News / From the associates

According to BNP’s analysis, the global economic landscape continues to be marked by geopolitical instability, slowing growth, and new inflationary pressures linked primarily to the energy shock resulting from the conflict in the Middle East. Global growth forecasts for 2026 have been revised down from 3.4% to 3.1%, while expected growth for the Eurozone has fallen to 1.0% (from 1.2% projected at the start of the year) and for the United Kingdom to 0.7% (from 1.1%). In Europe, growth is expected to remain positive thanks to high household savings rates, investments in AI and digital infrastructure, and increased defense spending, with stronger performance in Southern European countries such as Spain (+2.3%) and Portugal (+2.1%). Headline inflation has risen again in the Eurozone, from +1.9% in February to +2.5% in March 2026, while in the United Kingdom it rose from +3.3% to +3.6%. Core inflation remains more subdued due to the economic slowdown and slower wage growth. Potential rate hikes by the ECB could occur as early as the second quarter of 2026; yields on 10-year European government bonds are also expected to rise over the next 12 months.

Investments in European commercial real estate reached approximately €181 billion in the twelve months ending in March 2026, representing 10% year-over-year growth, although the first quarter of 2026 saw a 7% decline compared to Q1 2025 due to geopolitical tensions and increased financial volatility. Office investments still show an 11% year-over-year increase, driven primarily by France (+21%), Spain (+199%), Switzerland (+104%), and the Netherlands (+54%), while London continues to account for approximately 75% of UK national volumes. Logistics grew by 7%, with volumes doubling in Sweden, Belgium, and Portugal, while the hotel sector reached approximately €20 billion in investments over the past 12 months—17% above the five-year average—accounting for 11% of the European market.

Growth in alternative assets was also very strong (+37%), driven primarily by the UK, Sweden, Spain, and Italy. Residential real estate, with nearly €12 billion invested in the quarter and a 24% share of total real estate investments, continues to benefit from a shortage of supply and rising rents, with particularly high increases in Spain (+98%) and Sweden (+62%).

Investors remain interested in real estate, but with greater selectivity and a focus on prime assets: London and Milan remain the European markets with the tightest prime yields in the office sector (4.0%).