News / Insights

The EPRA outlook identifies 2026 as the year of “normalization” for European listed real estate, following a 2025 that saw a recovery in performance but not yet a full realignment with the equity markets. In November 2025, the EPRA Index (FTSE EPRA Nareit Developed Europe Total Return) posted a +7.0% gain, a marked improvement over the previous year, but still below the returns of the major European stock exchanges. This trend reflects improving sentiment driven by the stabilization of inflation and interest rates, but also a persistent attitude of caution among investors, stemming from nearly five years of anomalous macroeconomic and real estate market conditions. The gradual “normalization” observed over the past year could lead to a convergence toward historical averages in 2026, with a potential expected return for the index ranging between 6.4% and 19.5%.

The macroeconomic outlook for 2026 appears more stable than in the previous three-year period. In the euro area, inflation is expected to average 1.7%, with ECB rates around 2.15% and GDP growth between 1.0% and 1.2%, driven primarily by domestic demand. The United Kingdom is expected to grow between 0.9% and 1.2%, with inflation near 2% and rates in the 3.0–3.25% range, while Sweden stands out for its more dynamic outlook, with GDP expected to reach 2.6–3.1% and rates around 2%.

In this scenario marking the end of the rate-cutting cycle—historically favorable to the sector—the EPRA Index has averaged a +12.1% return one year after the ECB’s first rate cut and a +11.3% return one year after the last, figures significantly higher than those of other European equity sectors.

From a fundamentals perspective, the listed real estate sector is showing signs of strengthening. The average discount to NAV stands at 26.8%, a level observed in only 12% of monthly readings since 1989 and historically associated with three- and five-year annualized returns of 12.1% and 11.9%, respectively. Earnings multiples also remain compressed, with a price-to-EPRA-earnings ratio of 15.3 as of September 2025, compared to a ten-year average of 19.3. Profitability is improving, with ROA and ROE already back to pre-pandemic levels in Switzerland and the eurozone, and expected rent growth of 4.2% in 2026, well above projected inflation.

With approximately €28 billion in capital raised in 2025 and more favorable financing conditions, European listed real estate enters 2026 on a more solid footing, despite risks linked to geopolitical and political uncertainties and the evolution of monetary policy.