EXPO REAL 2026: A reflection point

While EXPO REAL 2026 did not signal any dramatic shift in sentiment to deliver short-term adrenalin to the market, it still illustrated the depth and size of the industry and its ability to evolve.

That the event drew 42,000 attendees from 74 countries shows that the industry is ready to do business – with a mindset driven by realism and pragmatism.

This approach indicates that the industry no longer views geopolitical instability, climate change, and uncertainty around the impacts of AI as short-term pains before a return to the predictable market of the past – but as an enduring reality that must be embraced, priced, and managed as a condition of doing business effectively in the future.

The Enduring Power Connection

We dubbed EXPO REAL 2025 ‘a time to get personal’. Our verdict from the 2025 conference was that personal connection and trust were the bedrock of investment, and that understanding your partners cannot be outsourced or automated.

Feedback from EXPO 2026 continued to endorse this sentiment – in short, more of the same. Feedback was unequivocal: “This isn’t actually a bad market, but it’s definitely a complicated one.” People want (and need) to do deals, but ever-present macro headwinds, pricing gaps, and longer timelines make deal execution more challenging.

The solution was universally lauded: You deal with complexity through a return to familiarity, proven structures, and assets that investors know inside out. With infrastructure now centre stage, the message was simple: everything is connected.

‘Everything’ does not mean that the coalescence of infrastructure and real estate into a real assets strategy is confined to data centres, even with the AI-fuelled explosion of interest in this asset class. ‘Everything’ really does mean everything: Real estate development and investment cannot exist without infrastructure, and the recognition of infrastructure as a key participant within the halls at EXPO 2026 is very welcome as a sign of increasingly holistic recognition of that fact across all asset classes.

Residential remains attractive, but with an emphasis on viability and affordability

Within that ‘return to familiarity’ mantra, two familiar faces were in the spotlight this year: retail, on a positive trajectory, and private residential, as present as ever.

Residential continues to benefit from long-term demand drivers, including constrained supply in many major European cities and structural demand associated with demographic change.

The investment proposition, however, is not uniform across Europe and the UK. The scale of investment required can also vary significantly between the UK and individual EU markets, with implications for project feasibility, financing options, and overall returns.

A residential strategy that relies on undersupply should therefore be tested against the legal conditions that determine whether supply can actually be delivered. This includes land-use restrictions, affordable housing obligations, infrastructure contributions, construction procurement risk, and restrictions on rent setting or lease termination.

However, the biggest influence on performance in this sector is the impact of high inflation and a constrained labour market on construction costs. As an investor put it: “Land value accounts for 5% – 10% of overall project costs; certainty on construction cost changes the needle.” Without that certainty, investors face volatility on exit yields and reduced confidence, leading to a reduced pipeline despite the compelling driver of undersupply. This uncertainty cannot be approached on a thematic basis and requires granular, city-by-city market analysis. Capital will need to work harder and smarter to deliver an acceptable return.

Retail back in favour

Retail has spent a sustained period in the wilderness in certain investment circles, yet in Munich it was firmly back on the agenda.

In this complex and dislocated market, there was plenty of talk in the halls and restaurants of Munich about deals ‘feeling too forced or overstructured’, and about an over-reliance on fashionable ‘new’ asset classes as investors and managers chase returns in untapped markets. Against that backdrop, investors, and, particularly, the new wave of capital coming into Europe for the first time, want something they can understand. The message was clear: retail can deliver that clarity.

Of course, the retail story requires nuance. Retail interest will stay focused on prime assets backed by high-quality tenants, and on retail warehouse parks in well-located, well-connected areas – which brings us back, once again, to connection and the importance of the right locations, the right tenants, and the right partners.

Office and logistics: Improved outlook?

These asset classes remain hugely significant, and barometers of investor confidence.

Within offices, occupier demand continues to manifest itself in rental growth for prime offices. Investment volumes are increasing and, within the UK market, will be tested with a number of trophy sales recently launched in the market.

The bid-ask spread remains wide, with rental growth set against high debt costs. Comfort can be taken in the continued appetite for brown-to-green funds designed to take advantage of mispriced assets and liquidity pressures. Q4 2026 – Q1 2027 will be a true test of the market temperature.

In the logistics sector, further yield compression is unlikely, and it is predicted that there will be some valuation pressure on older assets. Despite this, the sector continues to evolve and bifurcate creatively, with the rise of industrial open storage and increased automation likely to drive future allocations.

Facing the headwinds with a new mindset: The outlook for three key markets

Across Europe, investors now face a market defined by repriced assets, constrained development pipelines, uneven liquidity, and persistent structural demand in selected sectors. The result is not a return to the pre-rate-rise investment model. It is a more discriminating market in which reliable income, operational capability, regulatory readiness, and unconditional access to power and other critical infrastructure increasingly determine whether an asset is investable and capable of sustaining value.

Germany remains a major institutional market, but transaction activity is selective and investor sentiment remains cautious in particular for high street retail properties. With regard to the office sector, EXPO REAL showcased some renewed interest in high-quality investment opportunities in selected core markets, namely Hamburg, Munich, and Berlin, as well as in Düsseldorf and Cologne. Repriced core assets may offer predictable cash flows, while value-add strategies may benefit from cyclical weakness and changing demand patterns. At the same time, reduced participation by certain domestic capital sources may create openings for international investors able to move with discipline.

The UK continues to offer market depth, transparent transaction processes, and a broad range of sector opportunities. Yet investors should not assume that the UK and continental Europe can be approached through a single underwriting model. Differences in leasing practices, planning systems, tax treatment, security structures, insolvency regimes, and regulatory expectations can materially affect risk allocation and execution.

Italy is attracting renewed interest from investors, supported by a relatively stable political environment and improving market confidence. Logistics and hospitality remain among the most attractive asset classes, while data centres are increasingly drawing investor attention. Although planning and permitting uncertainties have posed significant challenges to development projects, recent regulatory initiatives offer grounds for cautious optimism, particularly in the data centre sector.