Europe's real estate recovery will remain uneven and take longer than previously anticipated, according to the Emerging Trends in Real Estate® Europe 2027 report published by PwC and the Urban Land Institute (ULI). Based on surveys and interviews with 1,498 property professionals, the report finds that only 45 percent of respondents expect business profitability to improve in 2027, down from 50 percent in the previous edition. Headwinds include higher bond yields, geopolitical instability, rising energy and construction costs, and higher-for-longer interest rates. Increased regulation is a top-three concern for 38 percent of respondents, while national political instability is a growing worry for 41 percent.
"The European real estate outlook for 2027 is more nuanced than a simple narrative of a stalled recovery. Despite a challenging near-term economic backdrop, occupier demand remains resilient. Meanwhile, the increasing influence of family offices and other sources of private capital is helping to offset the continued caution of core institutional investors. Our research suggests that this divergence is creating meaningful opportunities, particularly where market dislocations have opened up attractive entry points," said Jean-Baptiste Deschryver, PwC EMEA real estate leader. The report also notes a rise in mergers and acquisitions activity, driven by the need for scale, discounts to net asset values at listed property companies, and demand for broader capital access.
London, Madrid and Paris retain the top three positions in the European city rankings for investment and development prospects. Munich rises to fourth, overtaking Berlin, while Milan climbs to fifth. Lisbon enters the top ten for the first time. "While a longer than expected recovery isn't what we'd hoped for European real estate, this year's survey does reveal our industry's great capacity to adapt to the continued uncertainty, and it highlights its resilience as it adapts to a prolonged period of transition. Undoubtedly, there are still many challenges ahead, from the housing crisis to climate risk, but clearly there are important opportunities too," said Simon Durkin, CEO of ULI Europe.
Poland is identified as Central and Eastern Europe's primary growth market, backed by economic momentum, competitive debt financing and strong bank liquidity. According to MSCI data cited in the report, investment volumes reached €4.8 billion in the first three quarters of 2026, up 77 percent year on year. Warsaw retains 12th place in the European ranking for the third consecutive year, ahead of Brussels, Dublin, Vienna and Copenhagen, with Prague ranked 22nd. Oxford Economics forecasts included in the report project Warsaw's average annual real GDP growth at 3.1 percent for 2027 to 2029, compared with 1.6 percent for London, 2.2 percent for Madrid and 1.3 percent for Paris. In Warsaw's office market, prime city-centre assets continue to attract occupiers and deliver rental growth, while new supply is expected to remain constrained. Despite these fundamentals, international investors continue to require a risk premium reflecting proximity to the war in Ukraine, currency risk and lower market liquidity relative to Western Europe. "Poland has a compelling case to make to investors: a growing economy and unmet needs that create opportunities for long-term investment. Turning that potential into lasting value requires a predictable business environment and projects that will continue to serve their users well for many years to come," said Anna Szelc, chair of ULI Poland.
Housing affordability and supply constraints are identified as the biggest challenge facing European cities over the next decade, ranking above climate adaptation, infrastructure provision and social cohesion. The report notes that housing shortages affect cities' ability to attract workers and sustain economic growth, but regulatory barriers and high construction costs hamper delivery of affordable homes. On climate, 53 percent of respondents expect physical climate risk adaptation to grow in importance over the next 18 months, rising to 59 percent over five years. Decarbonisation remains a significant goal, but attention is broadening to energy security and physical resilience, with landlords increasingly acknowledging that retrofitting may become standard practice.
