Global real estate investment volume was $230 billion in Q1 2026, down 5% sequentially, according to Savills’ latest Quarterly Capital Markets Report. According to the international real estate service provider, however, market activity could pick up significantly: The number of ongoing transactions in the 2nd quarter is 18% higher than the previous year’s figure. However, this is subject to a rapid de-escalation of events in the Middle East, which proves to be true.
According to Savills, a strong transaction pipeline suggests that transactions are currently being deferred rather than permanently removed from the market. This is in line with the pattern observed on global real estate markets after last year’s customs shock on “Liberation Day”: a weak first half of the year was followed by a noticeable revival in transaction activity in the second half of 2025.
According to Savills, a rapid resolution of geopolitical tensions would keep the impact on the fundamental conditions of the real estate market to a minimum. The company expects prices to remain stable despite low risk premiums and a higher risk-free interest rate, while there is still sufficient liquidity in the debt capital markets. At the same time, a limited development pipeline is likely to continue to provide significant support for rental growth, as increased uncertainty, increased financing costs and higher energy cost-related construction costs weigh on the profitability of new projects. Any short-term weakening in the outlook for rental growth is therefore likely to give way to a more severe shortage of supply in the medium term. In Savills’ view, it is also crucial that after Liberation Day, the conclusion of a series of bilateral trade agreements has reduced the greatest risks and thus created a more stable environment for investors that will favour the revival of transaction activity.
Rasheed Hassan, Head of Global Cross Border Investment at Savills, says: “2025 has shown that real estate market activity has a considerable level of resilience. After several years of heightened volatility, investors were increasingly willing to conclude transactions throughout the cycle. While recent geopolitical events have led to a slowdown in transactions, we expect a similar pattern to before. Investors today seem to be more willing to remain active even during periods of uncertainty: they recognize that the long-term fundamentals of real estate are intact and that the asset class contributes significantly to portfolio diversification.”
The German real estate investment market also got off to a cautious start in 2026. In the first quarter, commercial and residential real estate worth EUR 8.2 billion changed hands, a decrease of 24% compared to the previous quarter. Karsten Nemecek, Deputy CEO Germany and responsible for Capital Markets, classifies the developments in Germany as follows: “The German investment market has recorded a particularly sharp decline in turnover in recent years by international standards and has so far recovered only hesitantly. Nevertheless, the supply has also increased significantly in this country and, despite the Iran conflict and the associated uncertainties, we are observing an increasing willingness to sell among many owners. Against the backdrop of more realistic price expectations, we expect that the higher supply will gradually translate into an increasing number of sales. The increased interest rates could even increase the pressure on owners and banks to act and provide additional momentum in the future.”
