Everything you need to know about ‘Emerging Trends in Real Estate: Europe 2026’ report by PWC

Investment head, global Real Estate fund

Although there are challenges, the Real Estate industry remains resilient. And despite macro headwinds, there are positive signs: most expect debt and equity availability to increase in 2026, fueled by emerging investors such as European and US family offices, high-net worth individuals, and private equity funds.

| 70% of leaders now view deglobalization as a key concern, up from 31% last year

| 83% say climate risk is the second most important ESG credential for accessing finance, after energy efficiency

| 75% report using AI/machine learning in Real Estate activities, up from 51% last year

The industry is increasingly focused on long-term traditional trends: demographics, digitalization, and decarbonization. Niche operational sectors like data centers, new energy infrastructure, and student housing top the rankings, signaling the future direction of Real Estate investment.

Climate risk is becoming a top priority for Real Estate leaders, with 83% saying it is now the second most important ESG factor for securing finance, after energy efficiency. Europe’s vulnerability is increasing as it becomes the fastest-warming continent, facing record heat, severe floods and wildfires. As a result, insurers are tightening their approach, with some refusing to underwrite properties exposed to physical climate risks.

AI is shifting from experiment to essential tool. Its adoption has surged to 75%, up from 51% last year, as companies use it for operational efficiency, data analysis, and forecasting market performance. Some firms are even training AI models on internal investment documents to surface insights and risks. Nearly all respondents (93%) believe tech integration will be the biggest driver of organizational success by 2050.

The 4 main insights from industry leaders

1 |

Liquidity and sales volumes have improved, but industry leaders hold mixed expectations for capital market conditions in 2026 and beyond: some see a “glass half full”, driven by lower interest rates, ample debt, and pent-up equity demand, while others view a “glass half empty”, noting higher long-term rates, sidelined equity, and declining foreign investment. Regardless of which outlook prevails, a new source of liquidity may emerge, as adding private Real Estate to retirement plans could significantly strengthen demand for the asset class.

2 |

Sectors once considered niche have become essential property types, with data centers drawing the most attention for their rapid rise in importance, despite uncertainty, the industry’s shift toward a broad range of niche sectors is already pulling investment away from traditional property categories. This evolution is also paving the way for additional emerging sectors that may become essential in the years and decades to come.

3 |

Demographics are set to play a defining role in Real Estate demand. Older population and economic expansion will affect both demand and supply, with fewer construction workers raising building costs. Domestic migration has also cooled, and although the current “lock-in effect” may be temporary, emerging factors are reshaping the patterns of regional movement.

4 |

AI is transitioning from a tech buzzword to a practical tool in Real Estate, with job replacement still uncommon but job transformation and experimentation widespread. Most firms are exploring AI’s potential, while early adopters, especially residential operators, are successfully using AI to streamline resident services and improve operational efficiency.

PropTech’s Impact on Real Estate Innovation and Transformation

Since 2016, MetaProp and PwC have tracked PropTech’s influence on global Real Estate. The latest Global PropTech Confidence Index highlights key trends for 2026:

• AI moves from testing to adoption AI is now being applied in real-world operations across Real Estate, construction, and infrastructure, improving efficiency, cutting costs, and supporting better decisions.
• PropTech expands beyond real estate software Technology is now driving innovation across construction, infrastructure, energy, climate, and industrial IoT, creating new opportunities and efficiency gains.
• Startups and investors focus where ai adds value Sectors like predictive maintenance, insurance, mortgage underwriting, and construction tech are attracting attention due to high data use and clear productivity gains.
• Renewed appetite for large, established players Investors are backing platforms with proven scale, strong distribution, and market leadership, as seen in major growth-equity and AI funding rounds.

Property type experts outlook

Industry leaders expect improved real estate investment prospects in 2026, though development outlooks are more cautious. Out of 27 subsectors, investment prospect ratings increased for 16 subsectors, while development prospect ratings declined for 18 subsectors.

Data centers and senior housing lead both investment and development prospects, outperforming major commercial property types. Residential rentals are generally strong, while medical offices are highly rated.

“Identifying top property types or subsectors is seen as one step toward identifying the right asset, then underwriting with attention to risks amid the fog of uncertainty.”, specialists said.

Serviced Apartments

Among traditional real estate sectors, residential stands out, with five of the top ten sectors: student housing, serviced apartments, retirement/assisted living, co-living, and affordable housing.

“If you're going to build a value-add portfolio of any scale, it's going to have small niche products [within it], so you have to take a broad-brush approach.”, as reported.

Serviced apartments and co-living represent attractiveness should be understood within the context of value-add investors searching for opportunities in a sector where more conservative investors dominate.

Serviced Apartments emerges as a sector to watch in 2026.

Real Estate’s role in Europe’s growth agenda

Europe’s industrial and economic revitalization is driving demand for real assets that enhance competitiveness in energy, digital, transport, and defense sectors.

Projects aligned with EU priorities, as such as data centers, logistics hubs, and transport-linked housing, are well-positioned to attract investment and government support.

Resource shortage, particularly in energy and materials, is seen as an opportunity to drive efficiency and resilience.

After a period of low interest rates, real estate investment lagged other strategies, but in the “new normal” of higher ownership and operating costs, investors are reassessing real estate’s value proposition.

Despite risks, high-quality real estate offers potential for value growth, economic contribution, and social benefits.

The convergence of real estate, infrastructure, and renewables, along with tech-enabled operations, is broadening investment opportunities and strengthening the sector’s impact.

The future is resilient, decarbonized, and digital

Over the past two decades, the range of real estate investment sectors has grown significantly.

The 2026 outlook highlights a strategic focus on income resilience, decarbonization, and digital transformation as key drivers of capital allocation.

Data centers and new energy infrastructure remain the top sectors, consistently ranking in the top and reflecting their central role in Europe’s energy transition and digital connectivity.

Student housing holds third place, supported by steady demand and strong operational depth. A defining characteristic of the leading sectors is their operational intensity, with investors increasingly favoring assets that combine infrastructure-like qualities with essential, needs-based functions.

Healthcare and education-related real estate have climbed the rankings as investors seek social infrastructure and community-serving assets with long-term income stability.

Overall, residential sub-sectors continue to perform well, underscoring a focus on diversification and income-driven returns.