Global volatility is a "major test of nerve" for investors, and sector and country diversification is more integral to investment strategy, but real estate remains resilient, report the Urban Land Institute and consultancy PwC in their Emerging Trends in Real Estate Global Outlook 2026.
The report, unveiled at the Mipim real estate conference in Cannes, surveys thousands of senior property professionals from across Europe, the US and Asia-Pacific to gauge global sentiment on real estate investment and development.
The report finds improving fundamentals and an increase in the availability of capital have "buoyed the real estate industry globally as a new cycle gathers pace, with greater stability around inflation and interest rates, and a sense that asset class valuations are rebounding from recent lows with liquidity returning to the United States, Europe and Asia-Pacific".
But it says uncertainty arising from deglobalisation, including volatile geopolitics and challenging economic conditions, still presents investors with a “major test of nerve”.
It finds the international backdrop continues to "shift at pace, requiring the industry to constantly pivot and adapt". The net result is the industry believes there is a “real risk” that the effect on investment could be much the same in 2026 as it was in 2025.
This has led to a shift to diversification across sectors and countries which is now regarded as essential. Pricing has also fallen enough in Europe and Asia-Pacific to present an "attractive trade-off with risk, while occupier markets have remained relatively healthy despite the economic conditions". The report also reflects the respondents' strong belief that real estate’s "resilience should continue to shine through, despite the volatility".
Thomas Veith, global real estate leader, PwC, said in a statement: “The sustainable transformation of the industry continues to be in full swing. Real assets are shaping the landscape with a stronger focus on data centres and living."
Simon Chinn, vice-president, research and advisory services, ULI Europe, said: “This year’s global outlook portrays an industry that is coming to terms with a changing investment landscape dramatically shaped by geopolitics, where the composition of available capital is shifting from institutional sources to new ones, and where strategic thinking and the flexibility to pivot can mean success. In an era where volatility might be our new normal, it’s clear that our industry’s leaders strongly believe in the resilience of real estate despite the current turbulence.”
The report also highlights a resurgence in retail and offices in selected markets. Various retail subsectors and offices are now considered highly investable once again, particularly grocery based retail and local shopping centres. Office deals increased by 18% year-on-year to $195.8 billion.
Data centres continue to lead the "sectors to watch" rankings as one of the biggest opportunities for investment and development prospects across Europe and North America respondents. Asia-Pacific respondents regard them as the most attractive niche property type for the coming year.
This year’s report indicates that the sector is moving from niche into mainstream investment in Western markets, despite concerns about an “AI bubble” arising primarily from the vast capital expenditure on mega-campuses in the US. Respondents also indicated there were challenges, from water and energy consumption to the risk of obsolescence from technology advances.
Other sectors to watch include senior housing and assisted living, industrial and logistics, private rented residential, student housing, healthcare, storage facilities, hotels, and affordable housing.
The report also highlights a changing approach to environmental, social and governance strategies in real estate across the three regions. Growing consensus in Asia is that asset owners need to shift focus to deliverable and measurable initiatives, while European leaders see ESG increasingly as a "pragmatic, not philosophical, endeavour", and leaders in the US focusing on ideas such as asset resilience in response to climate change rather than ESG itself.
The report focuses on how the composition of capital is changing, and particularly the lasting influence that private wealth is expected to have on real estate investment as target allocations from traditional institutional investment decline and competition for capital from infrastructure and private credit increases.
The increase in private wealth is expected to make up some of the shortfall with high-net-worth individuals, private local investors, private equity and family offices all becoming more prominent funding sources in Europe and the US. In Asia the trend is more pronounced with capital flows driven by expanding family offices, private banks, insurers and newer sovereign wealth funds.
Gareth Lewis, PwC director and PwC Emerging Trends in Real Estate leader, added: “The real estate industry has been encouraged by improving fundamentals and the increasing availability of capital as a new cycle gathers momentum. Stepping back from the prevailing geopolitical uncertainties, our report identifies that it’s the changing nature – as much as the volume – of capital flowing into real estate that will be important to how the sector evolves in the coming years – alongside the shift towards operational assets, the increasing overlap with infrastructure, and the impact of technology and decarbonisation challenges.”
Simon Durkin, incoming CEO, ULI Europe, said: “While ULI and PwC’s annual barometer of global investment and development sentiment reflects understandable caution, particularly amid heightened geopolitical risk and ongoing macroeconomic uncertainty, it also points to a clear improvement in sentiment versus last year. Importantly, with much of the repricing across real estate now largely behind us, private markets are operating on a different cycle to public markets, creating a distinct set of conditions and entry points. Encouragingly, optimism remains widespread. The industry continues to prove durable and adaptable, and as the asset class evolves, debt markets remain supportive and compelling opportunities are emerging.”