Europe’s real estate market isn’t frozen – it’s recalibrating 

The latest Drooms Real Estate Trends Report 2026 portrays a European real estate market that appears slow and cautious, yet also shows early signs of structural recalibration rather than outright decline. The headline figure is striking: transaction durations remain historically high, with the UK reaching a record 577 days on average for deals to complete. But beneath that, the data suggests a market beginning to stabilise after years of escalating complexity.

Across Europe, transaction times have risen steadily due to economic uncertainty, expanding regulation and increasingly demanding due diligence. Against that backdrop, the stagnation of the European average at 363 days is notable. It is not a return to efficiency, but it is the first indication in years that the pace of deterioration may be slowing. High friction remains, yet the levelling‑off implies that buyers, sellers and advisers are adapting to a new normal of prolonged deal cycles.

The UK, however, stands apart. Its jump from 499 to 577 days reflects heightened economic pressures and a cautious buyer base navigating inflation, unpredictable monetary policy and geopolitical instability. Buyers are taking longer to validate assumptions, negotiate terms and assess risk exposure. This has led to extended due diligence, slower negotiations, and in some cases, deal fatigue. Yet despite these challenges, investor appetite for the UK remains surprisingly resilient. Liquidity, transparency and strong long‑term fundamentals continue to attract capital, even if the execution phase has become more arduous. If transaction times ease as predicted, the UK could rebound quickly as confidence returns.

Elsewhere in Europe, the picture is mixed. Germany’s slight improvement – from 405 to 398 days – may seem modest, but symbolically it matters. As a bellwether for European capital markets, stabilisation in Germany can help anchor sentiment across the continent. France and Spain, by contrast, saw increases in transaction durations, underscoring how uneven the recovery is and how dependent it remains on local regulatory environments, investor confidence and the depth of domestic capital pools.

One of the report’s most revealing insights concerns investor intentions. Despite longer timelines and reduced deal certainty – 24% say the likelihood of closing after due diligence has fallen – most investors plan to be more active in 2026 than in 2025. This contradicts the idea of a market freeze. Capital is still available and still seeking returns; it is simply being deployed more cautiously and selectively.

Shifts in asset class preferences reinforce this. Residential and logistics remain dominant, but infrastructure – particularly data centres – is gaining momentum. This reflects a broader pivot toward long‑term stability and assets aligned with structural trends such as digitisation, energy transition and demographic change. Offices remain deeply out of favour, with only 1.3% of investors selecting them as their preferred asset class. This aligns with ongoing uncertainty around hybrid work, underutilisation and the future demand profile for commercial space.

Financing remains the biggest obstacle. With 46% citing funding constraints as their primary challenge, the market is being shaped more by limited liquidity and high capital costs than by lack of interest. Until interest rates stabilise more predictably, financing will continue to act as a drag on deal flow and investor confidence.

The report’s findings on AI offer a glimpse of the sector’s next phase. While concerns about job displacement persist, nearly half of respondents believe AI will enable them to process more deals with the same staffing levels. For an industry defined by bottlenecks, documentation and complexity, this could be transformative. AI will not replace human due diligence, but it will accelerate and sharpen it, reducing friction in areas that have long slowed transactions.

Overall, Europe’s real estate market is not frozen. It is slow, cautious and recalibrating – but also adapting and preparing for renewed momentum. If transaction durations have indeed peaked, the next chapter may be defined not by a boom but by a healthier, more sustainable pace of investment. After years of turbulence, that shift could be exactly what the market needs.