London is the leading European destination for real estate investment and development prospects, according to the latest Emerging Trends in Real Estate Europe 2027 report produced by PwC and the Urban Land Institute (ULI).
The city is closely followed by Madrid and Paris, with Munich (fourth) overtaking Berlin to become Germany’s highest ranked city for the first time. Milan rose two places to fifth, Amsterdam fell by one place to sixth and Berlin fell by three places to seventh.
The report, which is based on a survey and interviews with 1,498 senior property professionals across the continent, found the real estate market’s recovery and growth are expected to remain uneven and take longer than previously anticipated, at both portfolio and national levels.
The industry is adjusting to a challenging short-term outlook alongside long-term structural trends, weak economic growth and a longer-than-anticipated cyclical recovery, and as a result expectations for business profitability has softened slightly, with 45% of respondents expecting an increase in 2027, compared with 50% last year.
This is due to continued uncertainty from macro and business headwinds, including higher bond yields, questions around real estate’s comparative appeal as an asset class, international political instability, rising social unrest, the impact of rising energy and construction costs, inflation, and higher-for-longer interest rates.
Jean-Baptiste Deschryver, PwC EMEA real estate leader, said: “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.”
Simon Durkin, CEO, ULI Europe, added: “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.”