EMEA Living Market Perspectives 2026

The living sectors encompass large-scale institutional rental housing across multifamily, single family, coliving, affordable housing, purpose-built student accommodation (PBSA), senior living and care homes. The market in EMEA varies widely: from core established multifamily markets in the Nordics and Germany, through to PBSA high-growth hotspots in Southern Europe or the recent wave of M&A in UK care homes. Living formed 30% of direct real estate investment in 2025, as the largest sector in EMEA for the second year running.

• Investment growth. Following hikes of 34% in 2024 and 22% in 2025, expect stable average annual growth of 10-15% in 2026. Transactional volumes will be supported by large platform deals, a rebound in mature core markets and certainty following yield compression and accelerated capital value growth.
• Sector diversity. PBSA growth to outpace traditional multifamily, elevated by strength in Continental Europe. Investors pursue emerging markets with high demand, notably in Southern Europe. Affordable and mid-market strategies set to rise from investors focused on social impact.
• Active capital. Core capital will be prominent in 2026, following growth in capital deployed and various new living funds anticipated. Institutions have been attracted by standing stock sales, with signs of growth from previously dominant pan-European investors.
• Supply in decline. Housing completions forecast to drop 5% in 2025 and again in 2026. Losses are most acute in cities, falling 11% in 2025. Low supply will be most felt in urban locations of high demand and historically low supply eg Dublin and Madrid.
• Operational focus. Rental growth to stabilise under 5% in 2026, as landlords respond to tenant affordability challenges. Investors to double down on cost reduction and maintaining occupancy, while government seek to reform regulation to unlock investment and new supply.

Living investment has been fuelled by a rebound in larger deals. Total private transactions rose 22% to €62.2 billion in 2026. Investment in deals over €500m more than doubled (+118%) from 2024, reaching the highest level since 2021. Investment in entity deals increased by 168%, while standing stock purchases grew 20% and forward investment – still limited by high costs – fell by 22%.

Two-thirds of transactional volume gains came from the UK rising to €22 billion, accounting for 37% of the EMEA total. Denmark contributed 13% of the uplift, due to increasing international capital attracted to PBSA. Mid-to-mature markets, such as Germany, are picking up pace although still below historic trends. Prohibitive regulation, for example in Ireland and the Netherlands, has limited growth – although changes in both countries support greater investment in 2026.

Living investment is diversifying as emerging sectors gain momentum and attract international capital The fastest-growing sector, care homes, soared 165% year-on-year, with some €14.4 billion invested. US listed healthcare specialists have been able to buy at scale, buoyed by strong performance and consistent share price growth.

PBSA investment rose by 52% in 2025. For the first time, activity in Continental Europe exceeded the UK, having risen by 65% compared to growth of 11% in the UK. Experienced investors are expanding to new markets with strong dynamics. Growth in investment over the last five years has been highest in markets with lower private PBSA provision rates and strong demand from international students, notably in Portugal, Italy and Spain.

The smaller subsectors, which are typically more reliant on forward investment, all experienced declines year-on-year. Affordable and mid-market housing is expected to grow in 2026, through various subsidised structures, helping social impact investors overcome viability difficulties and respond to rising demand.

Investment from international buyers is growing at a faster pace compared to domestic capital, rising 55% in 2025 compared to 2% growth in domestic deals. Buyers from the Americas formed a third of total investment, as experienced living investors expanded in the UK and Spain.

European cross-border activity accounted for just €6.9 billion, a 19% rise year-on-year, although still 63% below the average level in 2018-22. There are signs of Europe’s listed landlords becoming more acquisitive once again, despite still depressed share prices. After a three year hiatus, Germany’s Vonovia returned to the market at the end of 2025 with further activity anticipated in 2026.

Fundraising activity is gaining pace, as investment and sentiment also improve. The number of new funds targeting the living sectors rose 47% in 2025, also 4% higher than 2023 levels, according to analysis of funds recorded by JLL and Preqin. Value-added strategies formed the majority, in particular targeting new housing and affordable tenures. A rebound in core activity is anticipated in 2026, as institutional and pan-European buyers become more active.

Residential construction has plummeted due to surging construction costs and interest rates, leading to weakened investment from homebuyers and investors. Completions dove by 11% in 2024 and are expected to fall 5% in 2025 and again in 2026, reflecting the impact of these challenges combined with complex development and planning processes.

Development challenges are intensified in cities. In 2024, across 20 key European cities, new housing supply fell at the same pace as national levels, dropping 11%. Estimates for 2025 will see completed homes fall by a further 11%, resulting in the lowest new supply since 2015.

Institutional stock plays an increasingly important role in new supply, amid a dearth of rental stock and dislocations in the homebuyer market. Yet in the largest 16 living investment markets some 7.5 million investor-owned homes account for just 10% of rental or 3% of the total housing stock. This undersupply has attracted various new funds and strategies targeting development suggesting improvements in supply in the longer-term.

Average rental growth on new lets accelerated at the end of 2025, finishing the year at 5.2%, up from 5% of 2024. Looking ahead growth will be tempered by affordability challenges for tenants. Rents in European cities demand a higher share of income than ever before. At the end of 2025 this reached 31.9%. Some 30% of European cities require more than 40% of income for rents – meeting the EU definition of housing overburden with rents alone - with 60% requiring more than 30% and breaching the affordability threshold.

Affordability under pressure has seen many governments rethink rental regimes, many such as Sweden and Ireland seeking to stimulate investment in new supply. At the end of December, the European Commission published the European Affordable Housing Plan, with a raft of strategies to improve supply and affordability. The plan recognises the importance of long-term private capital and seeks to ensure better access to financing and a framework for private investment.