivotal year for regulatory reform across Europe, which will reshape tenant protections and rent control frameworks.
European investment outlook
Investment turnover in Europe is forecast to rise by 18% in 2026 as pricing visibility improves and institutional capital returns. Values have largely rebased, though recovery will remain measured, with higher financing costs and persistent pricing gaps so far preventing meaningful yield compression.
There are still opportunities to acquire assets at attractive prices, supported by increasingly deal-friendly lending markets. Capital deployment in 2026 is expected to focus on income-resilient assets rather than cyclical plays. Living sectors will remain popular among investors, but value opportunities persist in under-priced segments such as shopping centres and offices, where the window for core assets at value-add pricing is narrowing.
Prime yields are forecast to edge lower over the next 12 months, particularly in CBD offices and retail, while non-CBD offices are likely to lag further behind.
North America outlook 2026
Devon Munos, Senior Vice President, Head of Americas Research, and Mark Russo, Vice President, Americas Industrial Research
Monetary policy shifts and growing investor confidence are boosting hopes of more stable real estate markets across North America.
Office market moves towards stabilisation
Office leasing activity rose 13.5% year-on-year in US and Canadian gateway markets, signalling stabilisation in fundamentals. Demand remains heavily concentrated in best-in-class assets, driving rental growth at the top end and tightening availability as the construction pipeline remains limited
Concession packages remain elevated, underscoring continued tenant leverage across much of the market. Further momentum is expected, dependent on easing economic uncertainty and sustained employer-driven return-to-office adoption.
Industrial market stabilises
After three years of softening, US industrial market fundamentals are approaching equilibrium. Rents are expected to hold steady, with modest growth and limited downside.
Construction activity will continue and will increasingly focus on build-to-suit projects tailored to a tenant’s specific requirements, although speculative development remains. As supply chains realign in response to trade policy changes, leasing demand should remain healthy, led by third‑party logistics operators.
Data centre development is emerging as a competing land use, while geopolitical tensions are supporting US manufacturing in aerospace and defence. In Canada, efforts to strengthen domestic industrial capacity could drive selective growth, though caution prevails ahead of the July 2026 review of the United States–Mexico–Canada Agreement free trade deal.
Investment market recovery
Capital markets in North America are showing signs of recovery and renewed investor confidence, supported by lower interest rates. This is boosting liquidity and deal activity. The US Federal Reserve’s cumulative rate cuts of 175 basis points since September 2024 have reduced financing costs and supported increased transactions. US real estate investment turnover is forecast to finish 2025 12% higher year-on-year, with further growth of 15% expected in 2026.
Yields have stabilised after two years of rises. While further easing of monetary policy is anticipated, economic uncertainty and inflation risk cloud the outlook. Despite the uptick in investment activity, elevated levels of outstanding office debt remain a significant headwind, with offices projected to face the greatest refinancing challenges in 2026. Meanwhile, debt distress in the industrial sector remains comparatively limited.
Asia Pacific outlook 2026
Paul Tostevin, Director, World Research, and Oliver Salmon, Director, World Research
Resilient fundamentals, occupier demand and selective growth opportunities are poised to support momentum in 2026.
Positivity in the occupier outlook
Grade A office markets are expected to see robust occupier demand. Talent hubs in India, Vietnam and Malaysia will lead rental growth as multinationals expand to tap into cost-efficient skilled labour. Tokyo stands out among mature markets, with forecast Grade A rental growth of more than 5%. The exception is China where occupier demand remains weaker.
The retail sector is benefiting from rapidly increasing consumer affluence in parts of the region, growing tourism and an influx of international brands. Quality retail space has not kept pace with occupational demand, pushing vacancy rates down and driving competition.
Industrial and logistics fundamentals continue to be supported by supply-chain diversification and ‘China plus one’ strategies as well as e-commerce expansion. We expect rental growth across major markets, apart from China and Singapore.
Modest investment growth forecast
Asia Pacific investment activity is expected to rise 7% in 2026 after remaining broadly flat in 2025. Growth will be modest compared with the US and Europe, reflecting the region’s more stable cycle. Institutions’ target allocations remain unchanged, but their actual allocations were below target in 2025. This may support fundraising and direct investment through the denominator effect.
Mainland China continues to temper total regional investment, with activity subdued across all sectors. Foreign investors are largely sellers, while domestic institutions dominate buying. Pricing is still searching for a floor amid oversupply and distress, allowing buyers to be very selective.
Hong Kong is showing more momentum, supported by equity market strength and lower rates, though office oversupply persists. Living sectors, together with hotels, offer better prospects as business and tourism builds.
Opportunity beyond China
Cross-border investors are cautious given geopolitical risks. But they continue to favour Japan, Australia, South Korea and, to a lesser extent, Singapore.
Investor interest in Japan remains strong despite rising rates, underpinned by robust occupational markets. Tokyo prime office vacancy is near zero, multifamily demand is solid and tourism is supporting retail and hospitality. Japan’s market stability points to a smoother, more consistent investment outlook.
Australia remains a bright spot. Investment is forecast to rise nearly 20% in 2026, though inflation and potential rate hikes may temper pricing expectations. Prime offices in Sydney and Melbourne are set to see increased liquidity and competitive bidding. Suburban retail (regional shopping centres) and logistics remain top picks.
Momentum continues in South Korea, with 10% growth in investment turnover expected in 2026. The Seoul office sector leads activity, supported by major transactions and a constrained development pipeline.
Singapore, meanwhile, is more exposed to geopolitical and trade risks given its small and open economy. A slight decline in investment (-5%) is forecast for 2026, but stability prevails overall.
Middle East outlook 2026
Rachael Kennerley, Director, Middle East Research
Shifting supply-demand dynamics and recalibrated Saudi development project funding are central themes for the region.
UAE
High levels of migration and pro-business policies will continue to sustain demand for prime residential and offices across the UAE. However, Dubai faces a potential oversupply of residential properties, with 200,000 units anticipated to be delivered over the next three years. If this construction surge coincides with softer global conditions, tighter financing or yield pressures, there is a risk of price corrections.
But this potential oversupply is not uniform: the supply of villas and well-located prime residential property remains tight. Meanwhile, supply constraints in the office market look set to continue, with limited pockets of supply likely to be quickly absorbed by pent-up demand. The expansion of the Abu Dhabi Global Market (ADGM) financial centre will help, but it will take time to deliver new stock to the market.
Saudi Arabia
Saudi Arabia is becoming less reliant on its Public Investment Fund (PIF), instead prioritising commercially viable phases of projects and attracting private and foreign capital.
While the Vision 2030 initiative remains central, rising costs and timeline shifts have prompted a more disciplined approach to delivery, focusing on strategic projects and inviting private-sector participation. Riyadh, Jeddah and the huge ‘giga-project’ developments will be the focus, but investors must price in execution risk, phasing changes and evolving partnership models.
A rental freeze until 2030 is limiting leasing activity as office tenants stay put amid near-full Grade A occupancy in Riyadh. The expected changes to foreign ownership laws, meanwhile, could reshape residential markets once full details emerge.
Egypt
In Egypt, purchasing power is recovering following the stabilisation of the currency. Well-designed and thoughtfully positioned real estate continues to outperform. Oversupply of Grade A commercial space remains a concern, creating opportunities for well-positioned Grade B assets.
International investment into Ras El-Hekma, meanwhile, has the potential to transform Egypt’s north coast into a tourist destination and new urban community.
