The European real estate markets offer medium-term earnings prospects, albeit under different circumstances: it is not so much a compression of yields as rental growth that determines the development. At the same time, interest rates remain high and the polarization of user markets continues to increase. As a result, the selection of the right location and the quality of the property are becoming even more important. These are the results of the current edition of the “Realometer”, the strategic real estate market analysis of Real I.S.
The expected acceleration in growth has so far failed to materialise. The aggregated GDP growth expectation of the countries surveyed for 2026 was reduced from 1.7 to 1.2 per cent compared to the February evaluation. Accordingly, the country assessment has deteriorated for Germany, France and Belgium, among others. In the risk-return matrix, Denmark, the Netherlands and Luxembourg show an attractive combination of comparatively high dynamics and low risk.
“The increasing differentiation of the real estate markets opens up opportunities for investors, but requires a very targeted selection. Today, more than ever, the type of use, the location and the quality of the property are considered. Especially in an environment of higher interest rates, the focus is on sustainable rental growth and stable current income,” says Marco Kramer, Head of Research & Investment Strategy at Real I.S.
Office: Prime locations set themselves apart
The office markets remain characterised by a clear polarisation between high-quality and older or peripherally located properties. Purchase yields have stabilised, while rent forecasts have improved moderately. In a comparison of locations, the German Class A cities of Berlin, Hamburg, Cologne and Munich in particular have a comparatively low risk, while Copenhagen and Sydney are particularly dynamic.
Retail and logistics: differentiated picture
In retail, the market remains fragmented, while food and specialty store-based concepts are stable. The assessment of locations is also developing heterogeneously: While risk parameters in Southern Europe (Spain, Portugal and Italy) are improving compared to the first quarter of 2026, they are increasing in France and Finland, but also in Ireland and the United Kingdom.
In the case of logistics real estate, structural drivers such as investments in infrastructure and defence ensure a positive long-term outlook. The Netherlands and Sweden, for example, have a low risk and good momentum at the same time.
Hotel and residential with attractive individual markets
Hotels currently achieve the highest overall rating of the sectors surveyed. Improved forecasts for revenue development strengthen the return assessment. Amsterdam and Frankfurt are particularly attractive, combining a high return valuation with comparatively low risk.
In the residential segment, structural excess demand and rising rents continue to ensure stable cash flows. Despite a moderate deterioration in valuation in almost all locations surveyed, residential is likely to remain the dominant asset class on the investment market in 2027. The Hague and Dublin have the highest yield valuations, with Amsterdam also offering an attractive risk-return combination.
The entire analysis “Realometer – The Real I.S. Real Estate Market Analysis, August 2026” can be found on the Real I.S. website under the following link: Realometer
